Is Nvidia Abusing its Market Position?

Is Nvidia abusing its market position?

That's the question EU regulators were asking themselves as they began taking a closer look into Team Green's market position, particularly in the wake of explosive interest in generative AI which has propelled Nvidia into the Trillion Dollar Club™.

It all started with news of an early-morning raid on Nvidia's French offices, this past Tuesday, over suspicions that the Santa Clara, Calif.-based chipmaker engaged in anticompetitive practices. Now whether the company actually breached any competition laws is yet to be determined, and we're likely some time off before any such conclusions can be made, but, if proven, the company could be looking to pay as much as 10% of its annual turnover in fines under the EU's competition laws.

That's a hefty amount when you consider the $27 billion the company generated in sales during its last fiscal year. At the maximum penalty level of 10%, Nvidia would be liable to pay around $2.7 billion in fines in the EU. *whistles*

Trouble isn't just brewing in France though. Just days after the raid, Bloomberg News reported the European Commission was investigating whether market participants were abusing their position in the GPU market, particularly given the chips' prominence in powering the ongoing AI takeover revolution. While it may sound like there is a healthy mix of GPU suppliers in the market, the truth is that Nvidia has a near monopoly in the space with its 80% share. The European Commission's investigation will likely predominantly involve the company and its role in AI chips, its price policy, the shortage of chips and its impact on prices, Reuters reported.

The European Commission's *ahem*.. inquiries are still early-stage and might not necessarily result in a formal probe or penalties, the report said.

That said, gamers have long decried Nvidia's abysmal price-to-performance ratio when it comes to its graphic cards over the past three generations, with some 4-series cards being heavily panned for lacking any meaningful performance uplift over their predecessors. But that doesn't seem to bother Nvidia, especially considering that the company is looking to make money elsewhere. Why worry yourself with the small fish when enterprise organizations are bending over backwards trying to get Nvidia hardware designed specifically for AI workloads? No wonder then the company is expecting to make more and more money in the quarters to come.

But where does that leave Nvidia competitors Intel and AMD? Well.. as we've said before, both companies are so far behind that it's not even a fair comparison. Intel is busy trying to catch up tot a Taiwanese competitor, while AMD is trying to gain a foothold with gamers long neglected by Nvidia.

That isn't to say that everything is in Nvidia's favor. A report from The Motley Fool indicates that the company might be more prone to disruption than some may think, particularly given that Nvidia's competitors have long touted open source alternatives that could compete with Nvidia's more expensive hardware. Perhaps this is why AMD CEO Lisa Su recently said, "I'm not a believer in moats when the market is moving as fast as this," referring to Nvidia's perceived AI moat.

Ah well.

AMD ranked #19 on HackerNoon's Tech Company Rankings this week.

\In Other News.. 📰*

• AMD CEO Lisa Su on the AI revolution and competing with Nvidia — via The Verge.
• Elon Musk's X Corp in another legal fight over unpaid rent, this time as plaintiff — via Reuters.
• This is Financial Advice — via YouTube.
• Google launches $399 Chromebook Plus category — via TechCrunch.
• Atari 2600+ sees its future in retro gaming — via CNN.
• How AI works, in plain English: Three great reads — via Axios.
• Apple will issue a software update to address iPhone 15 overheating complaints — via CNBC.

And that's a wrap! Don't forget to share this newsletter with your family and friends! See y'all next week. PEACE! ☮️

— Sheharyar Khan, Editor, Business Tech @ HackerNoon

*All rankings are current as of the time of publication. To see how the rankings have changed, please visit the Tech Company Rankings page.