French competition watchdog raids Nvidia offices

The French Competition Regulator (Autorité de la concurrence) raided the local offices of Nvidia, the world’s largest chipmaker, on suspicions of anti-competitive practices.

According to a press release by the French regulator, “an unannounced inspection was carried out in the graphics cards sector” following authorization from a liberty and custody judge.

The company is “suspected of having implemented anticompetitive practices in the graphics cards sector.” However, no further details were given.

The Wall Street Journal reported that the company in question is Nvidia. The raid is part of the broader investigation into the cloud computing sector, which started in January 2022.

“Such dawn raids do not pre-suppose the existence of a breach of the law which could be imputed to the company involved in the alleged practices, which only a full investigation into the merits of the case could establish, if appropriate,” the press release stated.

Last summer, the French competition authority released a market study and opinion piece where it identified competitive risks.

Nvidia dominates the market for high-performance graphic processors (GPUs) used in machine-learning applications, such as training neural networks like ChatGPT or other large language models. Nvidia claims that services from Alibaba, Amazon, Google, Meta, Microsoft, Snap, Spotify, Tencent, and 40,000 other companies are built and run on Nvidia AI technologies.

While the French competition authority’s market study did not include Nvidia specifically, it noted that “the increasing use of artificial intelligence will drive growth in demand for cloud services,” and considerable computing power is required for complex models.

Meanwhile, the cloud industry is dominated by three “hyper scalers,” Amazon Web Services (AWS), Google Cloud, and Microsoft Azure, having revenues of 46%, 8%, and 17% respectively from infrastructures and public cloud applications in 2021, French watchdog evaluated. Those companies also rely on Nvidia’s chips for AI applications.

“Competition authorities will have to monitor that established players do not hinder the development of smaller or new players based on these technologies,” the previous French Competition Regulator’s study stated.

While this was the first regulatory scrutiny Nvidia has faced in Europe, it may not be the last. The European Commission is examining alleged anticompetitive abuses in chips used for artificial intelligence, to understand if there’s a need for future intervention, according to Bloomberg’s sources.

EU antitrust regulators have not opened a formal investigation into chips used for artificial intelligence, the European Commission said in an email to Reuters.

Nvidia has a near-monopoly in the GPU market, raking in an 80% share. Nvidia’s share price is up by 204% since the start of the year, and the company is now valued at $1.07 trillion.

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