Exclusive-Nvidia set to face French antitrust charges, sources say

FILE PHOTO: The logo of Nvidia Corporation is seen during the annual Computex computer exhibition in Taipei, Taiwan May 30, 2017. REUTERS/Tyrone Siu/File Photo

By Foo Yun Chee

BRUSSELS (Reuters) -Nvidia is set to be charged by the French antitrust regulator for allegedly anti-competitive practices, people with direct knowledge of the matter said, making it the first enforcer to act against the computer chip maker.

The French so-called statement of objections or charge sheet would follow dawn raids in the graphics cards sector in September last year, which sources said targeted Nvidia. The raids were the result of a broader inquiry into cloud computing.

The world's largest maker of chips used both for artificial intelligence and for computer graphics has seen demand for its chips jump following the release of the generative AI application ChatGPT, triggering regulatory scrutiny on both sides of the Atlantic.

The French authority, which publishes some but not all its statements of objections to companies, and Nvidia declined comment. The company in a regulatory filing last year said regulators in the European Union, China and France had asked for information on its graphic cards.

The European Commission is unlikely to expand its preliminary review for now, since the French authority is looking into Nvidia, other people with direct knowledge of the matter said.

The French watchdog in a report issued last Friday on competition in generative AI cited the risk of abuse by chip providers.

It voiced concerns regarding the sector's dependence on Nvidia's CUDA chip programming software, the only system that is 100% compatible with the GPUs that have become essential for accelerated computing.

It also cited unease about Nvidia’s recent investments in AI-focused cloud service providers such as CoreWeave.

Companies risk fines of as much as 10% of their global annual turnover for breaching French antitrust rules, although they can also provide concessions to stave off penalties.

The U.S. Department of Justice is taking the lead in investigating Nvidia as it divvies up Big Tech scrutiny with the Federal Trade Commission, a source familiar with the matter has told Reuters.

(Reporting by Foo Yun Chee; Editing by Jan Harvey and David Holmes)