French regulators are reportedly gearing up to charge NVIDIA with anti-competitive practices, according to Reuters. This marks the first time a government agency has taken direct action against the GPU giant over its dominance in the AI chip market.
The French Autorité de la concurrence (Competition Authority) plans to issue a statement of objections to NVIDIA, following raids on the company's offices last September. These raids were part of a broader investigation into cloud computing, but sources say they specifically targeted NVIDIA.
At the core of the regulator's concerns is NVIDIA's stranglehold on AI-focused GPUs and their ecosystem. A recent report by the Competition Authority highlighted the tech industry's reliance on NVIDIA's GPUs and noting that its CUDA programming software is the only system fully compatible with them. This has resulted in NVIDIA establishing a dominant position in the market.
This action comes as NVIDIA rides high on the AI boom. The company's GPUs are highly sought-after for their ability to process vast amounts of data required for AI model development. To say the company's value has soared would be an understatement. Last month, NVIDIA briefly become the most valuable company in the world by market cap, surpassing both Apple and Microsoft.
French Finance Minister Bruno Le Maire has voiced concerns about NVIDIA's market position, stating last November that the company controls 92% of the GPU market. "Fair competition needs many private companies, not one selling all the devices," Le Maire argued.
The Competition Authority also raised red flags over NVIDIA's investments in AI cloud providers like CoreWeave, suggesting these deals could give NVIDIA an unfair edge in the growing AI cloud services market.
If found guilty of violating French antitrust laws, NVIDIA could face fines up to 10% of its global annual revenue. While such severe penalties are rare, it underscores the gravity of the potential charges.
NVIDIA's regulatory challenges extend beyond France. The company has disclosed that authorities in the U.S., EU, China, and the UK are also scrutinizing its business practices. In the U.S., the Department of Justice leads the investigation into NVIDIA, while the FTC maintains oversight following its blocked $40 billion Arm acquisition attempt in 2022.
The outcome of this French antitrust action could set a precedent for how regulators worldwide address power concentration in the AI hardware market, potentially shaping the future of AI development and deployment.
NVIDIA declined to comment on the potential charges.