Future of AI is at serious risk from Nvidia’s control of chips, groups warn

Sen. Elizabeth Warren (D-Mass.) has joined progressive groups including Demand Progress, the Open Markets Institute and the Tech Oversight Project in pushing the U.S. Department of Justice to investigate Nvidia’s dominance in the AI ​​chip market over alleged antitrust concerns, Reuters reported.

In a letter to Justice Department chief antitrust enforcer Jonathan Kanter, groups seeking greater oversight of Big Tech raised the alarm that Nvidia’s biggest rivals appear to be “struggling to gain traction” because Nvidia’s “near-absolute market dominance is difficult to challenge” and “funders are wary of supporting its rivals.”

Nvidia is now “the most valuable public company in the world,” the letter said, worth more than $3 trillion after taking near-complete control of the market for high-performance AI chips. Particularly “mind-boggling,” the letter said, was Nvidia’s dominance in the market for GPU accelerator chips, which are the heart of today’s leading AI. The groups called on Kanter to investigate Nvidia’s business practices to ensure rivals aren’t permanently locked out of the competition.

According to advocacy groups that strongly oppose Big Tech monopolies, Nvidia “currently holds 80 percent of the global GPU market share and 98 percent of the data center market share.” That “puts it in a position to squeeze out competitors and set global prices and terms of trade,” the letter warned.

Earlier this year, inside sources reported that the DOJ and the Federal Trade Commission had reached an agreement under which the DOJ would investigate Nvidia’s alleged anticompetitive conduct in the emerging AI industry, and the FTC would investigate OpenAI and Microsoft. However, no formal Nvidia investigation has been announced, prompting progressive groups to push harder for the DOJ to address what they see as a “serious threat to the free market” that “definitely merits DOJ review.”

Ultimately, advocacy groups told Kanter they feared Nvidia would take “control of the world’s destiny in computing,” noting that Nvidia’s cloud data centers not only power “Big Tech consumer products” but also “underpin every aspect of modern society, including the financial system, logistics, healthcare, and defense.”

They claimed that Nvidia was “exploiting” its “scarce chips” to force customers to buy its “chip, networking, and development software in a bundle.” Such bundling and “price fixing,” they warned in their letter, appeared to be “the same kinds of anticompetitive tactics that courts, in response to Justice Department actions against other companies, have found to be illegal” and could “stifle innovation.”

While data from TechInsights suggested that Nvidia’s chip shortage and high cost actually helped companies like AMD and Intel sell chips in 2023, both of Nvidia’s competitors saw their market share wane earlier this year, Yahoo Finance reported.

French antitrust authorities, which have been most closely monitoring Nvidia’s dominant position, opened an investigation into Nvidia last month over antitrust concerns, the letter said. “They became the first law enforcement agency to take action against a chipmaker,” Reuters reported.

Since then, the European Union and the United Kingdom, as well as the United States, have tightened scrutiny, but their apparent delay in conducting an official investigation may only embolden Nvidia, as the company allegedly “believes that its conduct in the marketplace is above the law,” the progressive groups wrote. The questionable conduct includes allegations that “Nvidia continued to sell chips to Chinese customers and provide them with access to computers” despite “a Commerce Department ban on trading with Chinese companies due to national security and human rights concerns.”

“It has been confirmed that their chips are going to blacklisted Chinese entities,” the letter warned, citing a Wall Street Journal report.

Nvidia’s dominance is clearly affecting everyone involved in AI. According to the letter, Nvidia apparently “determines who gets limited supply, sets premium prices, and contractually blocks customers from doing business with competitors,” “alarming” the entire AI industry. This includes “small companies (who have limited supply) and Big Tech AI giants alike.”

Kanter is likely to welcome the letter with open arms. In June, Fast Company reported that Kanter told an audience at an AI conference that there were “structures and trends in AI that should give us pause.” He also suggested that any technology that “relies on massive amounts of data and computing power” could “give dominant companies a significant advantage,” according to a Fast Company summary of his remarks.