Report from Reuters
In Brief – Nvidia’s giant business deal with OpenAI, with the market-leading AI chipmaker investing up to $100 billion in OpenAI, allowing the market-leading AI chatbot developer to buy millions of chips from Nvidia that will be housed in new datacenters, is likely to raise antitrust questions. Nvidia holds more than half of the market for the GPU chips that run AI data centers while ChatGPT is reported to hold 80% of the chatbot market. In the US, both company’s home market, the Trump Administration’s AI policy has been to promote investment and innovation through a deregulatory disposition, but Gail Slater, the top antitrust official in the US Department of Justice, recently said that protecting AI competition through antitrust enforcement is part of the President’s AI plan. Noting that AI-industry antitrust investigations begun last summer during the Biden Administration continue, Slater said, “the competitive dynamics of each layer of the AI stack and how they interrelate, with a particular eye towards exclusionary behavior that forecloses access to key inputs and distribution channels, are legitimate areas for antitrust inquiry.”
Context – AI regulation was in the ascendency in 2024. The EU enacted its huge AI Act, and the UK and Japan appeared to be moving in the direction of legislation. US, EU and UK antitrust regulators signed a joint statement on efforts to promote competition in AI. Each agency opened investigations of Microsoft’s relationship with OpenAI, and they began scrutinizing other deals between digital giants and AI startups. But momentum shifted last fall, with President Trump staking out a strong pro-industry position which is now reflected in his anti-regulatory AI Action plan. The UK and Japan have since stepped back from AI regulation, and the pace of the EU’s AI rules is now being criticized by European business leaders and noteworthy current and former government officials. The likelihood that US or UK regulators will meaningfully stand in the way of this deal is low, although both will likely show they are looking at it, while the EU, with its heightened focus on digital sovereignty, is a more likely wildcard. Market concerns with potentially circular financing and an AI infrastructure investment bubble will take precedence.