French competition authorities have confirmed that Nvidia is under investigation for alleged anti-competitive practices. People with direct knowledge of the matter initially hinted on July 1st that chip makers could face charges in France.
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Benoit Coeure, president of the competition authority, said that charges would be laid if the probe yielded positive results. Although the specific charges are still not very clear, it seems that the main emphasis is on Nvidia’s cloud computing.
Nvidia faces scrutiny in the Cloud Computing sector
In a regulatory filing made last year, Nvidia disclosed that officials from the European Union, China, and France had asked questions about its graphics cards. A report from the French competition authority that came out last month looked into the possibility of chip makers abusing the generative AI market.
The report also raised questions on the concentration of the industry in the use of the CUDA programming language from Nvidia, the only one that is fully compatible with the GPUs essential to accelerated computing. Additionally, the French competition authority raised some issues with Nvidia’s recent strategic acquisitions of AI-oriented cloud computing services such as CoreWeave. Such investments have raised concerns regarding market power and fairness of competition in the fast-growing AI industry.
Nvidia has a near monopoly, with some estimates putting its market share as high as 94% of the data center GPU market. Such control may also be seen as a cause for concern over the abuse of power by Nvidia, as observed by the French authorities.
Global regulators increase scrutiny of tech giants
In September 2023, the Wall Street Journal revealed that Nvidia’s offices in France were searched within the framework of the larger probe into the cloud computing market. At the time, the authorities did not directly name Nvidia; instead, they mentioned the graphic card producer. This investigation was to assess whether Nvidia and other large companies were abusing their dominance in the market by suppressing competition from small enterprises.
The outcome of the ongoing investigation remains uncertain. Speculations are that it could mean another setback for Nvidia as it faces more legal battles in the chip market if the investigation results in charges and penalties.
Meanwhile, the scrutiny of Nvidia by the regulators is not limited to Europe only. The US Department of Justice has taken the lead in the investigation of the company, sharing the responsibility of regulating Big Tech with the Federal Trade Commission. Additionally, UK regulators unveiled on Monday an investigation into the fast growth of digital wallets by Big Tech firms.
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