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

When news of the DOJ investigation into the trillion-dollar company first broke in June, Fast Company reported that the scrutiny was only intensifying because Nvidia controlled an estimated “as much as 90 percent of the market for chips” capable of powering AI models. Experts told Fast Company that the DOJ investigation could actually be good for Nvidia’s business, noting that the market had barely budged when the investigation was first announced.

But market confidence appeared to be shaken even further on Tuesday, when Nvidia lost a “record-breaking $279 billion” in market value following the Bloomberg report. Nvidia’s losses were “the largest single-day market cap decline ever,” TheStreet reported.

People close to the DOJ’s investigation told Bloomberg that the DOJ’s “legally binding requests” require competitors to “provide information” about suspected anticompetitive behavior by Nvidia as “the dominant supplier of AI processors.”

One concern is that Nvidia is “giving preferential supply and pricing to customers who exclusively use its technology or buy complete systems,” sources told Bloomberg. The DOJ is also reportedly investigating Nvidia’s acquisition of RunAI, as it suspects the deal could force RunAI customers to use Nvidia chips.

Bloomberg’s report builds on a report last month from The Information, which said Advanced Micro Devices Inc. (AMD) and other Nvidia rivals have been questioned by the Justice Department as well as by third parties who could shed light on whether Nvidia may have abused its market position in AI chips to pressure customers to buy more products.

According to Bloomberg’s sources, the Justice Department is concerned that “Nvidia is making it harder to switch to other suppliers and penalizing buyers who don’t exclusively use the company’s artificial intelligence chips.”

In a statement to Bloomberg, Nvidia stressed that “Nvidia wins on the merits, as demonstrated by our benchmark results and the value to customers, who can choose the solution that’s right for them.” Additionally, Bloomberg noted that following a chip shortage in 2022, Nvidia CEO Jensen Huang said his company aims to prevent a stockpile of Nvidia’s coveted AI chips by prioritizing customers “who can leverage its products in ready-to-deploy data centers.”

Potential Threats to Nvidia’s Dominance

Despite the stock’s decline, it seems unlikely that Nvidia’s market dominance will diminish anytime soon after the stock more than doubled this year. In an SEC filing this year, Nvidia boasted that its “accelerated computing ecosystem brings AI to every business” with an “ecosystem” that includes “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 profit than the combined revenue of its nearest competitor, AMD.

Following the DOJ’s most recent major victory, which successfully proved that Google has a monopoly in search, the DOJ appears intent on preempting tech companies’ ambitions to seize monopoly power and effectively become the Google of the AI ​​industry. In June, DOJ antitrust chief Jonathan Kanter confirmed to the Financial Times that the DOJ is investigating “monopoly bottlenecks and the competitive landscape” in AI, and not just Nvidia.

According to Kanter, the DOJ is investigating 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 critical hardware like graphics processing unit chips.” But in particular, the DOJ appears concerned that GPUs like Nvidia’s cutting-edge 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.