Europe reportedly targets Nvidia with anti-competitive practices in AI

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

Amid rising demands for AI chips, France's competition authority announced it had raided a company in the graphics cards sector, implying a potential regulatory scrutiny faced by Nvidia.

According to WSJ, the French competition authority disclosed a dawn raid was launched on September 27 targeting a player in the graphics card sector, with sources telling WSJ that Nvidia was the target. The development came after a broader inquiry by the French authority into the cloud-computing sector, which sources huge amounts of chips from Nvidia.

Meanwhile, Bloomberg also quoted sources saying that the European Commission had been informally collecting views on potentially abusive practices to see if intervention is needed in the AI chip sector.

Despite the rumors, Bloomberg received no formal responses from Nvidia, the European Commission, the French competition authority, or officials of the French finance and digital ministries. Sources told Bloomberg that the early-stage investigation by the European Commission may not necessarily lead to formal anticompetitive accusations.

Nvidia saw its income triple quarter-on-quarter to US$6.8 billion in the fiscal second quarter of 2024 and surpassed Intel, becoming the top data center chip provider in the calendar year of 2023. Nvidia is estimated to have an over 80% market share in the AI chip sector, and Citi estimated in June that Nvidia's market share could be more than 90% in the future.

If the raid by the French regulator and the inquiry by the EU are credible, Nvidia is facing stricter scrutiny amid the AI wave that leads to a surge in demands for Nvidia's chips. WSJ quoted the French competition authority report saying that increased use of AI will drive growth in demand for cloud services, adding that the regulators must ensure that established players do not hinder the development of smaller or new players.