On August 1st (Reuters) – U.S. progressive organizations, alongside Democratic Senator Elizabeth Warren, have urged the Department of Justice (DOJ) to initiate an investigation into Nvidia (NVDA.O) due to concerns over the company’s dominant position within the AI-driven chip market. Nvidia’s overwhelming market share is instrumental in fueling the current artificial intelligence (AI) boom.

This week, Demand Progress, along with a coalition of nine other advocacy groups, sent a letter to DOJ’s antitrust division, led by Jonathan Kanter. They requested an examination of Nvidia’s business tactics, particularly as the company skyrocketed in market value, surpassing $3 trillion earlier this summer, thanks to surging demand for chips that power complex generative AI models.

The coalition, known for its focus on anti-monopoly advocacy and governmental oversight of tech companies, voiced particular concerns over the way Nvidia bundles its hardware and software. French antitrust regulators have also taken notice of this bundling practice, with plans underway to possibly charge the company.

“Such a fiercely proprietary stance undermines established industry norms of collaboration and interoperability, effectively locking in customers and hindering innovation,” wrote the advocacy groups in their letter.

In June, Reuters reported on an arrangement between U.S. regulators, assigning the DOJ as the primary agency responsible for any potential Nvidia-related antitrust investigations. Meanwhile, the Federal Trade Commission (FTC) has been focusing on Microsoft (MSFT.O) and OpenAI as part of its own scrutiny.

Addressing the concerns, a spokesperson for Nvidia highlighted the company’s long-standing commitment to AI research, explaining that billions had been invested in computing innovations long before market demand materialized. The company reiterated its dedication to collaboration within its partner ecosystem by propelling markets forward and fostering growth.

"There is no cause for alarm from regulators, as we meticulously comply with all applicable laws. Nvidia's technology remains widely accessible via every major cloud service and directly within enterprises," the spokesperson added. "We stand ready to support the next generation of innovators across industries and are fully willing to cooperate with regulatory bodies."

Nvidia holds an estimated 80% share of the AI chip market, counting among its competitors in-house AI processors created by cloud giants like Google, Microsoft, and Amazon.com (AMZN.O). These custom chips, however, aren’t available for direct sale and are typically offered on a rental basis via cloud platforms.

When excluding those cloud-made processors, Nvidia’s market share nears 100%. This dominance has allowed the company to maintain enviable gross profit margins ranging between 70% and 80%.

Senator Warren, who represents Massachusetts, further expressed her worry regarding Nvidia’s grip on the semiconductor industry. In a statement to Reuters, she warned of the dangers associated with one company monopolizing the future of AI technologies.

“Giving any single entity the power to act as a gatekeeper for AI’s future is perilous, with adverse economic risks. It’s appropriate for the DOJ to investigate Nvidia’s antitrust practices,” she remarked.

A representative from the Department of Justice chose not to provide a formal comment on the situation.

During a Friday interview on CNBC, Kanter, without directly referencing Nvidia, noted that antitrust regulators generally focus on industries where bottlenecks or choke points exist, allowing companies to potentially marginalize smaller competitors.

“Our goal is to ensure active investment and spur development in new technologies and emerging competitors,” Kanter stated.

Last year, Reuters shared data showing a sharp decline in semiconductor investments, as firms struggled to compete with Nvidia’s towering market share.