competition law

DOJ subpoenas Nvidia in deepening AI antitrust probe, report says

AI chips, antitrust, Antitrust law, Artificial Intelligence, competition law, GPUs, Jensen Huang, monopoly, NVIDIA, Policy, run:ai / Mike M. / September 4, 2024

The Department of Justice is reportedly deepening its probe into Nvidia. Officials have moved on from merely questioning competitors to subpoenaing Nvidia and other tech companies for evidence that could substantiate allegations that Nvidia is abusing its “dominant position in AI computing,” Bloomberg reported.

When news of the DOJ’s probe into the trillion-dollar company was first reported in June, Fast Company reported that scrutiny was intensifying merely because Nvidia was estimated to control “as much as 90 percent of the market for chips” capable of powering AI models. Experts told Fast Company that the DOJ probe might even be good for Nvidia’s business, noting that the market barely moved when the probe was first announced.

But the market’s confidence seemed to be shaken a little more on Tuesday, when Nvidia lost a “record-setting $279 billion” in market value following Bloomberg’s report. Nvidia’s losses became “the biggest single-day market-cap decline on record,” TheStreet reported.

People close to the DOJ’s investigation told Bloomberg that the DOJ’s “legally binding requests” require competitors “to provide information” on Nvidia’s suspected anticompetitive behaviors as a “dominant provider of AI processors.”

One concern is that Nvidia may be giving “preferential supply and pricing to customers who use its technology exclusively or buy its complete systems,” sources told Bloomberg. The DOJ is also reportedly probing Nvidia’s acquisition of RunAI—suspecting the deal may lock RunAI customers into using Nvidia chips.

Bloomberg’s report builds on a report last month from The Information that said that Advanced Micro Devices Inc. (AMD) and other Nvidia rivals were questioned by the DOJ—as well as third parties who could shed light on whether Nvidia potentially abused its market dominance in AI chips to pressure customers into buying more products.

According to Bloomberg’s sources, the DOJ is worried that “Nvidia is making it harder to switch to other suppliers and penalizes buyers that don’t exclusively use its artificial intelligence chips.”

In a statement to Bloomberg, Nvidia insisted that “Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.” Additionally, Bloomberg noted that following a chip shortage in 2022, Nvidia CEO Jensen Huang has said that his company strives to prevent stockpiling of Nvidia’s coveted AI chips by prioritizing customers “who can make use of his products in ready-to-go data centers.”

Potential threats to Nvidia’s dominance

Despite the slump in shares, Nvidia’s market dominance seems unlikely to wane any time soon after its stock more than doubled this year. In an SEC filing this year, Nvidia bragged that its “accelerated computing ecosystem is bringing AI to every enterprise” with an “ecosystem” spanning “nearly 5 million developers and 40,000 companies.” Nvidia specifically highlighted that “more than 1,600 generative AI companies are building on Nvidia,” and according to Bloomberg, Nvidia will close out 2024 with more profits than the total sales of its closest competitor, AMD.

After the DOJ’s most recent big win, which successfully proved that Google has a monopoly on search, the DOJ appears intent on getting ahead of any tech companies’ ambitions to seize monopoly power and essentially become the Google of the AI industry. In June, DOJ antitrust chief Jonathan Kanter confirmed to the Financial Times that the DOJ is examining “monopoly choke points and the competitive landscape” in AI beyond just scrutinizing Nvidia.

According to Kanter, the DOJ is scrutinizing all aspects of the AI industry—”everything from computing power and the data used to train large language models, to cloud service providers, engineering talent and access to essential hardware such as graphics processing unit chips.” But in particular, the DOJ appears concerned that GPUs like Nvidia’s advanced AI chips remain a “scarce resource.” Kanter told the Financial Times that an “intervention” in “real time” to block a potential monopoly could be “the most meaningful intervention” and the least “invasive” as the AI industry grows.

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Amazon defends $4B Anthropic AI deal from UK monopoly concerns

AI, ai industry, Amazon, Anthropic, anti-competition, cma, competition and markets authority, competition law, foundational models, Policy / Ryan Harris / August 8, 2024

The United Kingdom’s Competition and Markets Authority (CMA) has officially launched a probe into Amazon’s $4 billion partnership with the AI firm Anthropic, as it continues to monitor how the largest tech companies might seize control of AI to further entrench their dominant market positions.

