Nvidia faces federal scrutiny over 80% AI chip market share

Nvidia, a leading manufacturer of AI chips, is under investigation by the Department of Justice due to its significant market share exceeding 80%. The DOJ is examining allegations that Nvidia is using its dominant position to hinder competition, particularly by offering lower prices to customers who exclusively use its products, a practice known as exclusionary rebates. This scrutiny comes amid a surge in demand for AI technology, which has significantly boosted Nvidia's market capitalization and stock price. The company has denied reports of receiving subpoenas but acknowledges that the government has previously sent out questionnaires, indicating an ongoing investigation. Nvidia's technology has become essential for major tech companies like Amazon, Google, and Microsoft, which have all integrated its chips into their operations. The anticipated release of Nvidia's new generation of chips, code-named Blackwell, is expected to further increase demand, raising concerns among regulators about potential monopolistic practices. In addition to the DOJ's investigation, there are worries regarding Nvidia's plans to acquire Run:ai, a smaller company focused on optimizing AI chip clusters. This potential merger is under scrutiny as U.S. antitrust authorities, including the DOJ and the Federal Trade Commission, have intensified their examination of merger activities across various sectors during the current administration. Critics of the investigation argue that Nvidia's contributions to the AI revolution should be recognized rather than scrutinized. Some believe that the government's actions may inadvertently benefit foreign competitors, particularly China, by stifling innovation and growth in the U.S. tech industry.