According to Reuters on July 1, French antitrust regulators will accuse Nvidia, becoming the world's first law enforcement agency to take such action against Nvidia.
After falling 3.8% on July 1, Nvidia's stock price rebounded and closed at $124.3/share, up 0.62% from the previous day.
The French accusation is another action following last year's raid on Nvidia's office. In September last year, the French Competition Management Agency stated that it had raided the office of a company suspected of engaging in anti-competitive behavior, without disclosing the specific company name, only stating that it belongs to the graphics card field. Later, media reports claimed that the company was chip manufacturer Nvidia.
In a document in February of this year, Nvidia revealed that "our position in the artificial intelligence-related market has attracted global regulatory attention to our business." These regulatory agencies include the United States, the European Union, France, China, and the United Kingdom, requiring Nvidia to provide information about its graphics cards.
The report said that the European Commission has been informally collecting opinions on whether Nvidia has violated its antitrust rules, but has not conducted a formal investigation into anti-competitive behavior. Informed sources said that given that the French authorities are investigating Nvidia, the European Union is unlikely to expand its preliminary review. In the United States, where Nvidia is headquartered, media reports last month stated that the Department of Justice is leading an investigation into whether Nvidia violated antitrust laws.
Nvidia is the world's largest AI chip manufacturer, with a market share of more than 80% with its powerful GPU chips. Driven by the AI boom, Nvidia's market cap has soared, and it has surpassed Apple and Microsoft to become the world's number one. At the same time, Nvidia's global regulatory environment is becoming increasingly strict.
Last November, French Finance Minister Bruno Le Maire stated that Nvidia's dominant position has increased inequality between countries, stifled fair competition, and emphasized that only one company should not sell all equipment. In a report on competitive generative artificial intelligence released last week, French regulators also expressed concerns about the AI industry's reliance on Nvidia's CUDA software. The software system has built a strong moat around Nvidia's hardware products.
If Nvidia violates French antitrust laws, it will face fines of up to 10% of its global annual income. In 2020, the French Competition Management Agency imposed a fine of 1.1 billion euros on Apple for violating competition rules, the highest fine in the agency's history.
With the AI wave sweeping the world, companies that have profited greatly are also coming under the scrutiny of regulatory agencies, including major technology companies other than Nvidia.
On June 28th, senior EU officials stated that they are increasing their scrutiny of the AI industry. The EU's antitrust regulator is further investigating the cooperation relationship between Microsoft and OpenAI to explore whether certain exclusivity clauses will have a negative impact on competitors, such as whether OpenAI exclusively uses Microsoft Azure cloud services. In the previous investigation, the EU clarified that although Microsoft invested $13 billion in OpenAI, making it its largest investor, it has not yet gained control of OpenAI.
At the same time, the European Union also issued an inquiry to the market about the agreement between Google and Samsung, to understand the impact of pre-installing Google's small model Gemini Nano on some Samsung devices. Some "acquisition employment" behaviors have also attracted the attention of the European Union, which refers to large technology companies using recruitment to achieve their acquisition intentions, such as Microsoft hiring most of the employees of AI start-up and OpenAI competitor Inflection AI, including its co-founders.
"If these practices ultimately lead to business concentration, we will ensure that they do not evade our merger control rules," said Margrethe Vestager, European Commissioner for Competition, last week.