Through the partnership, “Amazon will become Anthropic’s primary cloud provider for certain workloads, including agreements for purchasing computing capacity and non-exclusive commitments to make Anthropic models available on Amazon Bedrock,” the CMA said.

Amazon and Anthropic deny there’s anything wrong with the deal. But because the CMA has seen “some” foundational model (FM) developers “form partnerships with major cloud providers” to “secure access to compute” needed to develop models, the CMA is worried that “incumbent firms” like Amazon “could use control over access to compute to shape FM-related markets in their own interests.”

Due to this potential risk, the CMA said it is “considering” whether Amazon’s partnership with Anthropic “has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets” in the UK.

It’s not clear yet if Amazon’s partnership with Anthropic is problematic, but the CMA confirmed that after a comment period last April, it now has “sufficient information” to kick off this first phase of its merger investigation.

By October 4, this first phase will conclude, after which the CMA may find that the partnership does not qualify as a merger situation, the UK regulator said. Or it may determine that it is a merger situation “but does not raise competition concerns,” clearing Amazon to proceed with the deal.

However, if a merger situation exists, and “it may result in a substantial lessening of competition” in a UK market, the CMA may refer the investigation to the next phase, allowing a panel of independent experts to dig deeper to illuminate potential risks and concerns. If Amazon wants to avoid that deeper probe potentially ordering steep fines, the tech giant would then have the option to offer fixes to “resolve the CMA’s concerns,” the CMA said.

An Amazon spokesperson told Reuters that its “collaboration with Anthropic does not raise any competition concerns or meet the CMA’s own threshold for review.”

“Amazon holds no board seat nor decision-making power at Anthropic, and Anthropic is free to work with any other provider (and indeed has multiple partners),” Amazon’s spokesperson said, defending the deal.

Anthropic’s spokesperson agreed that nothing was amiss, telling Reuters that “our strategic partnerships and investor relationships do not diminish our corporate governance independence or our freedom to partner with others. We intend to cooperate with the CMA and provide them with a comprehensive understanding of Amazon’s investment and our commercial collaboration.”

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Meta defends charging fee for privacy amid showdown with EU

anti-competition, competition law, data privacy, Digital Markets Act, dma, European Commission, European Union, gdpr, General Data Protection Regulation, noyb, Policy / Mike M. / July 1, 2024

Meta continues to hit walls with its heavily scrutinized plan to comply with the European Union’s strict online competition law, the Digital Markets Act (DMA), by offering Facebook and Instagram subscriptions as an alternative for privacy-inclined users who want to opt out of ad targeting.

Today, the European Commission (EC) announced preliminary findings that Meta’s so-called “pay or consent” or “pay or OK” model—which gives users a choice to either pay for access to its platforms or give consent to collect user data to target ads—is not compliant with the DMA.

According to the EC, Meta’s advertising model violates the DMA in two ways. First, it “does not allow users to opt for a service that uses less of their personal data but is otherwise equivalent to the ‘personalized ads-based service.” And second, it “does not allow users to exercise their right to freely consent to the combination of their personal data,” the press release said.

Now, Meta will have a chance to review the EC’s evidence and defend its policy, with today’s findings kicking off a process that will take months. The EC’s investigation is expected to conclude next March. Thierry Breton, the commissioner for the internal market, said in the press release that the preliminary findings represent “another important step” to ensure Meta’s full compliance with the DMA.

“The DMA is there to give back to the users the power to decide how their data is used and ensure innovative companies can compete on equal footing with tech giants on data access,” Breton said.

A Meta spokesperson told Ars that Meta plans to fight the findings—which could trigger fines up to 10 percent of the company’s worldwide turnover, as well as fines up to 20 percent for repeat infringement if Meta loses.

Meta continues to claim that its “subscription for no ads” model was “endorsed” by the highest court in Europe, the Court of Justice of the European Union (CJEU), last year.

“Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA,” Meta’s spokesperson said. “We look forward to further constructive dialogue with the European Commission to bring this investigation to a close.”

However, some critics have noted that the supposed endorsement was not an official part of the ruling and that particular case was not regarding DMA compliance.

The EC agreed that more talks were needed, writing in the press release, “the Commission continues its constructive engagement with Meta to identify a satisfactory path towards effective compliance.”

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