global antitrust agencies "encircle" nvidia's response: win with strength
2024-09-08
한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina
in response to news that nvidia received a subpoena from the u.s. department of justice related to a potential antitrust investigation, on september 6, nvidia responded to the reporter from china business network: "we have made inquiries to the u.s. department of justice, but have not received a subpoena. nvidia wins by strength, and we are happy to answer any questions that regulators have about our business."
market value evaporated by 4,000 in one week100 million us dollars
the subpoena from the u.s. department of justice will mean an escalation of its antitrust investigation into the company. according to previous reports, the u.s. department of justice has been asking technology companies in recent weeks about nvidia's business practices, including the company's hardware bundling practices.
in addition to bundling sales, the us department of justice is also investigating nvidia's investment and acquisition transactions, including a $700 million deal in april this year to acquire israel's run:ai.
since nvidia released its latest quarterly financial report last week, its stock price has continued to fall in recent days. in the past five trading days, its stock price has fallen by more than 15%, and its market value has evaporated by more than $400 billion. on september 3 alone, the company's stock price fell by nearly 10%, and nvidia founder and ceo huang renxun's net worth lost nearly $10 billion.
although the u.s. department of justice has not yet filed an antitrust lawsuit against nvidia, the potential escalation of antitrust investigations also reflects nvidia's growing control over the artificial intelligence computing market. according to industry estimates, nvidia currently accounts for more than 80% of the market share of data center ai chips.
antitrust agencies believe that nvidia is trying to "bind" users through a powerful software ecosystem platform, making it more difficult for users to switch to other ai chip suppliers.
earlier, the french antitrust regulator's investigation found that ai chip suppliers were at risk of abusing their dominant position. the agency particularly emphasized that the industry's over-reliance on nvidia's cuda chip programming software was worrying, and mentioned that it was uneasy about nvidia's investment in coreweave and other cloud service providers focusing on artificial intelligence.
benoit coeure, chairman of the french competition authority, said that if the investigation yields results, it means that nvidia will be sued by the french antitrust agency. companies that violate french antitrust rules may be fined up to 10% of their global annual turnover.
nvidia said in a regulatory filing last year that regulators in the european union, china and france had asked it to provide relevant information about its gpu graphics cards.
benefiting from its dominance in the field of data center ai chips, nvidia's performance has grown significantly in recent years, with revenues growing by triple digits for four consecutive quarters. in the second quarter of this year, nvidia's sales exceeded $30 billion and its profits more than doubled.
dominance established ten years ago
but nvidia's dominance in the era of artificial intelligence was established long before its competitors amd and intel began to develop ai chips. and nvidia had already laid out its ecosystem a decade ago, and its software platform cuda is a key tool for engineers to train advanced ai models such as chatgpt.
entering the era of generative ai, cuda software has become an important part of nvidia's corporate strategy as a tool for developers to run artificial intelligence programs on nvidia chips. nvidia allows developers to create and deploy generative ai assistants in systems with cuda gpus installed.
as nvidia's ai chip sales continue to increase, the company has also upgraded new enterprise software subscriptions and marketed its network products as an important supplement to help companies fully utilize the performance of the chips. nvidia's chips are usually pre-installed in the entire nvidia-designed server rack, so that nvidia has transformed from a simple parts supplier to an integrated system supplier, which can generate a greater premium effect.
regarding nvidia's business model, sheng linghai, an analyst at research firm gartner, told the first financial reporter: "nvidia's software business is essentially more profitable, which has a lot to do with the structure of the u.s. technology industry centered on software and services."
strictly speaking, nvidia does not officially support the compatibility of the cuda software platform with other chips. however, since cuda has been an open source platform since its launch, some manufacturers, including chinese chip companies, claim that their chips are compatible with cuda. however, some analysts say that the actual efficiency of these chips is still unknown.
sheng linghai said that nvidia's cuda currently does not charge licensing fees, but the software can actually generate higher profits. "but on the other hand, the fact that cuda was completely open source and free of charge from the beginning is the most critical factor for its success," he told the reporter from china business network.
according to the financial report, nvidia's gross profit margin in the second quarter fell from 78.4% in the previous quarter to 75.1%, but it was still higher than 70.1% in the same period last year. the company expects that its full-year gross profit margin will remain around 70%, but it is lower than the 76.4% expected by analysts.
on the other hand, although global antitrust regulators have been keeping an eye on nvidia, there has not yet been very reasonable evidence to prove that it has violated antitrust regulations.
you yunting, partner of shanghai dabang law firm, told the first financial reporter: "the key to antitrust review is whether there is any unfair restriction on competitors and disruption of the competitive order. from the information disclosed so far, no obvious anti-competitive behavior has been found in nvidia, and its software development platform ecosystem is also a legitimate business model, which is not unreasonable in itself."
(this article comes from china business network)
