The News
AI chip giant Nvidia’s domination is inviting global regulatory scrutiny from the US, Europe, and China. The US Department of Justice has begun an antitrust probe into Nvidia, The Information first reported, and is reviewing Nvidia’s sales practices and recent acquisitions, according to The New York Times.
It’s the latest tug-of-war between Silicon Valley and Washington as regulators rein in years of alleged anticompetitive business practices by tech giants. The battle intensified Monday after a federal judge ruled that Google’s massive search business violated a 19th century antitrust law. But unlike other tech giants who have been subjected to decades-long scrutiny, Nvidia is scrambling to fend off probes into its newfound market dominance, The Times wrote.
SIGNALS
Nvidia doesn’t have same Washington relationship as other tech giants
“Nvidia wasn’t ready for the attention” it has received from the AI boom and the subsequent scrutiny, The New York Times wrote. CEO Jensen Huang rarely visited Washington, but did so twice last year as the Biden administration expanded its China export controls on technology. “Nvidia’s scramble speaks to the narrow window it has to head off the kind of regulatory attention that has hamstrung other tech giants,” The Times wrote. Regulators’ concerns are driven by the extent of Nvidia’s power in determining how to allocate its AI chips as demand far outpaces supply.
Nvidia might be too young to have a monopoly
While Nvidia’s significant growth over the last year has turned it into the world’s third most valuable tech company, the AI industry is still too relatively nascent to determine if Nvidia has a monopoly over it, MarketWatch columnist Daniel Newman argued in April. Other giants like Advanced Micro Devices and Amazon also have promising AI chip plans. Industry insiders say that there’s no evidence to suggest Nvidia’s business model is harming consumers, and Newman argued that its pricing power “has come more from scarcity and demand rather than monopolistic behavior.”
Big Tech targeted by ‘dueling’ antitrust approaches from the US and EU
Regulators in Brussels and Washington “are taking dueling approaches” on how to rein in Big Tech, Politico reported. The US doesn’t have new laws on its books, and is targeting companies with individual lawsuits through the Federal Trade Commission and the Justice Department, but the upcoming election “could reset Washington’s priorities before any of the cases are resolved.” Meanwhile, Brussels’ digital antitrust law passed in 2022 could take years to implement, giving time to companies to adapt and evade penalties. Still, the different approaches impose “a considerable burden” on tech giants who had become accustomed to years of a light hand, a tech trade group leader said.