The French Competition Authority, Autorité de la concurrence, carried out a raid on NVIDIA’s local offices in the early hours of Wednesday morning on suspicion of the company’s engagement in anti-competitive practices.
While the French Competition Authority didn’t name the California-based AI chip manufacturer in the press release released on Wednesday, a report from The Wall Street Journal (WSJ) claimed that it was NVIDIA citing sources familiar with the matter.
The press release states that a custody judge authorized the raid on the premise, and such raids do not imply a violation of the law, the French authority clarified.
“Following authorisation from a liberty and custody judge, the investigation services of the Autorité de la concurrence carried out a dawn raid at the premises of a company suspected of having implemented anticompetitive practices in the graphics cards sector,” the French competition authority wrote in a press release.
“Such dawn raids do not pre-suppose the existence of a breach of the law which could be imputed to the company involved in the alleged practices, which only a full investigation into the merits of the case could establish, if appropriate.”
The antitrust agency did not provide any information on how the raid took place or whether any artifacts were seized. However, as per WSJ, such early morning raids typically involve the confiscation of the company’s physical and digital materials, as well as interviewing employees who come to the office.
Interestingly, the French competition authority noted that the raid followed as part of a broader investigation into the competition conditions in the cloud computing market.
According to the agency, the inquiry revolves around concerns that major cloud-computing companies may exploit their computing power to exclude smaller competitors from the market.
This links to a study published on June 29, 2023, that doesn’t label NVIDIA but names three hyper scalers: Amazon Web Services (AWS), Google Cloud, and Microsoft Azure, that dominate the cloud computing sector and potentially hinder competition development.
According to the study, these three hyper scalers represent 80% of the spending growth in public cloud infrastructures and applications in France in 2021.
Amazon and Microsoft have captured 46 % and 17 % respectively of revenues from IaaS and PaaS services in 2021. Given their financial capacities and their digital ecosystems, these hyperscalers are in a position to hinder competition development.
This recent development indicates NVIDIA’s increasing dominant position and critical role in supplying chips that are used for training large language models (LLMs) and other artificial intelligence (AI) software. All these make the AI chipmaker fall under the radar of these regulators.
The French regulator is exploring potential measures under national competition laws and the European Data Act to curb NVIDIA’s rule in the chipmaking market.
NVIDIA has declined to comment on the WSJ story.