DOJ Subpoena Sends Nvidia Stock Tumbling Amid Antitrust Probe
AInvestWednesday, Sep 4, 2024 1:00 am ET
1min read
NVDA --
The U.S. Department of Justice has issued a subpoena to Nvidia as part of an ongoing antitrust investigation. The company responded by emphasizing that customers can choose the solutions that best fit their needs.
According to sources, the DOJ has requested information from Nvidia and several other companies, seeking evidence of antitrust law violations by the leading chipmaker. This step indicates that the investigation may be moving closer to formal charges, a significant development from the previous stage where the DOJ had only sent out questionnaires to various firms.
Following the news, Nvidia’s stock plummeted nearly 10% on Tuesday, wiping out approximately $279 billion in market value, marking one of the largest single-day losses in the company's history.
Nvidia maintains that its market leadership is due to the superior performance of its products. A company spokesperson reiterated that “Nvidia wins on merit,” highlighting the quality and value their products bring to customers.
The DOJ’s investigation reportedly includes Nvidia's acquisition of RunAI, a company that develops software for managing AI computing tasks. Regulators are concerned that this partnership could make it more difficult for customers to switch from Nvidia's chips. Additionally, there are questions about whether Nvidia offers preferential pricing to clients that solely use its technology or purchase entire systems.
Nvidia, founded in 1993 and initially known for its graphics cards for gamers, has seen its chip-making techniques become essential for building AI models. According to earlier estimates, Nvidia controls a substantial share of the AI chip market. The company’s dominance is cited as being vital in training and deploying models like OpenAI's GPT.
The DOJ’s upgraded request, now legally binding, seeks detailed information from Nvidia and could represent a significant escalation towards a formal complaint. Despite the recent downturn in the stock price, Nvidia did not comment further on the investigation.
Observers have noted that this action by the DOJ could signal a more aggressive approach in regulating the AI and tech industries. Last year, the FTC initiated its investigations into data collection practices by companies like OpenAI, followed by broader scrutiny into strategic partnerships within the tech industry.
Just three months ago, reports surfaced that the U.S. government had begun investigating AI industry giants like Nvidia more intensely. The DOJ's San Francisco office is reportedly leading the current inquiry.
In conclusion, the DOJ's subpoena represents a pivotal moment in the ongoing antitrust scrutiny of Nvidia. If the probe culminates in formal charges, it could profoundly impact Nvidia's market standing and the broader AI chip industry.
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