US Justice Department probes Nvidia’s $12.9 billion Hugging Face acquisition and sales practices

Nvidia’s $12.93 billion acquisition of open‑source AI hub Hugging Face is now part of a broader U.S. antitrust investigation that also scrutinises the chipmaker’s sales tactics and past acquisitions. The Justice Department (DOJ) has asked whether the deal could let Nvidia dominate a key distribution point for AI models, while regulators continue to examine the company’s broader business practices.

What happened

The DOJ began asking questions about Nvidia’s pending purchase of Hugging Face, a platform where developers share open‑source models, datasets and applications. Two sources familiar with the matter told Reuters that officials are concerned the transaction could give Nvidia control over a neutral bottleneck in the AI ecosystem. The acquisition, announced by Nvidia’s CEO Jensen Huang, is valued at $12.93 billion and Nvidia expects it to close in the first half of 2027. Huang stated that Hugging Face will remain an open platform for the entire AI ecosystem.

Alongside the acquisition, the DOJ’s multi‑year antitrust probe is reviewing Nvidia’s sales practices, including whether the company has pressured customers or offered customers more AI chips if they bought Nvidia networking gear and Groq processors too. The investigation also covers past acquisitions such as the purchase of workload‑orchestration startup Run:ai, the acquisition of supercomputing software firm SchedMD, and a licensing arrangement with chip startup Groq.

Why it matters

If Nvidia were to control Hugging Face, it could influence which models, frameworks, clouds and inference services developers choose, potentially disadvantaging competitors. The DOJ’s focus on distribution control reflects concerns that the acquisition could turn a neutral, open‑source hub into a channel that favours Nvidia’s hardware.

The broader probe into Nvidia’s sales tactics raises questions about the company’s market power. Investigators are looking at practices such as tying chip allocations or offering more AI chips to customers who also purchase Nvidia networking equipment or Groq processors. Such conduct, if substantiated, could reinforce a walled ecosystem that hampers competition from rivals like Advanced Micro Devices, Broadcom and Alphabet.

The inquiry comes at a time when Nvidia’s chips power a large share of AI workloads worldwide. Any regulatory action could affect the firm’s strategy of vertical integration—using cash reserves to acquire complementary AI assets— and may influence investor sentiment, as Nvidia’s shares fell 1.7% after the news broke.

Context

The DOJ’s antitrust scrutiny of Nvidia began under the Biden administration and has continued into the Trump administration, reflecting a staff‑led review that spans multiple political cycles. The agency’s current focus blends the merger review of the Hugging Face deal with a longer‑running investigation into Nvidia’s overall conduct, including past acquisitions of SchedMD and Run:ai and licensing deals with Groq.

Europe is also watching Nvidia. France’s competition authority has opened its own probe into the company’s alleged anticompetitive practices, citing concerns about dependence on Nvidia’s CUDA programming software and potential supply restrictions regarding cloud providers like CoreWeave.

What we don’t know yet

The DOJ has not disclosed the specific evidentiary standards it will apply, nor the timeline for any potential enforcement action. Nvidia and the DOJ both declined requests for comment on the claims. It remains unclear whether the agency will seek to block the Hugging Face acquisition, impose conditions, or simply monitor the deal’s integration.

Regulators have also not clarified the outcome of related investigations into Nvidia’s sales practices. Details about any alleged conditioning of GPU sales on networking or Groq product purchases have not been made public, and no formal charges have been filed.

Further information may emerge as the DOJ’s review proceeds, especially regarding how the agency will balance concerns about market concentration with Nvidia’s role in advancing U.S. AI leadership.