Good morning.
Here’s a record Nvidia didn’t want to set: the biggest one-day loss in market cap, down $280 billion yesterday as its shares sank 9.5% to close at $108. While the chipmaker is coming off a year of giddy highs, one factor that set yesterday apart was the arrival of a subpoena from the U.S. Justice Department to investigate whether Nvidia violated antitrust laws. (Another was investor fears of an economic slowdown.) DOJ officials want to know if the AI chipmaker makes it hard for buyers to switch or shop around.
Antitrust officials are investigating other tech companies, too, so Nvidia is not alone. In fact, it’s hard to think of a moment in history when so many faced antitrust scrutiny—for monopolistic, hubristic, collusive or otherwise anti-competitive behavior. Federal Trade Commission (FTC) Chair Lina Khan and her peers at the Department of Justice have targeted alleged anti-competitive behavior in industries ranging from aviation, pharma and grocery to financial services, fast food and energy. And, of course, Big Tech.
That’s not intended to be a partisan stance. Antitrust rules are designed to make companies compete for our hearts and wallets. While America’s three core federal antitrust laws were forged more than a century ago, how they get enforced varies widely for a range of reasons. President Joe Biden’s Executive Order on Competition, signed in July 2021, argues that ‘monopoly products’ and ‘economic consolidation’ are significant impediments to a “fair, open and competitive marketplace.” And Khan’s antitrust push is widespread, garnering criticism from nonpartisan observers.
As an example, let’s leave tech and enter the world of fashion, where the FTC has sued to stop Tapestry’s merger with Capri, arguing that bringing brands like Coach and Versace into the same house will give Tapestry “a dominant share of the 'accessible luxury' handbag market.” When I met with Tapestry CEO Joanne Crevoiserat earlier this summer, she noted that hers is not an industry that lends itself to monopolies. A judge might agree and toss out the case. But antitrust suits that don’t hold up in court can still do a lot of damage as momentum is lost and people have to build again.
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Diane Brady
diane.brady@fortune.com
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