Nvidia Hit With DOJ Subpoenas in Escalating Antitrust Investigation

Nvidia shares tumbled further in after-hours trading Tuesday following a report by Bloomberg that the Department of Justice (DOJ) has issued subpoenas to the chipmaking giant as part of an ongoing antitrust investigation. This news comes on the heels of a brutal day for Nvidia, which saw its stock plummet nearly 10% during regular trading, wiping out a record-breaking $279 billion in market capitalization.

The DOJ probe centers around concerns that Nvidia is leveraging its dominant position in the AI chip market to stifle competition. As reported by Bloomberg, investigators are particularly interested in whether Nvidia makes it difficult for customers to switch to rival chip suppliers and if the company penalizes those who don't exclusively use its products.

Nvidia currently controls over 80% of the data center AI chip market, according to industry estimates. This dominance stems from its early investment in AI technology, particularly its development of the CUDA programming language, a crucial tool for training advanced AI models.

The company has faced increased scrutiny as its AI chips have become essential for major tech players like Microsoft, Alphabet, and Meta. As Nvidia's AI chips have become highly sought after, the company has capitalized by releasing new enterprise software subscriptions and promoting its networking products as essential complements to maximize the performance of its chips. Furthermore, recent versions of Nvidia's chips can now be purchased pre-installed in complete Nvidia-designed server racks, signifying the company's strategic move to transition from a component supplier to a comprehensive systems provider.

Bloomberg reports that regulators are also examining Nvidia's recent acquisition of RunAI, a software company specializing in AI computing management. The concern is that this deal could further cement Nvidia's market dominance and limit customer choice.

For its part, Nvidia maintains that its success is a result of its superior products and that customers are free to choose the best solutions for their needs. "Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them," a company representative said.