How Nvidia Brass Should Prepare for a Possible Justice Department Case

“Nvidia’s best approach at this point is to remain open and fully cooperative with the Department of Justice,” Jason Chung, an attorney and clinical professor at New York University’s School of Professional Studies, told Business Insider.

Bloomberg, citing unnamed sources familiar with the matter, reported on Tuesday that the Justice Department has issued subpoenas to Nvidia and other technology companies in connection with an investigation into whether the AI ​​chip giant violated antitrust laws.

Nvidia denied the reports in a statement on Wednesday, saying the public company had “referred” to the Justice Department and had not received a subpoena.

“Nvidia wins on merit, as reflected in our benchmark results and customer value, and customers can choose the solution that works best for them,” an Nvidia spokesperson said. “We have inquired with the U.S. Department of Justice and have not received a subpoena. However, we are happy to answer any questions regulators may have about our business.”

In a new report Wednesday, Bloomberg, citing one person with direct knowledge of the matter, said the Justice Department sent a so-called civil investigative demand to Nvidia seeking information about the company’s $700 million acquisition of Israeli AI startup Run:ai and other elements of its business. The newspaper noted that the document request is commonly referred to as a subpoena.

The Justice Department did not immediately respond to BI’s request for comment.

Nvidia executives should prepare for possible antitrust lawsuit

In any case, legal experts say Nvidia’s management should prepare as soon as possible for a potential antitrust lawsuit from the Department of Justice and do everything possible to cooperate with the federal agency in the investigation.

Chung, the technology law expert, told BI that receiving the civil investigation order “signals that the investigation is at the fact-finding stage.”

He said the civil investigative demand is a tool reserved for certain agencies, such as the Department of Justice and the Federal Trade Commission, to gather information early in a civil investigation.

“Nvidia should provide clear, transparent communication and trust its legal team to guide the interactions. Collaboration demonstrates good faith and can help mitigate potential concerns,” Chung said. “At the same time, it’s important for the legal team to carefully review all documents and communications to prepare for any possible outcomes.”

In addition, Chung said, the AI ​​chip maker should avoid any actions that could be perceived as “hindering.”

“That means responding to CID promptly and thoroughly, while refraining from any behavior that could be construed as influencing witnesses or tampering with evidence,” Chung said. “Internally, it’s important to continue business as usual while still complying with legal guidelines.”

George Hay, a professor at Cornell University School of Law and former chief economist of the Justice Department’s antitrust division, explained that a civil investigative demand is a request for documents or other information, whereas a subpoena is typically a request to appear to testify.

“The investigation is probably still too early for such an investigation, so a CID decision is more likely,” an antitrust expert told BI.

Still, Hay said, at this point Nvidia should be “concerned” about the Justice Department investigation, but that doesn’t mean an antitrust lawsuit is inevitable.

As Hay noted, simply opening an investigation does not mean a company has done anything illegal.

“What happens next depends entirely on the results of the investigation,” Hay said.

Chung added that the reported issuance of a civil investigative demand “demonstrates that the Department of Justice takes information collection seriously.”

“Every legal team needs to think ahead and be prepared for anything that might happen, whether it’s a lawsuit or something else,” he said.

Nvidia, Chung said, “definitely should be prepared for the possibility of an antitrust lawsuit, especially given the way the Justice Department has gone after other major tech companies like Google and Apple.”

“Preparations for a potential escalation should continue to focus on collecting solid internal documentation, analyzing market practices and ensuring compliance with antitrust laws,” Chung said.

“Engaging external legal experts and advisors to assess market strategies remains a prudent step,” he said.