Nvidia to be hit by French antitrust complaint, Reuters says

(Bloomberg) — French antitrust authorities are preparing to indict Nvidia Corp. over allegedly anti-competitive practices, Reuters reports, as the world’s most valuable chipmaker faces increasing regulatory scrutiny.

Most Read by Bloomberg

The French agency would be the first in the world to take such a step, Reuters said, citing unidentified people with direct knowledge of the matter. The statement of charges – or statement of objections – was said to have followed last year’s raid on Nvidia’s offices.

Nvidia has been attracting regulatory attention since becoming the biggest beneficiary of the artificial intelligence spending boom. Its chips – called graphics processing units, or GPUs – are prized by data center operators for their ability to process the vast amounts of information required to develop artificial intelligence models.

The French antitrust agency declined to comment to Bloomberg, as did Santa Clara, California-based Nvidia.

Nvidia shares fell as much as 3.8% in New York on Monday before mostly recovering. They have more than doubled this year, pushing the company’s valuation above $3 trillion.

In September, French antitrust enforcers searched the company’s offices for “anti-competitive practices in the graphics card sector.” They didn’t identify the company as Nvidia at the time, but the chipmaker later acknowledged that France and others were investigating its business practices.

Nvidia said in a document filed in February that its activities are also being investigated by officials from the United States, the European Union, China and the United Kingdom.

“Our position in artificial intelligence markets has led to increased interest in our business from regulators around the world,” the chipmaker said at the time.

French antitrust authorities interviewed market participants about Nvidia’s key role in AI processors, its pricing policy, chip shortages and the impact on prices. The raid on the office was aimed at gathering more information about potential abuses of dominant position.

Penalties for violating French antitrust law can amount to up to 10% of a company’s global annual revenue. The agency considers the 1.24 billion euro ($1.33 billion) fine imposed for 2020 to be the largest since 2011. Of this amount, €1.1 billion was imposed on Apple Inc. and the rest on two distributors.

In Brussels, the European Commission is informally gathering views on whether Nvidia may also have violated its own antitrust laws, but has not yet opened a formal investigation into anticompetitive behavior.

In November, French Finance Minister Bruno Le Maire said Nvidia’s dominance was causing “growing inequality” between countries and stifling fair competition. He said 92% of GPUs come from Nvidia.

“If we want to have fair competition, we need many private companies, not just one that has the ability to sell all the devices,” Le Maire said.

– With assistance from Mackenzie Hawkins and Alan Katz.

(Updates with more information about the raid begin in the sixth paragraph.)