DOJ Has Questioned Nvidia's $12.93 Billion Hugging Face Deal, Two People Familiar Say

The U.S. Department of Justice has made inquiries about whether Nvidia's $12.93 billion deal to buy Hugging Face would hurt competition in artificial intelligence, according to two people familiar with the matter who spoke to Reuters. The reporting was published Wednesday, Oct. 28.

Hugging Face runs the open-source platform where developers share and download AI models. Nvidia, the AI chip giant, has said the acquisition is expected to close in the first half of 2027.

What DOJ officials are asking

According to the two people, Justice Department officials have asked whether the deal would let Nvidia capture "a fundamental distribution point for AI." Hugging Face is where a huge share of AI models live, and Nvidia sells the chips those models run on.

The same people said the department's recent questioning is broader than one deal. It covers Nvidia's acquisitions, investments, sales practices, and whether the company has pressured its customers.

The inquiry sits inside an antitrust investigation of Nvidia's conduct that has run for years. It began under former President Joe Biden and has continued under President Donald Trump. Reuters reported there is no indication Trump has any involvement.

What Nvidia and DOJ say

A DOJ spokesperson declined to comment on matters before the department, citing longstanding policy. The spokesperson added: "This DOJ under President Trump's leadership will continue to prioritize advancement of Super Intelligence for the betterment of the American people."

Nvidia declined to comment on the reported inquiry. Hugging Face did not respond to a request for comment.

Nvidia has said publicly that Hugging Face would keep supporting work with a range of chip, cloud and AI providers. That is the company's answer to the distribution-point concern: the platform stays open to Nvidia's rivals.

Government investigations are not evidence of wrongdoing and do not necessarily end in lawsuits. No charges, complaint or formal challenge to the Hugging Face deal has been filed.

Other Nvidia deals in view

One of the two people said the DOJ has also examined Nvidia's December 2025 purchase of SchedMD. SchedMD makes open-source software that helps run supercomputers, including ones relevant to national security. The deal worried AI specialists about their future access to that software. Nvidia has vowed to continue open access and support.

The Groq transaction is also under scrutiny from another direction. Nvidia's roughly $20 billion deal with the AI chip startup was structured as a $17 billion license fee paid to all backers plus a separate $3 billion pool of Nvidia stock for engineers who moved over. A proposed class action unsealed Monday, Oct. 26, in Delaware's Court of Chancery challenges how it was done. Tom's Hardware also reports that the deal is already under a reported DOJ inquiry.

The plaintiffs, former Groq engineers Benjamin Serebrin and Joshua Rubin, sued Groq's former board and former CEO Jonathan Ross. They allege the board handed Nvidia both the company's technology and the team that built it, and kept billions from other shareholders. The plaintiffs themselves concede that "no Delaware decision has directly answered the question this case raises."

Those are allegations, and Groq disputes them. The company told CNBC the suit is "meritless" and that its licensing agreement with Nvidia "delivered exceptional value for Groq, our investors, and our employees."

Nvidia's annual report gives numbers on the structure. It books $14.4 billion of the license as goodwill, "primarily attributable to the workforce and future development of the licensed technology," plus $2.5 billion for the technology itself. The filing also states that "no customer contracts, existing products, or equity interests were purchased." Of the total, $13.0 billion was paid at closing and $4 billion is payable within a year.

Why the structure matters

The Groq deal is a license-and-hire arrangement. It moved the technology and the people without a conventional acquisition of the company. The Delaware case is about shareholder fairness, not antitrust, but both look at the same type of deal.

The Hugging Face deal is a conventional acquisition, and it reaches further. Nvidia already holds the largest share of the AI chip market, which powers tools like ChatGPT and Anthropic's Claude. Competitors including Broadcom and Google design processors of their own. Nvidia also backs major AI players, including Anthropic and OpenAI.

What comes next

The DOJ has not said whether it will open a formal review of the Hugging Face deal, seek more information, or sue. Nvidia has not said how it would respond to a challenge. Any action could reshape how the world's most valuable chip company buys and invests its way deeper into AI.

Closing is targeted for the first half of 2027. It remains unclear whether DOJ's questions about distribution control will turn into a formal challenge before then.