AI giant Nvidia faces calls from progressive groups to launch antitrust investigation

Nvidia is being called out for an antitrust investigation by Senator Elizabeth Warren, Democrat of Massachusetts, and several progressive groups that have taken issue with artificial intelligence (AI) the company’s dominant position in the AI ​​integrated circuits market.

This AI giant controls about 80% of the market, and surging demand for AI lifted its market capitalization above $3 trillion for a time this summer. The rest of the market is largely those rented out to cloud computing companies like Google, Microsoft, and Amazon Web Services, which are rented out to customers, and when you exclude them, Nvidia’s market share approaches 100%.

Warren and 10 progressive groups, including Demand Progress, sent a letter this week calling on Justice Department antitrust chief Jonathan Kanter to investigate Nvidia’s business practices. The groups raised concerns that Nvidia’s bundling of software and hardware used to run complex models that train generative AI could undermine competition.

“This aggressive, proprietary approach, which is in clear conflict with industry norms on collaboration and interoperability, seeks to lock customers in and stifles innovation,” the groups wrote.

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“Allowing one company to be the effective gatekeeper for the world’s future of AI is dangerous and poses significant economic risks,” Warren added in a statement to Reuters.

Heart	Security	Last	Change	Change %
NVDA	NVIDIA CORP.	108.17	-8.85	-7.56%

An Nvidia spokesperson said in a statement to FOX Business that the company believes the “regulatory system is working as expected to support the development and investment in breakthrough technologies” and noted the company’s long-term investments in AI-enabling technologies.

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“How Moore’s Law was coming to an end, we created an entirely new computing model and invited researchers and scientists, developers, ecosystem partners, customers and employees to explore what was once a zero-billion-dollar market with us,” the company said. “When we launched DGX1 and delivered the first AI supercomputer to OpenAI in 2016, few understood why we spent billions developing it.”

“Today, accelerated computing is sustainable computing. Any application that can be accelerated should move forward, and we are committed to opening new markets and growth opportunities for our partner ecosystem. Regulators don’t have to worry because we meticulously comply with all regulations and ensure that NVIDIA is available openly in every cloud and on-prem for every enterprise. We will continue to support early innovators in every industry and market, and we are happy to provide any information regulators need,” Nvidia added.

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A Reuters report in June indicated that U.S. regulators had reached an agreement under which the Justice Department would oversee potential Nvidia antitrust investigationswhile the Federal Trade Commission will look into Microsoft and OpenAI.

Nvidia shares were down more than 6% by early afternoon Thursday amid the news and a more modest market sell-off that dragged the S&P 500 down about 1.5%. Despite those headwinds, Nvidia shares are up more than 127% year to date.

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Reuters contributed to this report.