The tightening antitrust regulation is changing the landscape of the technology industry. Will NVIDIA be forced to break up because of "monopoly"? $NVIDIA (NVDA.US)$ There was news on Tuesday that NVIDIA has received a subpoena from the US Department of Justice for an anti-monopoly investigation. Under market concerns, the company's stocks were sold off massively, causing NVIDIA's stock price to plummet by more than 9.5% that day.

NVIDIA has also become the sixth company among the 'Big Seven' in US stocks to be targeted by US anti-monopoly agencies. A subpoena is usually a prelude to a formal lawsuit.

Currently, NVIDIA is facing two anti-monopoly investigations in the United States: The first investigation is whether NVIDIA discriminates against customers who simultaneously purchase chips from competitors, such as charging them higher prices; The second investigation focuses on whether NVIDIA's acquisition of the Israeli startup Run:ai is intended to consolidate its monopoly position in the GPU market.

Nomura Securities previously pointed out that NVIDIA controls 70-95% of the AI chip market, which inevitably makes it subject to US anti-monopoly investigations. Specifically, ten progressive advocacy groups have sent a letter to the Assistant Attorney General of the United States, demanding an anti-monopoly investigation into NVIDIA.

According to two industry insiders, NVIDIA's sales strategy has sparked criticism from customers and competitors, accusing the company of bundling chip sales to develop its software business.

The good news is, NVIDIA is just getting started. $Alphabet-C (GOOG.US)$Please use your Futubull account to access the feature.$Apple (AAPL.US)$N/A.$Microsoft (MSFT.US)$Following the path of the "predecessors", given that the anti-monopoly investigation institutions in the USA have stumbled in the hands of these tech giants, even if Nvidia is formally investigated, it may not necessarily end in tragedy.

However, this does not mean that NVIDIA can rest easy. The US tech industry is continually growing under the 'bullying' of anti-monopoly agencies, but at the same time, these agencies are also learning from their mistakes. The recent loss of Google in an anti-monopoly case serves as an example. This also casts uncertainty on NVIDIA's anti-monopoly fate.

Twining and lingering.

The anti-monopoly investigations in the USA are well-known. Over the past century, it has been responsible for splitting up the oil tycoon Rockefeller's Standard Oil Company, dividing up the once largest telecommunications company AT&T in the USA, and forcing the former computer giant $IBM Corp (IBM.US)$ to release the operating system permissions.

As industry changes, the US antitrust agency has also shifted its focus to Silicon Valley companies in recent years. In 1998, it sued Microsoft for bundling the sale of the Windows 95 system with the IE browser, a practice that violated antitrust regulations.

In 2019, the US Department of Justice launched an investigation into Apple's management of third-party software, criticizing Apple in a lawsuit filed in March of this year for abusing its position in the smartphone market to cultivate user stickiness through its exclusive software ecosystem.

In 2020, $Meta Platforms (META.US)$ It was sued again, accused of further consolidating its industry monopoly status and harming market competition, as well as the rights of advertisers, after acquiring Instagram and WhatsApp on its social media platform Facebook.

In 2023, it's Amazon's turn to taste the antitrust stick. The Federal Trade Commission in the United States has filed a lawsuit against Amazon for monopolistic practices such as low prices and compelling sellers to use Amazon's own delivery services.$Amazon (AMZN.US)$

Almost in the same year, Google became the target. Antitrust investigation agencies believe that Google's monopolistic behavior in multiple businesses such as search and advertising violates the market's principles of fair competition.

At the same time, in June 2021, the US House Judiciary Committee introduced six antitrust bills targeting tech giants. In July of that year, the White House signed an executive order to further tighten monitoring of tech giants' mergers and data collection practices. Meanwhile, US federal courts have begun to receive and process a large number of antitrust lawsuits against tech giants.

"Outdated"

However, while antitrust investigations are always beneficial in traditional industries, they clearly face challenges in the technology industry.

In the case of Microsoft, although antitrust institutions won in the first instance and forced Microsoft to split into two companies, one specializing in computer operating systems and the other specializing in software business.

However, Microsoft successfully overturned the first-instance judgment by accusing the initial judge of violating judicial procedures and leaking information to the media. In the end, the US Department of Justice chose to reach a settlement with Microsoft reluctantly.

And Microsoft's victory seems to have opened up the channels of Silicon Valley. Major companies are using various tactics and constantly making arguments, making the progress of antitrust investigations slow. For example, Apple claims that its "monopoly" position is due to the love of consumers, and they choose Apple only because of the quality of their products.

Google, Amazon, and Meta have also adopted a unified stance, emphasizing that "gold will always shine," and they are only committed to creating a piece of gold.

The unfavorable outcome of the lawsuits has also been reflected in the US stock market. Amidst the continuous bombardment of antitrust lawsuits, the stock prices of the seven major technology stocks in the US have rarely experienced significant fluctuations due to this news, and even if they do, it is only temporary disturbance.

Most of the time, technology stocks have become "desensitized" to antitrust investigations, and one of the main reasons is that investigations against Amazon, Meta, and Apple have been delayed for many years. This has led the market to believe that the investigative agencies are approaching a dead end.

The series of legislations enacted by the United States legislative body seems to be overstated in the eyes of professionals. Due to the complexity of the legislative process and the obstruction of large company lobbying, some people pointed out that in the end, only one or two anti-monopoly bills may actually be implemented, and their impact on technology companies may be far from what the outside world imagines.

Tightening regulations

Senior professionals in the anti-monopoly industry have pointed out that the logic of anti-monopoly is not to oppose companies occupying a monopoly market share through innovation and competition, but to oppose companies abusing their monopoly position to suppress competitors or customers.

This means that anti-monopoly lawsuits do not have consistent standards and rely heavily on regulatory agencies' investigations. And the network services provided by companies like Google and Meta are difficult to quantify in terms of market size, which is very different from the traditional rule that uses numbers to determine whether a market is monopolized. This is also an important reason why anti-monopoly investigations frequently meet obstacles in Silicon Valley.

On the other hand, legal experts also point out that there is a certain contradiction between anti-monopoly itself and intellectual property rights. Simply breaking up a company may satisfy the demands of anti-monopoly, but it may also destroy the company's technological innovation capabilities. This is also the reason why American institutions are very cautious about technology companies.

In response to the US Department of Justice's aggressive stance, Nvidia confidently stated in a statement that its basis for competition lies in decades of persistent investment and innovation. The company strictly complies with all laws to ensure that customers can choose any solution that suits them.

On the other hand, Nvidia is also under pressure. France has already launched an antitrust investigation against Nvidia, and it is seen as a demonstration for the next step of the European Union. The actions of various countries in antitrust have a synergistic effect, which may surround Nvidia in a predicament due to the defeat in a lawsuit.

In addition, Google lost the antitrust lawsuit last month and was ruled to have illegally monopolized the online search and search advertising market. It is reported that the US Department of Justice is considering breaking up Google, which makes everyone in Silicon Valley worried. They fear that antitrust agencies with escalated means will further crack down on large technology companies.

Analysts pointed out that Nvidia may be willing to make concessions in order to relax regulatory agencies, such as promising to increase compatibility support for products from competing manufacturers, establishing special funds to support AI chip companies, or voluntarily limiting market share in certain markets.

Editor/Rocky