Regulators are investigating potential competitive risks posed by Nvidia's acquisition of Hugging Face, specifically whether the transaction would enable the chipmaker to dominate a critical pathway for AI model deployment.

According to Reuters, the Justice Department is examining how Nvidia's $12.9 billion acquisition of Hugging Face would reshape competition within the AI sector. The inquiry focuses on a central question: could the deal grant Nvidia control over what officials describe as "a fundamental distribution point for AI"? Investigators are also probing whether Nvidia might leverage Hugging Face to disadvantage competitors.

Hugging Face functions as a repository where developers upload and distribute open-source AI models and datasets for public access. Nvidia announced its intention to acquire the platform in September, committing to preserve its open nature. The transaction is projected to conclude during the first half of 2027.

When asked for a statement, the Justice Department declined to provide comment, citing established protocols. The agency did note its commitment to "continue to prioritize advancement of Super Intelligence," referencing the White House's nomenclature for artificial intelligence. Neither Nvidia nor Hugging Face offered responses to inquiries.

This investigation occurs within the context of an extended Justice Department examination of Nvidia's business practices, initiated during the Biden administration. The probe encompasses the company's acquisition activity, its investment portfolio, and its chip distribution strategies, including allegations that Nvidia pressured purchasers. Additionally, Nvidia faces separate antitrust scrutiny from French authorities.

Last month, reports indicated the Justice Department was evaluating whether Nvidia structured a $20 billion transaction with Groq to circumvent merger review procedures. Rather than acquiring Groq outright, Nvidia opted to license its technology and recruit its leadership team.

As the world's highest-valued corporation, Nvidia has leveraged its dominance in AI chip manufacturing to expand into software and model development. The company is simultaneously negotiating with Reflection AI, a developer of open-source AI models in which Nvidia already holds a stake, regarding either an acquisition or expanded investment.

Source: The Next Web