Nvidia is reportedly under investigation by the Department of Justice concerning its substantial $20 billion non-exclusive agreement with AI chip company Groq. The New York Times, citing two individuals familiar with the inquiry, reports that the DOJ is examining whether the deal was intentionally structured to circumvent antitrust scrutiny.
The agreement, which grants Nvidia non-exclusive rights to Groq's AI chips, particularly those optimized for low-latency inference, could lead to fines for Nvidia if found to be in violation of regulations. The first Nvidia AI rack incorporating Groq chips is anticipated to launch later this year.
According to the report, the DOJ has issued a formal demand for information regarding the Groq deal. A common practice within the AI industry involves framing large agreements as licensing deals rather than acquisitions, a tactic that can potentially bypass mandatory government reviews. The sources who spoke to The New York Times requested anonymity due to the confidential nature of the investigation and emphasized that no definitive findings have been made. They also indicated that the Justice Department might conclude that no wrongdoing occurred.
This reported investigation aligns with calls from senators earlier this year who urged the FTC and DOJ to scrutinize such technology deals. These senators expressed concern that major tech companies might be using these arrangements to consolidate resources and talent without undergoing the typical acquisition and merger reviews.
The senators' letter highlighted that these deals function as de facto mergers, allowing companies to avoid the standard oversight applied to acquisitions and mergers. While regulatory bodies investigating potential evasion of oversight is seen as a positive step, the effectiveness of penalties on companies like Nvidia remains a point of discussion, especially if fines are nominal compared to their substantial revenues.