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Nvidia to be investigated for antitrust activity

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3line

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Jun 4, 2004
http://www.bloomberg.com/apps/news?pid=20601087&sid=alxMT1cJX21E&refer=home

Nvidia Receives Subpoena in Federal Antitrust Probe (Update3)

By John Stebbins

Dec. 1 (Bloomberg) -- Nvidia Corp., the third-largest maker of graphics chips for computers, received a subpoena from U.S. Justice Department antitrust prosecutors who are conducting a criminal price-fixing investigation of the industry.

The subpoena made no specific allegations, Santa Clara, California-based Nvidia said today in a statement. The company said it's cooperating. Nvidia shares fell $1.45, or 3.9 percent, to $35.54 at 4 p.m. New York time in Nasdaq Stock Market composite trading.

Federal investigators may be looking at the fact that Nvidia and larger rival ATI Technologies Inc. have similar pricing among some competing product lines, Doug Freedman, an American Technology Research analyst, said today in an interview. Advanced Micro Devices Inc., which bought ATI in October for $5.4 billion, was subpoenaed Nov. 29.

``When looking on the outside, it does seem suspect that the prices are similar,'' Freedman said. The Greenwich, Connecticut-based analyst rates the shares of Nvidia and Advanced Micro ``buy'' and doesn't own them.

ATI is the second-largest maker of computer-graphics chips behind Intel Corp. The combination of Advanced Micro and ATI puts the merged company in direct competition with Intel and Nvidia for sales of graphics chips. Intel hasn't received a subpoena, said Chuck Mulloy, spokesman for the Santa Clara, California-based company.

Probe Confirmed

Justice Department spokeswoman Gina Talamona said the agency ``is investigating the possibility of anticompetitive practices involving the graphics processing units and cards industry.'' She declined to comment on subpoenas to specific companies.

Nvidia spokesman Michael Hara said the graphics industry is ``controlled by outside forces.''

``Intel controls how the hardware works and Microsoft controls how the software works, and we have to work within those parameters,'' he said, referring to Microsoft Corp., the world's largest software company.

Hara said Nvidia is ``playing by everyone else's rules,'' and that the Justice Department wants to ``make sure the playing field is level and fair.'' He said he couldn't be more specific about the information requested.

Back to 1990s

``We don't know a lot -- only that they asked for a lot of documents that go back to the late 1990s,'' Hara said. ``It's really broad in scope.''

Drew Prairie, an Advanced Micro spokesman, declined to comment beyond saying the company received a subpoena.

Unlike ATI and Nvidia, Intel doesn't make stand-alone graphics chips, Mulloy said. Its graphics semiconductors are combined with its other products. Intel also competes with Advanced Micro in computer processors.

Nvidia has been beating ATI to market with faster graphics chips and other technologies, Freedman said. ``It usually goes that the technology leader gets to set the price, and followers try to meet that price,'' he said. ``But, if you look closely, Nvidia's profit margins on those products are usually better than ATI's.''

U.S. antitrust investigators have examined the market for memory chips used in computers and opened a probe in October into possible price-fixing for another type of memory chip used in cell phones, Freedman said.

In the second quarter, Intel got 40 percent of global sales of graphics chips, according to Tiburon, California-based Jon Peddie Research. ATI had 28 percent, and Nvidia had 20 percent.

In sales of stand-alone graphics chips used in desktop computers, Nvidia had 52 percent and ATI had 48 percent, according to Jon Peddie.

To contact the reporter on this story: John Stebbins in Chicago [email protected]
 
how come people will spend $500-$1000 o a cpu when they could buy a cheaper one like e6600 and clock it past x6800 or 3700 san diego and clock it past fx-57? When they have to spend $500+ on the best GPU on the market its gouging ?
 
You don't have to justify it for me; I'm just reporting the news. But I will say that I do believe the tremendous increase in the pricing of video cards in recent years is not simply due to market dynamics. And I don't see the need to get so effing defensive; I've been buying nvidia cards since the days of RIVA 128.
 
