Nvidia pauses some revenue-sharing deals with AI cloud companies
Nvidia has paused some deals under a new financial initiative that provided credit support to AI cloud companies in exchange for a share of their revenue. The Wall Street Journal reported this, citing informed sources; the Reuters report was published by Channel NewsAsia.
Possible antitrust risks
According to the WSJ, some Nvidia employees told current and potential clients that the initiative could trigger antitrust scrutiny. The publication also reported that the company stepped away from the program last week, although it may modify it or incorporate it into another program.
An Nvidia representative said that the business model presented in July, designed to expand access to computing capacity for the AI ecosystem, remains in effect and is evolving due to high demand.
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Terms of the initiative
Nvidia introduced this model less than two months ago to support financing for AI cloud companies to purchase its expensive chips. The company sought to lease computing capacity back if cloud clients could not market it on their own. In addition to revenue from chip sales, Nvidia was to receive a share of clients' revenue from capacity based on its equipment.
According to the WSJ, some potential partners were concerned about the degree of control Nvidia sought over their operations. The company allegedly told certain clients that they could lease chips only to approved customers. Nvidia also signaled that it preferred capacity to be distributed among several smaller AI companies rather than one large client.
