DOJ has issued a subpoena to NVIDIA, signaling an escalation in its antitrust investigation into the company’s dominance in the AI hardware market, as reported by Bloomberg. The investigation focuses on whether NVIDIA is using its position to limit competition and restrict access to alternative suppliers in the AI chip industry.
“We have inquired with the U.S. Department of Justice and have not been subpoenaed,” an Nvidia spokesperson to Quartz
About the NVIDIA antitrust investigation
Bloomberg indicates that NVIDIA, along with other relevant companies, has been issued legally binding subpoenas for information. Sources suggest that regulators are examining whether NVIDIA is engaging in practices “making it harder to switch to other suppliers and penalizes buyers that don’t exclusively use its artificial intelligence chips.”
The reasons behind NVIDIA receiving DOJ subpoenas
NVIDIA’s rapid ascent to becoming the world’s most valuable chipmaker, driven by a massive uptick in AI investments, has placed the company squarely in the crosshairs of regulators. With its quarterly sales more than doubling, NVIDIA has outpaced former industry giants like Intel, drawing the attention of antitrust authorities.
The primary concern for regulators is whether NVIDIA is using its dominant position to limit competition. There are allegations that the company has made it more difficult for customers to switch to other chip suppliers and may be punishing those who don’t exclusively rely on its AI hardware. These concerns were shared by individuals familiar with the investigation, though their identities remain undisclosed due to the private nature of the discussions.
As part of the DOJ’s ongoing investigation, NVIDIA’s acquisition of RunAI—a company specializing in AI computing management software—has become a focal point. The deal, which was made public in April, raises concerns that it could further consolidate NVIDIA’s control, making it harder for businesses to face to alternative chip providers. Additionally, regulators are looking into whether NVIDIA is offering advantageous pricing or supply deals to clients who fully commit to its AI solutions or purchase complete systems based on NVIDIA’s technology, fueling worries about anti-competitive tactics.
What’s the meaning of subpoena?
A subpoena is a legal document that orders an individual or entity to provide testimony or produce evidence, such as documents or records, for a legal proceeding. There are two main types of subpoenas:
- Subpoena ad testificandum: This type requires a person to testify in court or before a legal authority.
- Subpoena duces tecum: This type demands that the recipient produce specific documents, records, or evidence relevant to an investigation or court case.
Failure to comply with a subpoena can result in legal penalties, such as fines or even imprisonment. Subpoenas are commonly used in investigations to gather crucial information.
Why are NVIDIA stocks down?
Over the past year, NVIDIA’s stock has experienced significant growth, reflecting the company’s dominant position in the AI and semiconductor sectors. According to TradingView data, from a yearly perspective, NVIDIA’s stock has surged by 117.03%, driven largely by booming demand for its AI chips and the company’s expansion into various AI-driven markets. However, despite this impressive yearly gain, NVIDIA has faced recent volatility. On September 3rd, the stock dropped sharply, reaching $108.00, which represents a 9.53% decrease in just one day. The decline continued pre-market, dipping to $106.14, fueled by concerns surrounding the Department of Justice’s antitrust investigation.
While the one-day drop is notable, NVIDIA’s broader upward trajectory remains strong, with its year-to-date performance still up 119.32%. Despite short-term market corrections, NVIDIA’s strategic positioning in AI chip manufacturing continues to sustain its long-term value. This recent dip illustrates the market’s sensitivity to regulatory actions, but it is unlikely to derail NVIDIA’s overall growth momentum in the evolving AI space.
NVIDIA, Google & Apple: All facing antitrust
The relationship between Google and Apple has become a focal point in ongoing antitrust investigations. Central to this issue is the lucrative deal in which Google pays Apple billions each year to ensure that its search engine remains the default option on Apple devices, particularly Safari. This agreement gives Apple a 36% share of the advertising revenue generated by Google searches on its platform. Critics argue that this arrangement unfairly stifles competition by making it difficult for other search engines to gain traction. DOJ claims that such deals reinforce Google’s dominance in search while potentially dissuading Apple from developing its own competing search tools.
This investigation comes at a time when both companies face increasing scrutiny over their market power and influence, particularly in how they manage user data and monopolize key digital spaces. While financially beneficial to both, the arrangement puts Apple in a precarious position as it continues to promote itself as a pro-privacy company.
The broader effects of these antitrust cases echo concerns seen in the NVIDIA case, where dominant companies are scrutinized for using their market power to maintain control and limit competition.
Featured image credit: Kerem Gülen/Midjourney
