Nvidia under investigation by the US Department of Justice for circumventing antitrust scrutiny.

A licensing agreement between Nvidia and AI chip company Groq is putting the $5.4 trillion chip giant under the spotlight of antitrust investigations. The U.S. Department of Justice is reviewing whether Nvidia deliberately packaged the deal as a licensing agreement to circumvent routine government scrutiny of mergers and acquisitions.

According to the New York Times, the U.S. Department of Justice launched an investigation shortly after the agreement was announced last December and issued a formal disclosure request to Nvidia. If the Department of Justice finds Nvidia to have violated regulations, it may impose a fine, but it is not expected to require the deal to be reversed. Sources also emphasized that the investigation is still ongoing, and the Department of Justice may ultimately find Nvidia not to have acted improperly.

The aforementioned investigation represents a new signal of uncertainty for Nvidia shareholders. At the same time, this event reflects regulators' growing vigilance regarding "disguised mergers and acquisitions" in the AI industry—deals that achieve the practical effects of acquisitions by licensing technology and poaching executives, while circumventing the automatic review mechanisms triggered by traditional M&A agreements.

Controversial Transaction: Licensing Agreement or Disguised Acquisition?

According to information disclosed by both parties, Nvidia and Groq reached a "non-exclusive licensing agreement" last year, through which Nvidia obtained the right to use Groq's custom chips designed specifically for AI inference applications. The core dispute over the deal lies in personnel arrangements: Groq CEO Jonathan Ross and COO Sunny Madra both joined Nvidia after the agreement was reached.

This structure has drawn the attention of regulators. In January, Federal Trade Commission Chairman Andrew Ferguson told Bloomberg that the agency had begun reviewing whether such transactions were deliberately designed to circumvent regulatory scrutiny. Senators Elizabeth Warren and Richard Blumenthal also wrote to the FTC and the Department of Justice, requesting investigations into several similar transactions, including the Nvidia-Groq partnership. In their letter , the two senators stated that such transactions "are essentially disguised mergers and acquisitions, allowing companies to combine talent, information, and resources while clearly attempting to circumvent the regulatory scrutiny applicable to mergers and acquisitions."

In response to the investigation, Nvidia spokesperson John Rizzo issued a statement characterizing the collaboration as a successful example of the US innovation ecosystem.

A Justice Department spokesperson declined to comment on "any matter the Justice Department is currently reviewing," but stated, "The Justice Department will continue to prioritize affordability for people across all sectors of the economy."

Groq: Valued at $7 billion, with complex investor backgrounds.

Founded in 2016, Groq was valued at $7 billion according to PitchBook data before reaching an agreement with Nvidia. Despite the agreement with Nvidia, Groq continues to operate independently, providing cloud computing services, and announced the completion of a $350 million funding round last August, in which Nvidia also participated.

Groq's investor lineup has attracted considerable attention, including Samsung, BlackRock, and 1789 Capital—the latter's partner being Donald Trump Jr., the son of the president. Analysts believe this investor background adds extra political sensitivity to the regulatory investigation.

The AI industry's "licensing agreement" model is under systematic scrutiny.

The Nvidia-Groq case is not an isolated one. In recent years, the AI industry has seen a surge in deals centered on licensing technology and poaching executives, with tech giants like Microsoft and Amazon signing similar agreements with numerous AI startups. These arrangements often do not trigger the reporting thresholds of traditional M&A transactions, thus remaining outside the scope of automatic regulatory review.

Some of these deals leave startups with their core resources stripped away, leaving them nearly "hollowed out," while others, like Groq, are allowed to continue expanding. Regulators are working to clarify whether this structural arrangement, where a few companies continue to concentrate control over AI infrastructure, poses a substantial threat to the competitive order.

Nvidia's sheer size exacerbates this issue. As a leader in AI hardware, Nvidia leverages its substantial financial resources to continuously invest in AI startups, earning it the reputation as the "central bank" of Silicon Valley's AI ecosystem. Its CEO, Jensen Huang, maintains close ties with the Trump administration. This complex web of political and business relationships makes the trajectory of this investigation even more unpredictable.

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