Anti-monopoly groups want DOJ to probe Nvidia’s AI chip bundling, alleged price-fixing.
Sen. Elizabeth Warren (D-Mass.) has joined progressive groups—including Demand Progress, Open Markets Institute, and the Tech Oversight Project—pressuring the US Department of Justice to investigate Nvidia’s dominance in the AI chip market due to alleged antitrust concerns, Reuters reported.
In a letter to the DOJ’s chief antitrust enforcer, Jonathan Kanter, groups demanding more Big Tech oversight raised alarms that Nvidia’s top rivals apparently “are struggling to gain traction” because “Nvidia’s near-absolute dominance of the market is difficult to counter” and “funders are wary of backing its rivals.”
Nvidia is currently “the world’s most valuable public company,” their letter said, worth more than $3 trillion after taking near-total control of the high-performance AI chip market. Particularly “astonishing,” the letter said, was Nvidia’s dominance in the market for GPU accelerator chips, which are at the heart of today’s leading AI. Groups urged Kanter to probe Nvidia’s business practices to ensure that rivals aren’t permanently blocked from competing.
According to the advocacy groups that strongly oppose Big Tech monopolies, Nvidia “now holds an 80 percent overall global market share in GPU chips and a 98 percent share in the data center market.” This “puts it in a position to crowd out competitors and set global pricing and the terms of trade,” the letter warned.
Earlier this year, inside sources reported that the DOJ and the Federal Trade Commission reached a deal where the DOJ would probe Nvidia’s alleged anti-competitive behavior in the booming AI industry, and the FTC would probe OpenAI and Microsoft. But there has been no official Nvidia probe announced, prompting progressive groups to push harder for the DOJ to recognize what they view as a “dire danger to the open market” that “well deserves DOJ scrutiny.”
Ultimately, the advocacy groups told Kanter that they fear Nvidia wielding “control over the world’s computing destiny,” noting that Nvidia’s cloud computing data centers don’t just power “Big Tech’s consumer products” but also “underpin every aspect of contemporary society, including the financial system, logistics, healthcare, and defense.”
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They claimed that Nvidia is “leveraging” its “scarce chips” to force customers to buy its “chips, networking, and programming software as a package.” Such bundling and “price-fixing,” their letter warned, appear to be “the same kinds of anti-competitive tactics that the courts, in response to actions brought by the Department of Justice against other companies, have found to be illegal” and could perhaps “stifle innovation.”
Although data from TechInsights suggested that Nvidia’s chip shortage and cost actually helped companies like AMD and Intel sell chips in 2023, both Nvidia rivals reported losses in market share earlier this year, Yahoo Finance reported.
Perhaps most closely monitoring Nvidia’s dominance, France antitrust authorities launched an investigation into Nvidia last month over antitrust concerns, the letter said, “making it the first enforcer to act against the computer chip maker,” Reuters reported.
Since then, the European Union and the United Kingdom, as well as the US, have heightened scrutiny, but their seeming lag to follow through with an official investigation may only embolden Nvidia, as the company allegedly “believes its market behavior is above the law,” the progressive groups wrote. Suspicious behavior includes allegations that “Nvidia has continued to sell chips to Chinese customers and provide them computing access” despite a “Department of Commerce ban on trading with Chinese companies due to national security and human rights concerns.”
“Its chips have been confirmed to be reaching blacklisted Chinese entities,” their letter warned, citing a Wall Street Journal report.
Nvidia’s dominance apparently impacts everyone involved with AI. According to the letter, Nvidia seemingly “determining who receives inventory from a limited supply, setting premium pricing, and contractually blocking customers from doing business with competitors” is “alarming” the entire AI industry. That includes “both small companies (who find their supply choked off) and the Big Tech AI giants.”
Kanter will likely be receptive to the letter. In June, Fast Company reported that Kanter told an audience at an AI conference that there are “structures and trends in AI that should give us pause.” He further suggested that any technology that “relies on massive amounts of data and computing power” can “give already dominant firms a substantial advantage,” according to Fast Company’s summary of his remarks.
Nvidia’s rivals struggling to compete
As Kanter mulls a DOJ probe, progressives are concerned that any emerging Nvidia rival is seemingly “struggling to gain traction,” which allegedly risks extractive pricing and market gatekeeping from Nvidia as its dominance is cemented.
“Such a company deserves the most aggressive scrutiny that the Department of Justice can bring to bear,” their letter urged.
But some of Nvidia’s rivals do not appear discouraged by Nvidia’s dominance, with Intel openly striving to become America’s leading AI chip manufacturer, partly by building chip plants in the US.
Intel declined Ars’ request to comment on advocacy group’s claims that it’s struggling to compete with Nvidia, whose chips are “highly coveted” globally, The Wall Street Journal reported, because of their superior “ability to handle the massive computations needed to train AI systems.”
According to the WSJ, Nvidia rivals in China, “including US-sanctioned Huawei,” are “attempting to make chips as capable as Nvidia’s but are faced with capacity and technology bottlenecks.” Other rivals may face similar challenges, subsequently making chips viewed as inferior to Nvidia’s because they may be “prone to system crashes” when training AI models, the WSJ reported.
In addition to dominating the market for high-performance chips, Nvidia also offers NVLink, which combines multiple servers that power popular AI applications like ChatGPT. Nvidia’s interconnect standard for AI accelerator chips in data centers is a key part of any modern AI data center system, Ars reported in May, and can effectively dictate which hardware tech companies running AI systems will use. To compete with Nvidia on that front, some big tech companies—including Google, Intel, Microsoft, Meta, AMD, Hewlett-Packard Enterprise, Cisco, and Broadcom—have formed the Ultra Accelerator Link (UALink) Promoter Group to develop a new interconnect standard.
But Nvidia’s certainly got a big lead that could be difficult to disrupt, progressive groups fear, by manufacturing the most in-demand chips and offering superior networking technology to train AI.
Ars could not immediately reach Nvidia for comment, but a spokesperson told Reuters that “the company spent billions of dollars developing AI-capable computing technology before demand existed,” and is “committed to opening new markets and growth opportunities for our partner ecosystem.”
China crucial to Nvidia’s dominance
For Nvidia, continuing to do business in China appears crucial to maintain its world leading chip dominance because the market for AI chips there is massive. Last year, after Nvidia achieved what The New Yorker reported was “one of the largest single-day gains in stock-market history”—spiking its value by $200 billion—Nvidia warned that US export controls on China may hurt the company’s growth and encourage innovation outside the US, harming US companies’ abilities to compete.
At that point, Nvidia CEO Jensen Huang said that Nvidia had “to come up with new chips that comply with the regulation, and once we comply with the regulation, we’ll go back to China.”
“We try to do business with everybody we can,” Huang said. “On the other hand, our national security matters. Our national competitiveness matters.”
Nvidia’s spokesperson seemed to dispute the progressive groups’ allegations that Nvidia is delivering “access to China via cloud services to circumvent export restrictions,” telling Reuters that Nvidia remains fully compliant with all laws and supports a competitive market.
“Regulators need not be concerned, as we scrupulously adhere to all laws and ensure that Nvidia is openly available in every cloud and on-prem for every enterprise,” Nvidia’s spokesperson said. “We’ll continue to support aspiring innovators in every industry and market and are happy to provide any information regulators need.”
