Reuters says Nvidia will face a French antitrust complaint

(Bloomberg) — French antitrust officials are preparing to prosecute Nvidia Corp. The world’s most valuable chipmaker is facing increasing regulatory scrutiny over alleged anti-competitive practices, Reuters reports.

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Reuters, citing unidentified people with direct knowledge of the matter, reported that the French agency would be the first in the world to take such a step. The indictment – i.e. the presentation of charges – will be issued after the raid on Nvidia’s offices last year.

Nvidia has drawn scrutiny from regulators since it became the biggest beneficiary of the boom in AI spending. Its chips — known as graphics processing units, or GPUs — are prized by data center operators for their ability to process the vast amounts of information required to develop AI models.

France’s antitrust agency declined to comment to Bloomberg, as did Santa Clara, California-based Nvidia.

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

In September, French antitrust authorities raided the company’s offices on suspicion of “anti-competitive practices in the graphics card sector.” The company was not identified as Nvidia at the time, but the chipmaker later admitted that France and others were investigating its business practices.

In February, Nvidia said officials in the United States, the European Union, China and the United Kingdom were also reviewing its business.

“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 collecting more information about possible abuses of a dominant position.

Fines for violating French antitrust law can reach up to 10% of the company’s global annual revenue. The agency called the €1.24 billion ($1.33 billion) fine for 2020 the largest since 2011. Of that, €1.1 billion was imposed on Apple and the rest on two distributors.

In Brussels, the European Commission is informally gathering views on whether Nvidia has also violated its own antitrust rules, but has not yet launched 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 graphics processors come from Nvidia.

“If you want to have fair competition, you have to have many private companies, not one that can sell all the devices,” Le Maire said.

– With assistance from Mackenzie Hawkins and Alan Katz.

(For more information on the rally, see paragraph 6.)