DOJ Questions Nvidia's $12.9B Hugging Face Deal Over AI Distribution Concerns

The U.S. Department of Justice is examining NVDA's planned acquisition of Hugging Face, the open-source AI model hub, asking how the deal could affect competitors. Reuters first reported the inquiry on Oct. 28, citing two people familiar with the matter, and CNBC confirmed it through its own source. The central question, per Reuters as relayed by PYMNTS, is whether owning Hugging Face would hand Nvidia control of a key channel for distributing artificial intelligence. Nvidia shares slipped 1.7% in Wednesday trading, according to Reuters coverage carried by Investing.com.

The questions are folded into a broader, multi-year DOJ review of Nvidia's conduct that predates this deal. Investigators are also looking at Nvidia's sales practices, its strategic investments and past acquisitions such as Run:ai and SchedMD, and its $20 billion Groq licensing arrangement, according to Reuters and PYMNTS. Reuters noted the inquiry may not lead to any action, and no enforcement case has been filed. Seeking Alpha's post on X described it more forcefully as an opened antitrust investigation, a stronger framing than the wire report supports.

Nvidia agreed to the $12.93 billion purchase in early September and expects it to close in the first half of 2027, subject to regulatory approvals, per Reuters. It would be Nvidia's largest conventional acquisition, well above the roughly $6.9 billion Mellanox deal, for a company with about $150 million in annualized revenue (PYMNTS). Nvidia has said Hugging Face will remain an open platform across rival chips and clouds.

What to watch: whether DOJ issues a formal second request, which would signal an extended review and could push the closing timeline, and whether the agency ties the deal to its wider questions about Nvidia's investments in the AI ecosystem. For Nvidia's financials the deal is small; the risk is precedent for how regulators treat its push from chips into software distribution.