To paraphrase The Social Network, you don't get to a three trillion-dollar market valuation without making a few enemies. In this case, it's Nvidia becoming the multi-trillion dollar firm, and it's the DOJ that's the enemy.

As Bloomberg reports, the Justice Department has sent subpoenas to the AI chipmaker in an escalation of its inquiry into whether the company violated antitrust laws.

"Officials are concerned that the chipmaker is making it harder to switch to other suppliers and penalizes buyers that do not exclusively use its artificial intelligence chips," Reuters adds.

A spokesperson for Nvidia stated that the company "wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them."

But the DOJ is not convinced.

"In the inquiry, regulators have been investigating Nvidia’s acquisition of Run:ai, a deal announced in April. That company makes software for managing AI computing, and there are concerns that the tie-up will make it more difficult for customers to switch away from Nvidia chips," the Los Angeles Times explains. "Regulators also are inquiring whether Nvidia gives preferential supply and pricing to customers who use its technology exclusively or buy its complete systems, according to the people."

To aid in its investigation, the DOJ has also questioned Nvidia rivals like AMD, and how the chipmaker was able to captivate roughly 90% of the market seemingly overnight, reports Fast Company.

And it's not just American authorities tracking Nvidia, the French antitrust officials are too. Last September, the company's regional offices were raided by French police in connection with the investigation and a report the French antitrust agency published earlier that summer on Nvidia's cloud computing dominance.

However, Shawn Collins, a partner at Stradling Yocca Carlson & Rauth, told Fast Company: “I’m not as worried about [the probe] because I remember when everybody thought that Microsoft was just too big for anyone to compete with them, and the antitrust regulators were scrutinizing them in the early ’90s. …Now, Microsoft is one of many computer companies in the world.”

‍Influencer

Amidst the investigations of Nvidia, CNBC labeled the company "the world's 'most important' stock". In essence, Nvidia's quarterly earnings calls are the most influential market-mover outside a Fed decision.

To that end, the chipmaker's legal woes are compounded by investors' growing realization that Nvidia cannot grow at its meteoric clip forever. Over the first 2 trading days, the company erased some $300 billion from its value.

Verdict

While Nvidia has been the beneficiary of certain good luck with its chips, any attempts to use its dominance to trap customers into using its product are anti-competitive. Should the DOJ and/or French authorities find evidence of such behavior, Nvidia might see its dominance luck shift.

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