The US$12.9 billion acquisition of Hugging Face draws scrutiny from the Department of Justice: Is NVIDIA Corporation (NVDA.US) trying to seize control of AI's "distribution throat"?

Title context: The US$12.9 billion acquisition of Hugging Face draws scrutiny from the Department of Justice: Is NVIDIA Corporation (NVDA.US) trying to seize control of AI's "distribution throat"? Text: According to two people familiar with the matter, the U.S. Department of Justice (DOJ) has opened inquiries into NVIDIA Corporation's (NVDA.US) US$12.93 billion acquisition of open-source platform Hugging Face to understand how the deal will affect competition in the artificial intelligence sector; meanwhile, antitrust enforcers are still pursuing a multi-year investigation into the chip designer's conduct. The two people familiar with the matter said the DOJ's recent inquiries cover NVIDIA Corporation's acquisitions, investments, and sales practices, as well as whether the chip designer has pressured its customers. Regarding Hugging Face, DOJ officials have asked whether the deal would give NVIDIA Corporation control of a foundational distribution node for artificial intelligence. NVIDIA Corporation previously said the acquisition is expected to close in the first half of 2027, adding that Hugging Face will continue to support collaboration with various chips, cloud, and AI providers. The questions raised by the DOJ around the Hugging Face deal, and details of its broader, ongoing pursuit of NVIDIA Corporation's conduct, are being reported for the first time. NVIDIA Corporation has become a cornerstone of the tech economy and the AI boom, investing in major players such as Anthropic and OpenAI, while promoting data center construction globally so that its chips can meet AI's massive computing demands. Any DOJ action could trigger chain reactions across the chip industry and pose a challenge to NVIDIA Corporation's investment and acquisition strategy of extending its influence in AI. A government investigation is not evidence of wrongdoing and may not necessarily lead to litigation. A DOJ spokesperson, citing long-standing policy, declined to comment on any matter the department has not completed. The spokesperson added: "The Department of Justice under President Trump will continue to prioritize the development of Super Intelligence for the benefit of the American people." The broad investigation into NVIDIA Corporation began under former Democratic President Joe Biden and has continued during Republican President Trump's administration. During this period, NVIDIA Corporation has been the world's most valuable company and a unique force in AI. There is no indication that Trump has any involvement in this, and the investigation may not necessarily lead to any action by the DOJ. According to one of the people familiar with the matter, as part of the investigation, the DOJ has reviewed NVIDIA Corporation's acquisition of SchedMD. The deal, reached in December 2025, raised concerns among AI experts about continued access to SchedMD's open-source software, which is used to run supercomputers related to national security. NVIDIA Corporation has committed to maintaining open access and support. NVIDIA Corporation's business and political ties with Trump NVIDIA Corporation holds the largest share of the AI chip market, with these chips providing computing power for ChatGPT, Anthropic's Claude, and similar tools. Numerous startups and chip design companies are challenging its dominance. Competitor Broadcom Inc. (AVGO.US) has teamed up with Alphabet's Alphabet Inc. Class C (GOOGL.US) to design processors, aiming to surpass NVIDIA Corporation's hardware with chips tailored for specific tasks and AI software. AMD (AMD.US) has said it can produce technologically superior hardware and has reached multi-billion-dollar deals with several AI labs and cloud computing operators. Nevertheless, NVIDIA Corporation's market position still makes it an industry force and has helped CEO Jensen Huang build a relationship with Trump, who is pushing U.S. AI. Huang and Trump have frequently appeared together, and the CEO also joined the president's diplomatic trip to China. Trump previously disclosed holding NVIDIA Corporation stock and separately awarded Huang the National Medal of Science and Technology to recognize his role in advancing AI hardware. Trump's critics have previously accused the administration of interfering in DOJ affairs, which the administration denies. Such interference has historically been unconventional. Staff-driven DOJ investigations often last for years and can span from one administration to the next. In addition, the DOJ typically seeks input from companies when assessing proposed mergers. A DOJ spokesperson said: "It is inappropriate for the Department of Justice to conduct merger investigations under the guise of conduct investigations." Review of other NVIDIA Corporation deals According to the people familiar with the matter, the DOJ has reviewed NVIDIA Corporation's conduct following other deals, including its 2025 transaction to obtain technology licenses from chip startup Groq and hire its engineers. Officials have investigated whether NVIDIA Corporation unfairly offered larger allocations of AI chips when customers purchased its networking equipment and Groq processors, raising questions about whether NVIDIA Corporation is using its dominant products to enter new markets, the people said. The DOJ also reviewed NVIDIA Corporation's acquisition of Run:ai, which develops software that helps improve the efficiency of AI chip operations, the people said. Questions the DOJ has raised around the proposed Hugging Face acquisition include clarifying how NVIDIA Corporation might use the AI platform to harm competitors in the AI market and whether NVIDIA Corporation might use the newly acquired business to gain leverage, the people said. Officials are also asking questions about Hugging Face's competitors.