The European Commission announced on Thursday that U.S. semiconductor giant Nvidia will need to obtain antitrust clearance for its proposed acquisition of Israeli AI startup Run. This move is rooted in concerns that the deal could undermine competition within the sectors both companies operate in, according to Reuters.
The potential for competition distortion has raised alarms among EU regulators, who may require Nvidia to propose concessions to gain approval for the transaction. This scrutiny reflects a broader trend among regulators in both Europe and the United States, who have intensified their oversight of tech firms’ acquisitions of smaller startups. Such acquisitions often spark fears that they may eliminate future competition by absorbing potential rivals, as noted by regulatory bodies.
Nvidia’s intent to acquire Run was first announced in April, with reports estimating the deal to be valued at approximately $700 million, as reported by TechCrunch. Run specializes in technology that enables teams and developers to effectively manage and optimize their AI infrastructure, a service increasingly in demand as AI applications grow more prevalent.
Interestingly, the acquisition does not meet the EU’s financial thresholds that would normally mandate a review. However, after notifying the Italian competition authority, the case was referred to the European Commission, which accepted the request for further investigation. The Commission expressed serious concerns regarding the transaction’s potential impact on competition, particularly within the European Economic Area, which includes Italy.
Related: Nvidia Faces EU Antitrust Scrutiny Over Planned Acquisition of AI Startup Run
In a statement, the Commission highlighted that “the transaction threatens to significantly affect competition in the markets where Nvidia and Run are active.” This acknowledgment underscores the high stakes involved in the deal and the necessity for thorough regulatory examination.
Nvidia has expressed its willingness to cooperate with regulators, stating that the company is prepared to answer any inquiries related to Run. A spokesperson for Nvidia reassured stakeholders, saying, “After the acquisition closes, we’ll continue to make AI available in every cloud and enterprise, and help customers select any system and software solution that works best for them.”
The acquisition comes at a time when Nvidia is enjoying remarkable success, reporting significant profits and revenues driven by its cutting-edge processors, which have become essential for AI applications, including those used for training models like ChatGPT.
