Reuters says Nvidia will be hit with a French antitrust complaint

(Bloomberg) – French antitrust officials are preparing to charge Nvidia Corp. with anti-competitive practices, Reuters reported, as the world’s most valuable chipmaker faces increased regulatory scrutiny.

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

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

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

Nvidia shares fell 3.8% in New York on Monday before mostly recovering. They have more than doubled in value this year, pushing the company’s valuation above $3 trillion.

In September, French antitrust authorities raided the offices of a company suspected of engaging in “anti-competitive practices in the graphics card sector.” The company was not identified at the time as Nvidia, but the chipmaker has since acknowledged that France and other entities were examining 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 regulators around the world,” the chipmaker said at the time.

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

Fines for violating French antitrust law can reach up to 10% of a company’s global annual revenue. The agency lists a fine of 1.24 billion euros ($1.33 billion) in 2020 as the largest it has imposed since 2011. Of this amount, a fine of 1.1 billion euros was 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.

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In November, French Finance Minister Bruno Le Maire said Nvidia’s dominance had caused “growing inequality” between countries and stifled fair competition. He said 92% of the GPUs are from Nvidia.

“If you want there to be 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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