On December 12th, reporter Li Ling from Nandu News reported that Nvidia China released a statement on its official Weibo account refuting rumors, stating that Nvidia will cut off its supply to the Chinese market, which is a false rumor. Nvidia stated in a statement that China is an important market, and the company adheres to the original intention of putting customers first, and will continue to provide the highest quality and efficient products and services to Chinese customers.
On the evening of December 9th, the State Administration for Market Regulation announced that it had launched an anti-monopoly investigation into Nvidia in accordance with the law. After the news was released, on the 9th local time, Nvidia's stock price fell 2.55%, closing at $138.81 per share, and its market value evaporated by $88.9 billion (about 640 billion yuan) overnight. Subsequently, Nvidia responded by stating that it is willing to answer any questions that regulatory agencies may have regarding its business.
After being subjected to anti-monopoly investigations, it was reported that Nvidia's Tmall flagship store had all products removed from the shelves. However, according to Interface News, informed sources have revealed that the "Baby" section of the "NVIDIA GeForce Flagship Store" has always been empty. The flagship store is only used for displaying products and does not sell directly, so there is no such thing as "delisting".
On December 12th, Southern Metropolis Daily reporters found that there were still related product displays on the "homepage" of Nvidia's Tmall flagship store. Clicking on the "category" page to browse product information can also guide you to the flagship stores of Asus, Lenovo, HP and other manufacturers through links to place orders and purchase.
On Monday (9th) of this week, the news of this chip giant being involved in an anti-monopoly investigation in China has attracted widespread attention. According to the notification from the State Administration for Market Regulation, Nvidia is suspected of violating the Anti Monopoly Law of the People's Republic of China and the Announcement of the State Administration for Market Regulation on the Anti Monopoly Review Decision on the Approval of Nvidia's Acquisition of the Equity of Melos Technology Co., Ltd. with Additional Restrictive Conditions (State Administration for Market Regulation Announcement [2020] No. 16). Therefore, it has been decided to initiate an investigation into Nvidia.
This announcement directly points to an acquisition case by Nvidia five years ago. In March 2019, Nvidia acquired the entire equity of Israeli chip manufacturer MicroOS for a huge sum of $6.9 billion. According to the Anti Monopoly Law, after the turnover of the trading parties participating in the concentration of operators reaches a certain threshold, they need to undergo anti-monopoly review before the concentration can be implemented.
In April 2020, the State Administration for Market Regulation made a decision to approve this cross-border acquisition with additional restrictive conditions, on the grounds that it has or may have the effect of excluding or restricting competition in the global and Chinese GPU accelerator, dedicated network interconnection equipment, and high-speed Ethernet adapter markets.
The above conditional approval decision states that in the GPU accelerator market, Nvidia's global and Chinese market shares at that time exceeded 90%; Mailuosi's market share in the specialized network interconnection equipment market and high-speed Ethernet adapter market far exceeds other competitors in the market, with a global and Chinese market share of over 50%.
Antitrust enforcement agencies are concerned that with such market power, centralized entities may exclude or restrict market competition through bundling, refusal to trade, and other actions. Therefore, the State Administration for Market Regulation attached restrictive conditions when releasing this transaction, requiring Nvidia, Maxus, and the centralized entity to fulfill seven obligations, two of which involve confidential information not being disclosed.
These commitments, which are still valid for 6 years, specifically include that when Nvidia sells Nvidia GPU accelerators and Maxus high-speed network interconnection devices to the Chinese market, it shall not be forced to bundle or attach any other unreasonable transaction conditions in any way; Customers shall not be hindered or restricted from purchasing or using the above-mentioned products separately. At the same time, based on the principles of fairness, reasonableness, and non discrimination, we will continue to supply Nvidia GPU accelerators, Maxus high-speed network interconnection devices, and related software, accessories, etc. to the Chinese market.
It is currently unknown which specific commitment Nvidia has violated in this anti-monopoly investigation. However, it is worth noting that Nvidia has gradually stopped supplying multiple GPU accelerator products to China in recent years, citing export controls.
Deng Feng, a professor at Peking University Law School, recently pointed out in a signed article in the Economic Daily that export controls are not a natural reason for Nvidia to violate its commitments and fail to fulfill its legal obligations. Even if Nvidia cannot fulfill its previous commitments, it has an obligation and responsibility to come up with new alternative commitments to eliminate the negative impact of competition arising from its merger.
According to Southern Metropolis Daily reporters, China's anti-monopoly law enforcement departments have made three penalty decisions against relevant operators for violating the restrictive conditions attached to business concentration. At that time, the maximum fine amount reached 300000 yuan. However, the revised Anti Monopoly Law, which came into effect on August 1, 2022, has raised the upper limit of penalties for illegal concentration of business operators (500000 yuan) and introduced punitive penalty clauses.
According to Article 58 and Article 63 of the Anti Monopoly Law, the State Administration for Market Regulation has the right to impose administrative penalties on Nvidia, such as ordering it to stop implementing concentration, disposing of its shares or assets within a specified period of time, transferring its business within a specified period of time, and taking other necessary measures to restore it to its pre concentration state, and imposing a fine of less than 10% of the previous year's sales revenue; If the circumstances are particularly serious, the impact is particularly severe, and the consequences are particularly serious, a fine of not less than two times but not more than five times the above-mentioned fine amount may be imposed.