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The European Commission has unconditionally approved Nvidia’s $700 million bid for Israeli startup Run:ai, a deal that was under scrutiny over competition concerns.
This comes after the case had been referred to the Commission by an Italian competition authority in September asking if the proposed acquisition would not result in competition concerns in the European Economic Area (EEA).
EU gave thumps up to the Nvidia transaction
After some rigorous screening, the EU said it approved the proposed acquisition of the Israeli startup saying it did so unconditionally, adding the transaction would raise no competition concerns in the EEA.
According to a Reuters article, the EU’s probe into the deal focused on activities that could strengthen Nvidia’s control over GPUs, sought-after chips that could divide and process computer tasks. The EU, however, concluded that the deal would not raise any such concerns in the EEA.
Nvidia designs and supplies GPUs for data center applications, while the Israeli startup – Run:ai is a supplier of GPU orchestration software that enables corporate clients to manage their compute infrastructure.
“Since Nvidia is a leading producer of key hardware for AI applications used in the EU and beyond, it was important to carefully check whether its acquisition of start-up software company Run:ai may have negatively impacted competition in critical markets which are key for future competitiveness,” said Teresa Ribera, executive vice-president for clean, just and competitive transition at the European Commission, in a statement.
“But our market investigation confirmed to us that other software options compatible with Nvidia’s hardware will remain available in the market.”
Ribera.
The statement also emphasized that the two companies’ areas of activity do not overlap, while the EU Commission on the other hand has the authority to oversee mergers and acquisitions of large multinational corporations operating in the EU countries.
The EU has scrutinized other big techs apart from Nvidia
Nvidia announced the acquisition of the Israeli startup in April in a deal worth $700 million, a price tag that was to be reviewed by the bloc following requests by Italian regulators under the EU Merger Regulation (EUMR).
When announcing its plans, Nvidia said the deal would help customers make more efficient use of their computing resources.
“Run:ai enables enterprise customers to manage and optimize their compute infrastructure, whether on-premises, in the cloud or in hybrid environments,” Nvidia said in an April 24 blog post.
Run:ai co-founder and CEO Omri Geller revealed the startup has collaborated with Nvidia since 2020, adding that both companies “share a passion for helping our customers make the most of their infrastructure.”
However, regarding the proposed acquisition, the EU Commission revealed in October that Nvidia would need to get approvals and antitrust clearance for the transaction due to the raised concerns that the deal would undermine competition within the sectors in which the two companies operate.
Responding to the EU’s concerns then, Nvidia spokesperson John Rizzo said back then that the company was willing to provide any information to regulators regarding the deal.
“After the acquisition closes, we’ll continue to make AI available in every cloud and enterprise, and help customers select any system and software solution that works best for them.” Nvidia.
These developments also come as the big tech industry has for years enjoyed minimal oversight on the takeover of smaller rival firms prompting regulators to pay more attention to these to ensure fair competition.
Firms like Amazon, Microsoft, and Google have also been scrutinized over their investments in AI startups or other tech firms as they expand their AI operations and stay ahead of peers. The EU has probed the partnership between Microsoft and OpenAI as well as others like Google and Samsung.