Nvidia faces French antitrust charges amid global scrutiny

Nvidia, the world’s leading maker of AI and computer graphics chips, is set to be charged by French antitrust authorities with alleged anti-competitive practices, the first significant enforcement action against the tech giant, underscoring the growing global regulatory pressure on Nvidia’s dominant market position.

The French antitrust watchdog’s statement of opposition follows dawn raids last September that targeted the graphics card sector, with sources confirming that Nvidia was the primary target. The raids stemmed from a broader investigation into cloud computing, reflecting concerns about Nvidia’s growing influence in the tech industry.

Nvidia’s chips, especially its graphics processing units (GPUs), have become key to artificial intelligence (AI) applications, leading to a surge in demand following the launch of its generative AI app ChatGPT. But that boom has drawn the attention of regulators on both sides of the Atlantic, with the U.S. Department of Justice and the European Union also keeping a close eye on Nvidia’s practices.

France’s antitrust watchdog has highlighted potential abuses in the generative AI sector, pointing to Nvidia’s CUDA chip programming software as the only system fully compatible with its GPUs. That reliance has raised concerns about Nvidia’s ability to stifle competition. In addition, Nvidia’s recent investments in AI-focused cloud providers like CoreWeave have further worried regulators.

“Regulators are increasingly wary of Nvidia’s growing influence and potential abuse of the market,” said a source familiar with the matter. “The company’s dominant position in the AI chip market is seen as a threat to fair competition.”

If found guilty of violating French antitrust laws, Nvidia could be fined up to 10% of its global annual turnover. However, the company could offer concessions to mitigate those penalties. Nvidia and the French regulator declined to comment on the allegations.

Nvidia shares fell slightly, falling 3.8% in New York trading before recovering. The company’s valuation has soared to more than $3 trillion this year, fueled by its key role in the AI revolution.

French antitrust enforcers have been meticulously gathering information on Nvidia’s market behavior, including its pricing policy and the ongoing chip shortage. The raid on Nvidia’s offices was intended to reveal more details about potential abuses of its market dominance.

“Our position in AI-related markets has led to increased scrutiny of our business from regulators around the world,” Nvidia said in a February filing. The company acknowledged it has been under scrutiny from officials in the U.S., the European Union, China and the U.K.

The European Commission, although currently in an informal review phase, has not yet opened a formal investigation into Nvidia’s practices. French Finance Minister Bruno Le Maire has been outspoken about Nvidia’s overwhelming market share, citing it as a source of “growing inequality” and an obstacle to fair competition.

“If you want to have fair competition, you need to have multiple private companies, not one that has the ability to sell all the devices,” Le Maire said, noting that 92% of GPUs are shipped by Nvidia, underscoring the need for a more balanced market landscape.