Nvidia faces US probe over rival complaints related to sales practices – report

The U.S. Department of Justice has launched a probe into Nvidia (NASDAQ:NVDA) following complaints from rivals that the company allegedly abused its market dominance in selling chips that power AI products, The Information reported.

The U.S. officials have reached out to several Nvidia competitors, including Advanced Micro Devices (AMD) and AI chip startups, to collect information about the complaints, the report added citing people involved in the talks.

The issues range from allegations that Nvidia has threatened to punish customers who also buy products from its rivals, to alleged concerns about its recent acquisition of startups which boosts its reach on the software AI developers use, the report noted.

Nvidia commands about 80% of the AI chip market.

The DOJ investigators are checking if Nvidia pressured some of its chip customers, including cloud providers that rent Nvidia-powered servers to app developers, to buy multiple Nvidia products, such as the networking cables which connect servers to one another, the report added.

Employees of some Nvidia customers fear that if their companies also buy chips from rival companies such as AMD, Nvidia may charge them a higher price for the chips or limit the amount of chips it would sell to them, according to the report.

“We compete based on decades of investment and innovation, scrupulously adhering to all laws, making NVIDIA openly available in every cloud and on-prem for every enterprise, and ensuring that customers can choose whatever solution is best for them,” Nvidia said in a statement to Seeking Alpha.

Nvidia added that it would continue to support aspiring innovators in every industry and market and would provide any information regulators need.

The DOJ has also checking if Nvidia charges its customers more for networking gear if the customer wants to buy AI chips from competitors such as AMD or Intel (INTC), the report noted.

A representative of one of Nvidia’s competitors alleged to the DOJ that customers who buy chips and cables from Nvidia are charged less for each product, including the H100 chip, as part of a bundle than they would if they bought only one of the products, as per the report.

Giving discounts via bundling is not illegal. Antitrust regulations mainly target product tying, when a company subjects the sale of one product on the purchase of another, the report noted.

Separately, Nvidia is also facing scrutiny by the DOJ over possible antitrust issues related to its planned acquisition of Israel-based startup Run:ai.