Reuters reported that Sen. Elizabeth Warren (D-Massachusetts) has joined progressive groups including Demand Progress, Open Markets Institute and Tech Oversight Project in pressuring the U.S. Department of Justice to investigate Nvidia’s dominance in the AI chip market for potential antitrust violations.
In a letter to Justice Department antitrust enforcement chief Jonathan Cantor, the groups calling for greater scrutiny of big tech companies warned that Nvidia’s biggest rivals “have a hard time competing with Nvidia’s near-total market dominance” and appear to be “struggling to gain traction” because “funders are cautious about backing rivals.”
According to their letter, Nvidia is now “the world’s most valuable public company,” worth more than $3 trillion thanks to its near-total control of the market for high-performance AI chips. “Particularly astonishing,” the letter said, is Nvidia’s dominance of the market for GPU accelerator chips, which are at the heart of today’s leading AI. The group called on Kanter to investigate Nvidia’s business practices to ensure that rivals are not permanently stifled from competing.
According to the advocacy group, which strongly opposes big tech monopolies, Nvidia “currently controls 80% of the global market share for GPU chips and 98% of the data center market,” which gives the company “the ability to crowd out competitors and set global pricing and trade terms,” the letter warned.
Earlier this year, inside sources reported that the Department of Justice and the Federal Trade Commission had reached an agreement under which the Department of Justice would investigate Nvidia’s alleged anti-competitive conduct in the burgeoning AI industry, while the FTC would investigate OpenAI and Microsoft. But no formal investigation of Nvidia has been announced, and progressive groups have been pushing harder for the Department of Justice to recognize what they see as “serious dangers to the open market” and “worthy of Department of Justice scrutiny.”
Ultimately, the advocacy group told Cantor they fear Nvidia “controls the destiny of the world’s computing,” noting that the company’s cloud computing data centers not only power “the biggest tech companies’ consumer products” but also “underpin every aspect of modern society, including the financial system, logistics, healthcare and defense.”
They alleged that Nvidia was “taking advantage” of “scarce chips” to get customers to buy “the chips, networking, and programming software as a package.” Their letter warned that such bundling and “price fixing” appears to be “the same types of anti-competitive tactics that courts have found unlawful in lawsuits brought by the Department of Justice against other companies” and could “stifle innovation.”
TechInsights data suggests that Nvidia’s chip shortages and costs actually helped chip sales for companies like AMD and Intel in 2023, but Yahoo Finance reports that both of Nvidia’s rivals reported market share declines earlier this year.
According to Reuters, France’s antitrust authority has perhaps been the scrutiny maker of Nvidia’s monopoly the most, and last month launched an investigation into the company over antitrust concerns. “The French antitrust authority has become the first enforcement agency to take action against the computer chip maker,” the letter said.
Since then, the European Union, the UK and the US have stepped up scrutiny, but the apparent delay in conducting an official investigation may only embolden NVIDIA, which believes its “market conduct is above the law,” the progressive group wrote. Questionable behavior also includes allegations that “NVIDIA continues to sell chips and provide computing access to Chinese customers” despite “the Commerce Department banning transactions with Chinese companies due to national security and human rights concerns.”
“We have confirmed that the company’s chips are reaching blacklisted companies in China,” the letter warned, citing a report in the Wall Street Journal.
Nvidia’s dominance appears to affect everyone involved in AI: The letter states that Nvidia “decides who receives inventory from limited supply, charges premium prices, and contractually blocks customers from transacting with competitors,” sounding “alarm bells” across the AI industry, including “both smaller companies facing supply disruptions and the large tech AI giants.”
Kanter is likely to respond favorably to the letter. In June, Fast Company reported that Kanter told an audience at an AI conference that “AI has structures and trends that should give pause.” He also suggested that any technology that “relies on massive amounts of data and computing power” “could give a huge advantage to companies that already have an advantage,” according to Fast Company’s summary of Kanter’s remarks.
