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What just happened? Nvidia's offices in France have been raided by the country's antitrust enforcers over suspicions of anticompetitive practices. While the likes of Google and Apple have long fought anticompetitive charges from regulators, this would be the first time Team Green, which has seen its stock skyrocket since the AI boom began, has been accused of such things.
The Wall Street Journal writes that the French competition authority did not name the location that had been targeted in the dawn raid this week. However, the agency said in a press release that it was "a company suspected of having implemented anticompetitive practices in the graphics cards sector." People familiar with the matter said Nvidia was the subject of the raid.
The WSJ writes that these types of raids occur first thing in the morning and usually involve authorities seizing a company's premises and physical and digital materials, as well as interviewing employees who arrive for work.
Few companies have benefited from the surge in demand for generative AI as much as Nvidia. The company's revenue for Q2 FY2024 came in at a massive $13.5 billion, marking a 101% increase compared to the same period one year earlier. Most of that amount ($10.32 billion) came from its data center-class GPUs used in AI systems - another record and more than double what the same category earned in the previous quarter.
Thanks to the high margins it makes on data center cards – Nvidia generates up to 1,000% profit on every H100 GPU sold – the company made $6.1 billion in profit during the quarter, up 843% YoY and more than triple what it made during the previous quarter. The results mean Nvidia has now moved past Qualcomm to become the world's highest-earning fabless chip designer.
The French authority said it conducted the raid following an investigation into the cloud-computing sector, which examined concerns that smaller companies were being unfairly pushed out by larger firms with access to more computing power. The results of that inquiry, published in June, focused on the three "hyperscalers" dominating the industry: Amazon Web Services, Google Cloud, and Microsoft Azure. Nvidia is not mentioned in the investigation.
The French agency emphasizes that dawn raids "do not pre-suppose the existence of a breach of the law," adding that "only a full investigation" could determine if any crimes have been committed.