Rattle said:
no its due to 768mb of memory and 128 steam proccesors at 1.35ghz
And I'm old enough to remember when 8mb of memory would cost you an arm and a leg. :shrug:

I'm pretty neutral on this news so far, but fanboyish proclamations will get nowhere with me. I'm waiting until more facts get in.
 
Turns out that AMD is also being subpoenaed for the acquisition of ATI.

http://www.nytimes.com/2006/12/02/technology/02chip.html

The Department of Justice has issued subpoenas to the Nvidia Corporation and Advanced Micro Devices as part of an investigation of potential antitrust violations involving graphics chips.

Nvidia, the largest independent maker of graphics chips for computers and other devices, said yesterday that no specific allegations had been made against the company and that it planned to cooperate with the investigation.

Advanced Micro, the maker of computer processors, said late Thursday that it had been subpoenaed. Advanced Micro entered the graphics business in October after acquiring a Canadian company, ATI Technologies.

Nvidia and Advanced Micro each control about 25 percent of the market for graphics chips, which are used in personal computers, mobile handsets, video game consoles and other devices; Intel controls the rest of the market.

A Justice Department spokeswoman, Gina Talamona, confirmed that the department was looking into ”the possibility of anticompetitive practices” involving graphics chips and cards, but she declined to elaborate.
 
so they are investigating amd for trying to be cutting edge and aquiring a GPU giant to incorporate into their future technological advancements?
 
Rattle said:
so they are investigating amd for trying to be cutting edge and aquiring a GPU giant to incorporate into their future technological advancements?
What part of anti-trust do you not comprehend? Nothing has been decided yet, but this is a current investigation into collusive and anti-competitive practices in the graphics card industry. Nothing you have said refutes or undermines the potential validity of this in any way. Talk all you want; I'm not engaging in these fanboyish musings. It seems like to even suggest that the makers of your newest and shiniest toys may be in engaged in somewhat shady activities is utter heresy.

Me, I'm more interested in the legal ramifications and the eventual impact on the industry.
 
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Indeed, I am most fascinated as to how this will play out. I don't bear any particular grudge against Nvidia, ATI, and AMD, having used all three companies' products for years, but I don't regard them as infallible either.
 
Rattle said:
LOL

whatever you say man

Ever taken an introductory business class? Antitrust laws are real, although they lack the teeth they once had.

This has nothing to do with fanboyism or choosing a favorite. Collusion between ATI and NVidia regarding pricing may be very real. This rumor has been floating for almost a year now, and the investigation is no real surprise.
 
i can believe it. i think back a few years to the 9700pro and Ti4800 days. those were top line cards in '02-'03? highest price i recall was a little over $300 for one of em at the time. 300+ for a flagship card, not too bad. fast forward to today,..... man i see prices like $500-600 plus flying around like its nothing. thats a 80-100% jump in price in 3-4 years. around 25% growth a year. somethings up. it doesnt seem like the other parts of the computer market are experiencing such similarly drastic infllation, so why the gfx department? its as if all the computer enthusiests got together a few years back, flashed our wallets at the hardware manfs. and said "take your best shot".
 
The ATI / Nvidia pricing seems to be bassed on tact collusion involving a price leader... hence why ATI always releases after Nvidia.

And why Intel and AMD's pricing schemes are designed to be compeditive against eachother only.


In theory tact collusion cant be proved, and so mainly its a cartel that is totaly illegal in the US, and also why the US and no US firm can be a member of opec.
 
I'm wondering if the courts will see the AMD/ATI as major potential for anti-trust violations. Honestly, does anyone think that a new AMD/NForce board will even compete with a co-branded AMD/ATI joint Northbridge? Deep, deep secrets these big corps. hold, for sure.
 
TollhouseFrank said:
i just wonder if they can do anything at all to nvidia or amd, since neither are based in america.
They could restrict or demand a split of the US office the companies hold.

But personaly, if they let ATI and AMD team up... you cant really call out Nvidia on monopilization given that AMD is trying for a vertical monopoly with the purchase of ATI.
 
That's not monopolistic behaviour but possible collusion. It's definitely not predatory pricing. I see nothing wrong. (Economics Major, 25 yr plan)
 
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