The U.S. Department of Justice (DoJ) is investigating Nvidia’s acquisition of Israeli AI software startup Run:ai over antitrust issues, The Information reported on Friday, citing people with knowledge of the matter. Officials are also probing whether Nvidia abused its market dominance in selling AI chips.
The chipmaker announced the acquisition of Run:ai in April, but did not say for how much. Tech Crunch later reported that Nvidia would pay $700 million to complete the purchase. Run:ai’s software allows enterprise users to manage and optimize their AI compute infrastructure across different platforms.
Competitors accuse Nvidia of threatening customers
According to The Information, U.S antitrust lawyers are investigating complaints from several of Nvidia’s competitors over its alleged abuse of its market dominance in AI semiconductors. The DoJ has since reached out to Advanced Micro Devices (AMD), AI chip startups, and other Nvidia rivals to gather information about the complaints, the report says.
Nvidia faces allegations that include threatening to “punish” customers who buy products from any other company apart from itself. Some of Nvidia’s customers fear that the chipmaker could raise prices or limit the number of chips it will sell, if a customer also buys from competitors, according to employees of customers who spoke with The Information.
DoJ officials are looking into whether Nvidia coerced some of its customers, including cloud providers that lease servers powered by the firm’s chips to AI developers, into buying more of its chips. The Information reports that one Nvidia rival alleged the company limited the number of chips a customer can buy if they aren’t buying anything else.
Nvidia’s chips are at the heart of AI development
Another competitor reportedly told U.S. investigators that the chipmaker raised prices for customers who buy just one product in bundled packages that include chips – like its high-end H100 chip -and cables.
Nvidia denies wrongdoing
Investigators have also asked Nvidia’s rivals about the company’s acquisition of Run:ai. They are keen to find out whether the Israeli startup allows its customers to use graphics processing units (GPUs) that are not made by Nvidia and whether the acquisition has any effect on this.
“Nvidia wins on merit,” said Nvidia spokesperson Mylene Mangalindan, as reported by Politico.
“We compete based on decades of investment and innovation, scrupulously adhering to all laws…We’ll continue to support aspiring innovators in every industry and market and are happy to provide any information regulators need.”
The U.S. Justice Department has not publicly commented on the issue.
This is not the first that Nvidia has faced scrutiny over its business practices. In July, the French antitrust regulator said it planned to launch a probe into Nvidia’s alleged anti-competitive behavior. The regulator is concerned about the AI sector’s dependence on Nvidia’s CUDA chip programming software.
