The Department of Justice is investigating whether Nvidia structured its arrangement with AI chip startup Groq to avoid antitrust scrutiny, according to two people with knowledge of the inquiry cited by The New York Times.
According to The New York Times, the DOJ opened the investigation shortly after Nvidia and Groq announced their deal in December and has since sent Nvidia a formal demand for information. Reuters independently reported the investigation, citing the Times account.
The DOJ hasn't confirmed the investigation. The department declined to comment on matters before the agency under its longstanding policy.
For IT infrastructure buyers and data center operators, the inquiry could affect how AI accelerator vendors structure technology partnerships and talent deals. It could also affect the competitive choices available to customers. Nvidia obtained Groq's inference technology and hired key personnel without acquiring the company, creating a transaction structure that could become more consequential if regulators determine it amounted to an acquisition in practice.
Nvidia paid billions for Groq technology
Nvidia disclosed the financial and accounting details in regulatory filings. It said it didn't purchase Groq's customer contracts, existing products or equity interests. Nvidia reported $13 billion in cash consideration at closing, with another $4 billion payable within a year.
Nvidia also recorded a $2.5 billion developed-technology intangible asset related to the arrangement.
The issue it raises is whether this is in some sense an acquisition in sheep's clothing.
David PearlPartner at Herbert Smith Freehills Kramer
When the agreement was announced, Groq said it would remain independent under then-CEO Simon Edwards and continue operating its cloud business.
Transaction structure draws scrutiny
The combination of a technology license with the hiring of Groq's top executives raises the question of whether the arrangement effectively functioned as an acquisition, said David Pearl, a partner at law firm Herbert Smith Freehills Kramer, who analyzed the Nvidia-Groq transaction.
"The issue it raises is whether this is in some sense an acquisition in sheep's clothing," Pearl said.
The question for regulators, he said, is whether Nvidia structured the deal as a license and hiring arrangement because the Hart-Scott-Rodino Antitrust Improvements Act of 1976 doesn't cover those transactions, letting Nvidia avoid antitrust scrutiny, or whether the structure had legitimate business reasons.
Pearl said the DOJ's reported interest would be consistent with increased scrutiny of large technology companies, AI and compliance with the procedural requirements of the Hart-Scott-Rodino Act.
Senators questioned the deal months before reported DOJ probe
The reported investigation follows congressional scrutiny of the arrangement. Sens. Elizabeth Warren, D-Mass., and Richard Blumenthal, D-Conn., questioned Nvidia about the transaction in March, asking whether its structure was intended to avoid antitrust scrutiny.
The senators focused on Nvidia's combination of a technology license with the hiring of Groq's top executives and other employees. They argued that the arrangement could let Nvidia obtain important competitive assets without acquiring Groq as a company.
Warren, Blumenthal and Sen. Ron Wyden, D-Ore., had separately urged the DOJ and Federal Trade Commission (FTC) to examine similar "reverse acquihire" arrangements involving major technology companies. Such transactions can combine technology and talent without the formal corporate acquisition that would ordinarily trigger merger review, the lawmakers said.
Groq remains independent
Groq has continued to operate independently since the Nvidia agreement. The company raised $650 million in June to expand its AI inference cloud and said it was targeting about 200 megawatts of capacity by the end of 2027.
Whether Groq continues operating as a genuinely independent company could become important to the DOJ's analysis, Pearl said. Regulators could look at factors including whether Groq retains customers and develops new products.
"Even if Groq remains technically independent, if the reality is that it exists now only to serve Nvidia, I suspect DOJ would view that as evidence that the transaction was a de facto acquisition," Pearl said.
If the DOJ ultimately has concerns about the transaction, a court challenge might not be the most likely outcome, Pearl said. The legal issues surrounding transactions structured to avoid a Hart-Scott-Rodino review remain relatively unsettled. Instead, the agencies could seek an agreement requiring Nvidia to notify the DOJ and FTC about future acquihire-like transactions for a period of several years, he said.
Such a settlement would address regulators' concerns about similar transactions without requiring the DOJ to establish a broader legal precedent in court.
TechTarget has contacted Nvidia and Groq for comment and will update this story if they respond.
Shane Snider is a senior news writer at TechTarget, covering AI infrastructure, hyperscale data centers, cloud platforms, and the power and energy systems driving modern compute expansion. You can reach Shane at [email protected] or on LinkedIn.
