Nvidia's AI Dominance Attracts Antitrust Scrutiny With Latest Acquisition

Nvidia's acquisition of an Israeli AI startup set off alarm bells in the Justice Department.

Nvidia has been firing on all cylinders lately, riding every hype wave in technology to become the second most valuable technology firm after Microsoft. That Microsoft and Nvidia currently top the list speaks to the high value the market places on artificial intelligence, which both companies have invested heavily in. However, regulators are beginning to worry Nvidia has too much power in AI. The Justice Department is reportedly probing a recent acquisition by Nvidia, which could lead to a full investigation.

It was a relatively low-profile acquisition earlier this year that attracted the government's attention. Nvidia picked up an Israeli firm called Run:ai in April. The companies did not disclose a price, but reports have suggested it was around $700 million. For most companies, that would be a lot of money, but Nvidia's market cap is currently sitting at more than $3 trillion.

The investigation has not been officially detailed by the Justice Department, but five sources have provided an overview to Politico.

Run:ai, which had a previous partnership with Nvidia, built GPU virtualization technology, allowing companies to do more with less silicon. That can be a major advantage when the best AI accelerators, like Nvidia Blackwell, might cost $70,000 each.

The Run:ai investigation is related to but separate from inquiries into Nvidia's business practices. Investigators are concerned that Nvidia's control of roughly 90% of the AI accelerator market would allow it to bundle other services to unfairly stifle competition.

Because Run:ai's technology can reduce the number of AI accelerators a company needs, regulators are concerned that Nvidia may have purchased the firm to bury the technology and force companies to invest in more compute resources. And given Nvidia's dominance, it would probably be the one selling those chips.

 Nvidia's Blackwell chips could cost $70,000 each. Credit: Nvidia

This is not the first time Nvidia's business has attracted antitrust scrutiny. Regulators in the US, UK, and EU all opposed the $66 billion deal, eventually causing Nvidia to walk away. ARM instead went on to launch an IPO, which has seen the company's value nearly double.

And that played out before AI fever pushed Nvidia's value into the stratosphere. If Nvidia continues to grow, this scrutiny will only escalate. There are also numerous regulatory investigations around AI safety and national security that could affect Nvidia's plans.

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