Nvidia's Runai Acquisition Wins EU Approval

Nvidia Corp.'s proposed acquisition of Israeli AI software startup Run:ai has been unconditionally approved by the European Union, reports Bloomberg. The European Commission, in a statement on Friday, determined that the takeover does not pose any competition concerns within the 27-member bloc, despite Nvidia's dominant position in the AI hardware market.

"Our market investigation confirmed to us that other software options compatible with Nvidia's hardware will remain available in the market," said Teresa Ribera, the EU's new antitrust chief, in the statement.

Run:ai, founded in 2018, has been a close collaborator with Nvidia since 2020. While the financial terms of the deal were not disclosed, Israeli newspaper Calcalist estimated the transaction to be worth $700 million. This follows Nvidia's previous major acquisition in Israel, the $7 billion purchase of Mellanox Technologies Ltd. in 2020.

Nvidia's dominance in the AI chip market has drawn scrutiny both domestically and internationally. The company's graphics processing units (GPUs), initially popular in video gaming, are now crucial for training large language models and other AI systems. While companies like Amazon are working to challenge Nvidia's market share, the high demand for these chips—which can cost tens of thousands of dollars each—means they are currently in short supply.

The EU's merger watchdog initiated the investigation following a referral from the Italian competition authority. This was conducted under special powers allowing Brussels to review mergers, including tech deals, that would typically fall below EU review thresholds.

However, these powers have been curtailed by a recent ruling from the EU's Court of Justice in a case concerning Illumina Inc.'s blocked acquisition of Grail Inc. The court determined that the EU's merger watchdog had inappropriately encouraged national regulators to seek EU-level reviews of mergers that would normally be subject to national review. The court stipulated that this system could only be used when national watchdogs already had jurisdiction to conduct their own probe.

This ruling has impacted the EU's ability to scrutinize potentially problematic mergers, including Microsoft Corp.'s investments in Inflection AI.