A “moat” is a common term associated with Nvidia and its proprietary products that lock customers into their hardware and software. Another moat breakdown should have them concerned.
The U.S. Department of Justice is looking at breaking up another moat — that of Google — which has locked customers into its search and search advertising markets.
“Google’s illegal maintenance of monopolies in these two markets has been sustained and reinforced for over ten years,” the DOJ said in a court filing.
The DOJ’s filing does not affect Google’s HPC infrastructure, though it does mention delivery of search results in its AI technology. The AI overviews are delivered via TPUs in its data centers.
The DOJ is accusing Google of using Chrome, Android, and other properties to lock down customers to its search and advertising products.
The agency contends that monopolistic behavior limits new entrants to the markets.
“This conduct has also enabled Google to profitably charge supracompetitive prices for text ads while degrading the quality of those ads and the related services and reporting,” the DOJ said.
Customers are not given a choice, and separating search from advertising will break Google’s market control.
“The DOJ is considering remedies that stop Google from using Chrome, Play, Android, and other products to advantage Google search and Google search-related products,” the DOJ said.
It also prevents Google from using those search features in “emerging search access points and features, such as artificial intelligence—over rivals or new entrants.”
The mention of breaking up Google’s moat and its interlocking technology has to worry Nvidia, which is locking customers into its proprietary hardware and software technologies.
Nvidia, which is dominating the AI market with its GPUs, has built a moat around the AI market with its hardware and software technologies. It prioritizes customers and controls the price at which it sells GPUs, which has raised concerns from federal agencies.
The DOJ apparently subpoenaed Nvidia for possible antitrust violations based on its monopolistic behavior in the AI market. Nvidia denied it had been subpoenaed. However, The Information has reported that the DOJ has initiated an investigation into Nvidia’s market behavior.
Nvidia’s behavior of prioritizing top clients that can immediately deploy its GPUs could be a violation of antitrust law, said Angela Luna, technology and innovation policy analyst at American Action Forum, in a research note this week.
“Specifically, regulators are concerned that Nvidia has monopoly power in the market for AI chips, and the concerns suggest that Nvidia could be implementing illegal tying agreements by promoting exclusive use of its chips and complementary AI services,” Luna wrote.
Federal agencies scrutinizing competition concerns in AI markets should “stay focused on practices that harm competition – such as the ability to control prices and tie-in products – rather than simply targeting firms due to their size,” Luna wrote.
Nvidia has denied engaging in monopolistic behavior and said it is not creating roadblocks for new entrants. The competition in the market is growing with AI chips such as AMD’s MI chips, but other startup AI chip makers have found it difficult to find customers.