The Justice Department has been asking questions about Nvidia's roughly $12.9 billion agreement to buy Hugging Face, the widely used AI model-hosting platform, according to Reuters, which cited two people familiar with the matter. Officials want to know whether the deal would give Nvidia control of a key distribution channel for AI tools and whether the company could use that position to disadvantage rivals.
Nvidia announced the acquisition in early September, agreeing to pay Hugging Face shareholders $11.9 billion in cash plus roughly $1 billion in equity to retain employees who join the company. Nvidia has pledged to keep the platform open and expects the deal to close in the first half of 2027. Hugging Face has become one of the AI industry's most important pieces of shared infrastructure — a repository where developers publish, download and fine-tune machine learning models — which is precisely what has drawn regulators' attention.
Part of a bigger pattern
The inquiry sits inside a broader Justice Department review of Nvidia's conduct that began under the Biden administration and has continued under the current one. That review also covers Nvidia's roughly $20 billion licensing-and-hiring arrangement with chip startup Groq, which officials have reportedly examined to see whether it was structured specifically to avoid a formal merger review, and Nvidia faces a separate antitrust inquiry in France. A Justice Department spokesperson declined to comment on matters before the department but added pointedly that "it would be inappropriate for the department to conduct a merger investigation under the guise of a conduct investigation" — a remark that, without confirming anything, signals the questions are being taken seriously internally.
Nvidia has been down this road before: the Federal Trade Commission sued in December 2021 to block the company's proposed $40 billion takeover of chip designer Arm, and Nvidia abandoned that deal in 2022 rather than keep fighting it. Nvidia and the Justice Department both declined to comment on the current inquiry, and reporting on it stresses that it remains preliminary — a round of questions, not a lawsuit, and one that doesn't by itself block the Hugging Face transaction from proceeding on its current timeline. Still, Nvidia's own securities filings already flag regulatory approval as a risk that could delay or unwind the deal, and the DOJ's parallel look at the Groq arrangement suggests the company's dealmaking across the AI stack — not just this one acquisition — is now under sustained scrutiny.
