As Regulators Close In, Nvidia Scrambles for a Response

🌈 Abstract

The article discusses the regulatory scrutiny Nvidia is facing due to its dominant position in the AI chip market, with authorities in the EU, UK, China, and the US investigating the company's sales practices and acquisitions. Nvidia is scrambling to build up its Washington presence and legal team to respond to the antitrust concerns.

🙋 Q&A

[01] Nvidia's Dominant Position and Regulatory Scrutiny

1. What is Nvidia's market share in the AI chip market? Nvidia has more than a 90% share of the AI chips sold around the world.

2. What are the key concerns of the regulators? Regulators are concerned about Nvidia's power to determine how a scarce but essential technology (AI chips) is being allocated, and whether the company is engaging in any monopolistic or anticompetitive practices.

3. How is Nvidia responding to the regulatory scrutiny? Nvidia is racing to build up its staffing and offices in Washington, hiring public policy employees and an in-house competition attorney, and developing a strategy to respond to government inquiries.

[02] Nvidia's Acquisition Challenges

1. What acquisition did Nvidia attempt that faced regulatory opposition? Nvidia offered to buy Arm Holdings for $40 billion in 2020, but the deal was abandoned after the FTC sued to block it due to concerns that it would give Nvidia too much power over the industry.

2. What other acquisition is Nvidia facing scrutiny over? Nvidia has offered to acquire the startup Run.ai for $700 million, but the Justice Department plans to review this deal alongside its broader investigation into Nvidia's business practices.

[03] Nvidia's Dominance and Bundling Strategies

1. How has Nvidia expanded its control over the AI supply chain? Nvidia has increased its ownership of critical pieces of the AI supply chain, including acquiring Mellanox (maker of high-speed cables and switches) and introducing its own CPU to deliver better GPU performance. By bundling these products, Nvidia enjoys more pricing flexibility and power than its rivals.

2. How has Nvidia's dominance in AI complicated its acquisition plans? Nvidia's dominant position in AI has led to concerns from competitors and customers about the company gaining too much power over the industry, which has complicated its acquisition plans.