France goes after NVIDIA, files antitrust charges following investigation on anti-competitive practices

NVIDIA, the world’s largest maker of chips for both artificial intelligence and computer graphics, is set to face antitrust charges by the French antitrust regulator. This marks the first enforcement action against NVIDIA in this context, according to sources familiar with the matter.

The French authorities’ “statement of objections” or charge sheet follows dawn raids in the graphics cards sector last September, targeting NVIDIA. These raids stemmed from a broader inquiry into cloud computing.

NVIDIA has experienced a surge in demand for its chips following the release of the generative AI application ChatGPT, which has sparked regulatory scrutiny on both sides of the Atlantic.

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In a regulatory filing last year, NVIDIA disclosed that regulators in the European Union, China, and France had requested information about its graphics cards.

Sources indicate that the European Commission is unlikely to expand its preliminary review at this time, given the ongoing investigation by the French authority. The French watchdog recently issued a report highlighting competition concerns in the generative AI sector, particularly the risk of abuse by chip providers.

The report specifically mentioned the sector’s reliance on NVIDIA’s CUDA chip programming software, which is the only system fully compatible with the GPUs essential for accelerated computing. Additionally, it raised concerns about NVIDIA’s recent investments in AI-focused cloud service providers like CoreWeave.

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Companies found in breach of French antitrust rules could face fines of up to 10 per cent of their global annual turnover, although they can also offer concessions to avoid penalties. The US Department of Justice is leading an investigation into NVIDIA as it allocates Big Tech scrutiny with the Federal Trade Commission, according to a source familiar with the matter.

In September last year, France’s competition authority conducted raids at NVIDIA’s local offices on suspicion of anticompetitive practices. The French competition authority disclosed the dawn raid without specifying the practices under investigation or identifying the targeted company beyond stating it was in the “graphics cards sector.” The raid was part of a broader inquiry into cloud computing, focusing on concerns that cloud-computing companies might leverage their access to computing power to exclude smaller competitors.

The operation targeted NVIDIA, as reported by the Wall Street Journal, citing individuals familiar with the raid.

NVIDIA’s chips, initially designed for computer graphics, are well-suited for AI-related computing, contributing to the company’s significant market share.

Following the release of ChatGPT late last year, demand for NVIDIA’s chips surged. With a combination of its chips, other hardware, and powerful software, NVIDIA has achieved approximately 80 per cent market share.

French authorities have recently taken a more aggressive stance against Big Tech. For instance, in September, France suspended sales of Apple’s iPhone 12 and threatened a recall, citing radiation levels exceeding the limit, prompting Apple to release a software update for the French market.

As the investigation into NVIDIA unfolds, the outcome could have significant implications for the chipmaker and the broader tech industry. The French antitrust regulator’s actions demonstrate a robust approach to ensuring fair competition in rapidly evolving technological sectors.