Report: US opens antitrust proceedings against Nvidia
On Wednesday, Nvidia celebrated the most successful day in U.S. IPO history. The business of high-performance chips for AI applications is still booming. But is everything above board in the sale of these chips to cloud giants and other companies?
The U.S. Department of Justice has reportedly launched an investigation into Nvidia, the world leader in high-performance chips for training artificial intelligence. According to the U.S. technology portal "The Information," investigators are looking into whether Nvidia pressured cloud providers to buy multiple products, citing people involved in the discussions. The investigation was initiated after competitors complained that the company may be abusing its dominant market position in the sale of AI chips.
Nvidia controls around 80% of the market for AI chips. The investigation is also reportedly looking into whether Nvidia charges customers more for networking equipment if they want to buy AI chips from competitors like Advanced Micro Devices (AMD) and Intel.
The company denies the allegations. "We compete on the basis of decades of investment and innovation, ensuring we comply with all laws, making Nvidia available in every cloud and on-premise for every company, and ensuring customers can choose the best solution for them," said an Nvidia spokesperson in a statement. The U.S. Department of Justice has not yet responded to a request for comment.
Best Day of IPO History
Just last Wednesday, the renewed AI euphoria gave Nvidia the largest single-day increase in market value in the history of the Wall Street. The company's shares rose by nearly 13%, adding $330 billion to Nvidia's market capitalization in just one day. No other publicly traded U.S. company has ever gained so much value in a single day.
The rally was triggered by AMD's encouraging numbers. However, the business of chipmakers is driven by large cloud providers like Amazon, Microsoft, and Google's Alphabet subsidiary, which are upgrading their data centers for billions of dollars. Special-purpose processors are needed for these AI applications.
Microsoft, like Amazon and Google's Alphabet subsidiary, is a significant player in upgrading data centers for AI applications, requiring special-purpose processors. Despite the investigation into Nvidia's business practices, Microsoft continues to rely on various chip manufacturers to meet its data center needs.
In light of Nvidia's market dominance and the ongoing investigation, Microsoft may consider diversifying its supplier base to ensure competition and fair pricing for AI chips, potentially including Advanced Micro Devices (AMD) and Intel.
