06 Sep Nvidia denies receiving DOJ subpoena amid antitrust investigation
Updated on September 6, 2024 by David Lalire
Nvidia has publicly refuted claims that it received a subpoena from the U.S. Department of Justice (DOJ) in relation to an ongoing antitrust investigation. This follows a Bloomberg report stating that the chipmaker had been issued a subpoena as part of a larger probe into major tech companies.
Key statements from Nvidia
In response to these reports, a Nvidia spokesperson told multiple outlets, including CNBC, Forbes, and Reuters, that the company had reached out to the DOJ and had not received any subpoena. The representative reiterated Nvidia’s willingness to cooperate with regulatory authorities, stating, “We are happy to answer any questions regulators may have about our business.”
The Bloomberg report, which first broke the news, led to a drop in Nvidia’s stock, with the company’s shares slipping nearly 10% on Tuesday. Although no formal complaints have been filed against Nvidia, the investigation appears to be scrutinizing the company’s dominance in the AI chip market, where Nvidia controls between 70% and 95% of the market, according to industry estimates.
Antitrust concerns surrounding Nvidia
Nvidia’s AI chips, which are critical for data centers, have become a cornerstone of its growth. Competitors such as AMD and Intel have only recently begun developing similar products, allowing Nvidia to establish an estimated 80% control of this sector. This dominance has led to growing concerns about its influence on the market and the potential for monopolistic practices.
The DOJ’s focus appears to center on whether Nvidia’s business practices, such as bundling hardware or penalizing customers who choose rival products, make it harder for buyers to switch suppliers. Additionally, regulators are reportedly concerned about Nvidia’s $700 million acquisition of the Israeli AI management firm Run. This acquisition could further consolidate Nvidia’s position, making it more challenging for competitors to thrive in the market.
Stock impact and market reactions
Following the initial Bloomberg report, Nvidia’s shares dropped significantly, falling 9.5% on Tuesday and continuing to decline during after-hours trading. The market reaction underscores the sensitivity of investors to any potential regulatory scrutiny, especially given Nvidia’s prominent position in the AI industry.
Despite this recent dip, Nvidia has seen significant gains over the year. Starting 2024 at $48.17 per share, the company’s stock remains well up, even with this setback. However, investor concerns have mounted following the company’s latest earnings report, which, while record-setting, did not meet some of the loftier expectations from the market.
Broader implications
Nvidia is just one of several tech companies under the DOJ’s antitrust microscope, with investigations reportedly extending to Microsoft and its partnership with OpenAI. As scrutiny of the tech industry increases, Nvidia’s situation highlights the growing focus regulators are placing on AI-related companies and their potential market dominance.
While no formal charges have been levied, the probe into Nvidia reflects broader concerns about the consolidation of power within the tech sector, particularly in AI, where a few companies control a substantial portion of the market. It remains to be seen how these investigations will evolve and whether they will lead to any regulatory action.
In the meantime, Nvidia has maintained its stance of openness, stating that its market success is based on merit and customer choice.
For further details, see these sources:
Photo by BoliviaInteligente, Unsplash
