The rapid advancement in generative artificial intelligence thanks to graphics processing units has ushered in a new era of innovation and competition, but it has also brought regulatory scrutiny, most recently for Nvidia Corp. and its GPUs.

Nvidia, which is reportedly about to be caught in the crosshairs of antitrust regulations in both France and the U.S., is a prime example of how difficult it can be to walk the fine line between market dominance and anticompetitive practices. Not only is the French government reportedly poised to slap the company with antitrust charges, but the U.S. Department of Justice is reportedly investigating Nvidia’s leadership position in the AI chip market and, in addition, scrutinizing its acquisition of startup Run:ai.

“Nvidia has been enjoying quite a meteoric rise or re-rise in the industry,” said David Linthicum, principal analyst at theCUBE Research. “I don’t think it should be something that we consider anticompetitive. It should be something that we look at as a common pattern in terms of net new technology and innovative technology as it emerges into a new space — in this case, generative AI.”

Linthicum’s recent podcast in the AI Insights and Innovation series from theCUBE, SiliconANGLE Media’s livestreaming studio, focuses on gen AI, delivering the latest news, trends and insights in AI. In this edition, Linthicum talks about French regulators’ pending antitrust charges against Nvidia over its alleged anticompetitive practices and how he thinks the situation is likely to unfold — for Nvidia AI chips and the industry — over the next few years.

French and regulators focus on Nvidia AI chips and proprietary software

As the third most valuable company in the world, Nvidia AI chips and the company’s software system, CUDA, dominate the GPU technology market, Linthicum noted. French regulators are set to charge Nvidia with anticompetitive practices, making it the first country to take such action against Nvidia.

“What they’ve done is basically raided the offices,” Linthicum said. “They’ve gathered what they’re saying is evidence that there’s going to be anticompetitive practices at Nvidia. I’m not here to make a legal diagnosis. It’s just interesting that the antitrust lawsuits are starting to approach Nvidia this kind of early in the market.”

There’s historical precedent to justify the French authorities’ focus on Nvidia’s market dominance. Recall the browser wars and lawsuits against tech giants Microsoft Corp. and Google LLC, among others — all of which were also highly successful in specific tech markets and subject to the same concerns that they would behave in anticompetitive ways.

“Sometimes that occurred, sometimes it didn’t,” Linthicum said. “But at the end of the day, this was about them being very successful in dominating a particular sector of the market. And lots of people, including regulators, being concerned that that’s going to have a negative effect on the competitive behavior of other companies out there.”

The core of the antitrust issue lies in the company’s use of the Nvidia AI chips and its CUDA software, according to Linthicum. Critics posit that this practice creates a closed, proprietary system that makes it difficult for competitors to challenge Nvidia’s preeminence.

“It’s going to be very difficult for you to build something using the CUDA ecosystem and then move it to another set of processors,” Linthicum said. “You’re going to have to pay to rewrite the code and things like that.” However, he noted that this was the case with everything that’s out there, such as native cloud services that are around a particular chipset.

Competitive alternatives will shape the future of AI and GPU technologies

Several companies are stepping up their efforts to develop competitive alternatives to Nvidia AI chips. For instance, Intel Corp. Chief Executive Pat Gelsinger has challenged Nvidia’s CUDA technology, claiming that “inference technology will be more important than training for AI.”

In keeping with Gelsinger’s observation, Cerebras Systems Inc. is launching what it claims to be the fastest AI inference service. In addition, IBM Corp. plans to make Intel’s Gaudi 3 artificial intelligence processor available in its public cloud platform. Moreover, Advanced Micro Devices Inc. has agreed to acquire ZT Systems, which delivers artificial intelligence infrastructure for hyperscale computing providers.

“There’s going to be no single technology that dominates the space,” Linthicum said. “It’s just too big. And companies are not going to buy from a single-source vendor. They’re going to look for innovation coming out of a variety of ways.”

The focus on building more efficient, accessible AI systems drives innovation. Linthicum envisions a future where AI is ubiquitous and seamlessly integrated into various applications.

“AI is going to be on our phone with Apple Intelligence, and we don’t need these big honking systems to run the AI systems,” Linthicum stated. “And there’s lots of people [who] are going to get into that business, where it takes 12 days to build the model from the data that’s out there and $12 million in processor time to make it happen.”

So, what might be the consequences of a possible conviction for Nvidia and the industry in which it operates? The company could face fines of up to 10% of its global annual revenue, according to Linthicum. However, he suspects that the market will have shifted and normalized by the time the case is made. With more competitive technologies in the mix, Nvidia won’t have the outsized influence it has now, though Linthicum expects the company will continue to experience phenomenal growth.

“You have to give them credit where credit’s due,” Linthicum said. “They built an innovative chipset, and they built an innovative software infrastructure that allows people to build extremely powerful AI systems. I think they’re just doing what companies do when they see so much wind behind their sails, and they’re taking advantage of it while they can because they understand that that’s not going to last forever.”

Here’s the complete discussion with David Linthicum, part of the AI and Innovation podcast series on theCUBE:

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