Reuters says Nvidia will face French antitrust complaint

Reuters says Nvidia will face French antitrust complaint

(Bloomberg) — French antitrust officials are preparing to indict Nvidia Corp. With alleged anti-competitive practices, Reuters reported, as the world’s most valuable chipmaker faces increasing regulatory scrutiny.

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Reuters, citing unidentified people with direct knowledge of the matter, said that the French agency would be the first in the world to take such a step. The indictment – or statement of objections – will follow a raid on Nvidia’s offices last year.

Nvidia has caught the attention of regulators since it became the biggest beneficiary of an AI spending boom. Its chips — known as graphics processing units, or GPUs — are prized by data center operators for their ability to process the vast amount of information required to develop artificial intelligence models.

France’s antitrust agency declined to comment to Bloomberg, as did Santa Clara, California-based Nvidia.

Nvidia shares fell as much as 3.8% on Monday in New York before mostly recovering. Those amounts have more than doubled this year, pushing the company’s valuation past $3 trillion.

In September, French antitrust forces raided the offices of a company suspected of engaging in “anticompetitive practices in the graphics card sector.” They did not identify the company as Nvidia at the time, but the chipmaker has since acknowledged that France and other entities are studying its business practices.

Nvidia said in a filing in February that officials in the United States, European Union, China and the United Kingdom are also scrutinizing its operations.

“Our position in AI-related markets has led to increased interest in our business from regulatory bodies around the world,” the chipmaker said at the time.

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French antitrust watchdogs have interviewed market players about Nvidia’s key role in AI processors, its pricing policy, chip shortages and the impact on prices. The office raid was aimed at gathering more information about possible abuses of dominance.

Fines for violating French antitrust law can reach 10% of a company’s global annual revenue. The agency listed a fine of 1.24 billion euros ($1.33 billion) as of 2020 as the largest since 2011. Of this fine, 1.1 billion euros were imposed on Apple, while the rest was imposed on two distributors.

In Brussels, the European Commission has been informally gathering views on whether Nvidia has also violated its own antitrust rules, but has yet to launch a formal investigation into anticompetitive behavior.

In November, French Finance Minister Bruno Le Maire said Nvidia’s dominance was causing “increasing inequality” between countries and stifling fair competition. He said 92% of graphics processing units were from Nvidia.

“If you want to have fair competition, you need to have many private companies and not one company that has the ability to sell all the devices,” Le Maire said.

–With assistance from Mackenzie Hawkins and Alan Katz.

(Updates include more on the raid starting in paragraph 6.)

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