Nvidia Subpoenaed by DOJ in Expanding Antitrust Probe Over AI Practices

The U.S. Department of Justice has subpoenaed Nvidia as part of a deepening antitrust investigation into the company’s AI practices, raising concerns about market dominance and competitive fairness.

Key Points

• The U.S. Department of Justice has sent a subpoena to Nvidia as part of an ongoing antitrust investigation into its AI practices.
• The probe is concerned with Nvidia potentially making it difficult for customers to switch to other suppliers and penalizing those who don’t exclusively use its AI chips.
• Nvidia has faced similar inquiries from regulators in the U.S., South Korea, the EU, UK, and China regarding its investments and partnerships.
• The investigation comes as investor optimism around AI softens, with Nvidia’s shares falling sharply after its recent quarterly forecast missed expectations.
• Despite recent setbacks, Nvidia’s shares are still up 141% this year, driven by strong AI-related growth.

Nvidia, a leading player in the artificial intelligence (AI) chip market, is facing increased scrutiny from the U.S. Department of Justice (DOJ), which has issued a subpoena as part of a broader antitrust investigation into the company’s business practices. This development, reported by Bloomberg News, marks a significant escalation in the ongoing probe, which aims to determine whether Nvidia has been leveraging its market dominance to stifle competition.

The DOJ’s investigation is focused on concerns that Nvidia may be making it difficult for customers to switch to alternative suppliers and penalizing those who do not exclusively use its AI chips. These allegations suggest that Nvidia could be engaging in anti-competitive practices that limit choice and innovation in the rapidly growing AI sector.

In response to the subpoena, Nvidia defended its position, stating, “Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.” The company has emphasized that its success is due to the quality and performance of its products, rather than any unfair business practices.

This is not the first time Nvidia has come under regulatory scrutiny. Last month, it was reported that the DOJ had launched an investigation following complaints from competitors about Nvidia’s alleged abuse of its market dominance. Additionally, the company has received requests for information from regulators in the U.S., South Korea, European Union, United Kingdom, and China, concerning its investments, partnerships, and agreements with other companies.

The timing of the subpoena is particularly sensitive for Nvidia, as it comes during a period of recalibration in the tech industry, where investor enthusiasm for AI has been tempered by concerns over the slow payoffs from large-scale investments. Nvidia’s shares took a hit last week after the company’s quarterly forecast failed to meet investor expectations, leading to a 9.5% drop in its stock price—a record one-day loss that slashed $279 billion from its market capitalization.

Despite these challenges, Nvidia’s stock has seen a remarkable 141% increase so far this year, driven by high expectations around AI. However, the ongoing antitrust investigation could pose significant risks to the company, especially if regulators find evidence of anti-competitive behavior.

As the DOJ’s investigation deepens, the tech industry and investors alike will be watching closely to see how Nvidia navigates these legal and regulatory challenges. The outcome could have far-reaching implications, not only for Nvidia but for the broader AI industry as well.