Nvidia Antitrust Litigation Moves Forward in French Court

The French competition authority is planning to follow through with its Nvidia antitrust litigation as it fears it might become a monopoly sooner rather than later.

• The charges follow a raid of Nvidia’s French offices last September.
• While the regulator did not specify which practices, they have something to do with pricing and storage control.

The Nvidia antitrust litigation is moving forward as the French antitrust regulator charges it over alleged anti-competitive practices, which might affect chip manufacturers and AI developers alike.

Anti-competitive practices hinder newer and smaller companies from competing with household names. As a result, governments, especially in the last couple of years, have been coming down hard on big companies, be it Big Tech or otherwise, whose practices stopped smaller companies and startups from flourishing for the longest time. However, until now, Nvidia managed to dodge any actions against it.

Last September, the Wall Street Journal reported that, according to people close to the matter, the French competition authority raided Nvidia’s offices in France, as part of a broader inquiry into the cloud computing sector. For its part, the French regulator did not confirm which company or what practices they were investigating.

Eleven Months Later…

Reuters reported earlier this week that, according to people familiar with the matter, the French competition authority is planning to move forward in the Nvidia Antitrust litigation. It will be charging the chip maker over alleged anti-competitive practices.

Following the AI boom, Nvidia chips skyrocketed in value, and data center operators heavily relied on them for their ability to quickly process information – something that AI development needs to thrive.

The French watchdog has been interviewing market players regarding the chip manufacturer’s role in AI processors, questioning Nvidia’s pricing policy, the chip shortage, and its impact on prices.

Across the Atlantic, the U.S. Department of Justice (DoJ) is reportedly looking into Nvidia to see if it qualifies as a monopoly yet.

What Could It Be?

While Nvidia’s specific anticompetitive practices have not been shared along with the antitrust litigation news, there are several possibilities. The chip giant has always been a popular chip supplier, however, recent developments in AI skyrocketed the company toward Stardom. As a result, it became and has maintained its spot as the top company right now, beating Microsoft. Its graphics processing units (GPUs) are data centers’ first choice for their operations.

Then, there’s the matter of pricing. Nvidia’s position gives it an unfair advantage of setting the prices as it sees fit. Operators have no choice other than to pay the said price or acquire their chips from other manufacturers, whose chips may not be on par with Nvidia’s.

Considering that the best AI chips are exclusively Nvidia’s, it can control the stock. Companies have already experienced a shortage of hardware throughout the early 2020s. which drove prices through the roof. At the time, some cards sold at over 300% of their Manufacturer’s Suggested Retail Price (MSRP). Another shortage coupled with Nvidia’s near monopoly will run other chip makers out of business.

But It Won’t Just Be Chips

The possible anti-competitive practices that the Nvidia antitrust litigation might uncover won’t just affect other manufacturers. They will also interfere with the fair competition in the AI sector.

Some of the biggest companies in the world, including Amazon, Google, and Meta, have built their systems on Nvidia AI technologies. And considering the only software compatible with the chips is Nvidia’s own proprietary one, it pushes other manufacturers out of the picture. As a result, these companies and many more will have no choice but to choose Nvidia, negatively impacting their growth.

Also, if Nvidia were to manipulate the prices of its chips, then all of these companies that are in a way stuck with it would either be forced to increase their prices or eat the cost. The former drives away customers and the latter threaten an AI company’s longevity.

Final Thoughts

For the longest there has been somewhat of an even playing field among the chip giants, however, Nvidia and its chips are outperforming the competition. The French watchdog is moving forward with the Nvidia antitrust litigation because they fear that the chip manufacturer might become a monopoly. The EU wants to foster innovation and technological advancements, however, with only giants at the table, there isn’t much room left for the little guys.

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