It’s been a roiling week for Big Tech, both on Wall Street and at the U.S. Department of Justice, with share prices in the chip sector taking major hits and, now, the DOJ opening two antitrust probes into Nvidia, according to an article in The Information.
Intel’s stock in particular has taken a beating after reporting disappointing earnings. Shares, which had topped this month at nearly $35, are at $21 as of this writing, the lowest price in nearly 12 years. Intel also announced employee layoffs totaling 15,000, 15 percent of its workforce.
AMD stock has declined from its monthly high by nearly 30 percent, and Nvidia is down more than 20 percent over the same period. To be sure, these declines come after significant stock run-ups for all three companies during the past year, so a chip sector correction is not a surprise – though the degree of decline possibly is.
As for DOJ’s probe of Nvidia, The Information reported that Justice is investigating complaints that Nvidia “is allegedly abusing its market dominance” in GPUs. This is a complaint we often hear at industry gatherings and conferences – at ISC 2024 in Hamburg last May it was a common topic of conversation, particularly among vendors whose products compete with Nvidia’s in the AI realm.
According to The Information, U.S. official have gathered information from several Nvidia competitors, such as AMD and AI chip startups. “The issues range from allegations that Nvidia has threatened to punish customers who also buy products from its competitors to potential concerns about its (Nvidia’s) recent acquisition of startups that strengthen its grip on the software AI developers use.”
The story also reported that “rivals have told the DOJ that customers who buy chips and cables from Nvidia pay a lower price for each product.” A story in Data Center Dynamics reported “while bundling isn’t illegal, it can turn into a company using a dominant product to harm competitors.” Microsoft is “reportedly concerned that not buying Nvidia’s networking cables would lead the company to be slower in delivering its much-sought-after GPUs,” the article stated.
Nvidia, meanwhile, issued a statement from spokesperson Mylene Mangalindan: “Nvidia wins on merit, as reflected in our benchmark results and value to customers. We compete based on decades of investment and innovation, scrupulously adhering to all laws, making Nvidia openly available in every cloud and…for every enterprise, and ensuring that customers can choose whatever solution is best for them. We… are happy to provide any information regulators need.”
Also drawing DOJ scrutiny is Nvidia’s $700 million acquisition earlier this year of Run:ai, which helps customers manage AI deployments. The DOJ is looking at whether the Israeli company “will still help customer of non-Nvidia GPUs,” according to the Data Center Dynamics article. Nvidia’s acquisition two years ago of cluster management software company Bright Computing also is under DOJ review.
The article reported that officials in France and the UK are looking into anti-competition charges against Nvidia.
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