(Updates with details from story on French antitrust charges

against Nvidia ( NVDA ))

By Supantha Mukherjee and Martin Coulter

STOCKHOLM/LONDON, July 2 (Reuters) - France's antitrust

regulator is set to charge Nvidia ( NVDA ) in relation to

alleged anti-competitive practices, Reuters reported on Monday,

making it the first enforcer to act against the computer chip

maker.

The move comes after dawn raids by French authorities in

September last year, which sources said targeted Nvidia ( NVDA ). The

raids were the result of an ongoing probe into the cloud

computing industry.

The French authority and Nvidia ( NVDA ) declined to comment.

European regulators have launched a string of actions seeking to

prevent Big Tech companies from thwarting competition.

WHY IS NVIDIA IMPORTANT?

Nvidia ( NVDA ) makes graphics processing units (GPUs), chips that

break down a computer task into smaller pieces and processes

them together, making it faster than traditional methods.

The GPUs are highly sought by technology companies for their

data centres, by video game console makers, and even by bitcoin

miners to solve the complex math puzzles that earn them more

cryptocurrency.

Nvidia ( NVDA ) has a near-monopoly of the GPU market with an 84%

market share, leagues ahead of rivals Intel ( INTC ) and AMD

. With a market valuation of $1 trillion, Nvidia ( NVDA ) is also

becoming crucial to fast-developing artificial intelligence (AI)

technology.

Almost all computing systems used to power services like

ChatGPT - OpenAI's blockbuster generative AI chatbot - use GPUs

from Nvidia ( NVDA ).

While GPU prices start from over $1,000, the ones favoured

by AI companies can cost well over $10,000. Specialized AI

systems from Nvidia ( NVDA ) such as DGX A100 start at $199,000, or the

price of four Tesla Model 3s.

Oracle, for example, said it has been spending billions of

dollars on Nvidia ( NVDA ) chips.

WHY IS FRANCE INTERESTED?

As well as hardware, Nvidia ( NVDA ) has an edge in the software side

of the supply chain.

In an industry report issued last Friday, the French

watchdog cited the risk of abuse by chip providers.

In particular, it raised concerns around the sector's

dependence on Nvidia's ( NVDA ) CUDA chip programming software, the only

system that is 100% compatible with the GPUs that have become

essential for accelerated computing.

Companies risk fines of as much as 10% of their global

annual turnover for breaching French antitrust rules, although

they can also provide concessions to stave off penalties.

Britain's FCA also issued a report on the competitive

functioning of the cloud computing sector last year, looking at

the market dominance of cloud companies such as Amazon ( AMZN ), Google

and Microsoft ( MSFT ) and whether that affects competition.

In that report, the authority said several developments,

such as large language models and cloud gaming, would

potentially have an impact on the competitive functioning of the

sector.

Nvidia ( NVDA ) has a presence in both sectors, and if any startup is

planning to create an AI company, they would depend on Nvidia ( NVDA )

for the chips.

ARE OTHER COUNTRIES INVESTIGATING NVIDIA?

The U.S. Department of Justice is taking the lead in

investigating Nvidia ( NVDA ) as it divvies up Big Tech scrutiny with the

Federal Trade Commission, sources told Reuters.

In September, Bloomberg News reported the European Union was

examining alleged anticompetitive practices in the AI chip

industry, but has since confirmed there is no formal

investigation into Nvidia ( NVDA ).

Meanwhile the FCA is examining whether the competitors of

big cloud companies are facing any obstacles.

The authority has tools to protect competition under the law

of abuse of a dominant position, the law of cartels, abuse of

economic dependence and concentration control, and the law on

restrictive competition practices.