Nvidia under fire as French regulators prepare antitrust charges

The French antitrust watchdog is accusing Nvidia of anti-competitive practices, according to sources. The investigation by the French antitrust watchdog makes it the first enforcement body to take action against the computer chip maker. The accusations follow a raid by French regulators on Nvidia’s offices in Paris in September.

French competition authorities are close to bringing to light accusations against Nvidia Corp. for anti-competitive practices related to its dominant position in the artificial intelligence market, sources have reported.

Nvidia’s Anti-Competitive Practices

Nvidia has become the world’s leading supplier of graphics processing units and the fast networking hardware needed to build the massive clusters required to train and run the most powerful AI models. By some estimates, Nvidia controls 80% of the AI ​​infrastructure market, a fact that seems to be causing a stir in the French competition authority.

The raid was aimed at gathering evidence for an antitrust investigation and was part of a broader probe by the agency into the cloud computing sector, which is looking into allegations that some U.S. companies may have hindered competition in the country.

French regulators raid

The French antitrust investigation, which included a statement of opposition, or charge sheet, followed early raids in the graphics card sector last September that sources said targeted Nvidia. The raids were the result of a broader investigation into cloud computing.

The world’s largest maker of chips used in both artificial intelligence and computer graphics has seen demand for its chips surge following the launch of its AI app ChatGPT, prompting heightened regulatory scrutiny on both sides of the Atlantic.

French Antitrust Charges Against Nvidia

It’s not yet clear what charges French regulators plan to bring against Nvidia. However, the Autorité published a report last week that listed a number of “risks” for the chipmaker. The company said in a regulatory filing last year that regulators in the European Union, China and France had requested information about its graphics cards.

“The Autorité identified a number of potential risks, such as price fixing, production restrictions, unfair contract terms and discriminatory behaviour,” the report said.

The European Commission is unlikely to expand its preliminary analysis for now, sources said, as the French office is investigating Nvidia.

A French antitrust investigation into competition in the generative artificial intelligence market that began last Friday has pointed to risks of abuse by chip suppliers.

The company has raised concerns about the sector’s dependence on Nvidia’s CUDA programming software, the only system that is 100% compatible with the GPUs that have become essential for accelerated computing.

The report also noted concerns over Nvidia’s recent investments in AI-focused cloud providers such as CoreWeave.

It is difficult to prove the allegations against Nvidia

If French authorities do indeed bring charges against Nvidia, both sides will have a hard time proving their case, said Rob Enderle, an analyst at Enderle Group. Nvidia may have to prove it did nothing wrong.

“But France places much greater emphasis on hard-coded regulations that likely haven’t been updated specifically for AI and current technology in general, potentially giving Nvidia an advantage it wouldn’t have in the UK or the US,” Enderle said.

It is not known whether France has grounds for this, but the analyst said the Autorité may have difficulty proving that the chipmaker was involved in price-fixing.

Penalties for violating French antitrust laws

Companies risk fines of up to 10% of their annual global turnover for violating French antitrust rules, although they can also make certain concessions to avoid punishment.

US Justice Department takes lead on Nvidia investigation, while sharing control of big tech companies with Federal Trade Commission

The chipmaker is also facing tough questions from antitrust regulators elsewhere. The EU is also reportedly investigating the company to see if it is abusing its dominant market position. In the US, the Justice Department is reportedly planning its own antitrust investigation into Nvidia, as it has reportedly “begun to raise concerns” about its leading position in the AI ​​chip market.

Nvidia shares update

Nvidia shares closed high at +0.76 at $124.30