EU Stops Nvidia from Acquiring AI Startup Run for $700 Million Deal
Nvidia tried to buy an AI startup. The European Union prevented Nvidia from purchasing Run:AI for $700 million. Run:AI focuses on managing AI workloads.
The European Union has halted Nvidia’s acquisition of Run:AI, a Tel Aviv-based startup specializing in AI workload management. Our sources reveal that Nvidia announced the deal in April, valuing it at $700 million.
The EU Merger Regulation says that competition authorities in Italy have asked the bloc to look into the deal.
The proposed deal does not meet the EUMR’s normal notification requirements. However, EU law lets a national regulator tell the Commission about a deal if it thinks it would seriously hurt competition in the country and could also impact trade within the Single Market.
“Italy sent a referral request to the Commission in line with EUMR Article 22(1).” The Commission said in a press release Thursday that this provision lets Member States ask the Commission to look into a merger that doesn’t have an EU aspect but does affect trade in the Single Market and could have a big impact on competition in the territory of the Member State making the request.
When the EU agrees to the referral, it means that it thinks the proposed deal meets the requirements for referral under Article 22.
The EU wrote that the deal could significantly impact competition in the markets where NVIDIA and Run:AI work. These markets are likely to be at least those in the European Economic Area, which includes Italy as a referring country.
“The Commission also concluded that it is best suited to look into the deal given its knowledge and track record in similar markets.”
The Commission has now asked Nvidia to take a formal step toward the deal. This implies that the chipmaker must prepare documentation to inform the bloc’s competition authorities about the proposed merger, enabling them to assess its potential impact.
Before completing the deal, Nvidia must notify and obtain Commission approval. A referral may delay closing the deal by a few weeks. However, if the EU’s initial assessment identifies specific issues that concern them, they might proceed with a more comprehensive investigation, potentially resulting in a longer timeline and less certainty.
Regulators Intensify Oversight of Big Tech
Regulators neglected to monitor Big Tech’s strategic acquisitions of startups and smaller competitors for many years. But in the last few years, they’ve changed their tune because they saw how anti-competitive it was to do nothing while a few platform giants ate up market power.
In the rapidly developing field of artificial intelligence (AI), new ideas depend on having access to a limited number of key inputs.
For instance, Nvidia has specifically designed graphics processing units (GPUs) for AI model training. The threat of a repeat of the market concentration problem has made antitrust authorities more alert than ever.
However, no more drastic measures have been taken yet. That’s why it will be fascinating to see what the Commission’s review finds.
John Rizzo, a spokesman for Nvidia, sent an email in response to the EU’s review of the merger. The company wrote, “We are happy to answer any questions regulators may have about Run:AI.”
“Once the deal concludes, we will continue to provide AI across all clouds and businesses, guiding customers in selecting the platform and software that best suits their needs.”
