Philippa Kaur

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    America’s trustbusters wage war on Apple

    Hardly a month goes by without antitrust regulators taking another swipe at big-tech firms. On March 21st, it was Apple’s turn. America’s Department of Justice (DoJ) along with attorneys-general from 16 states sued the company. The case alleges that the firm uses its monopoly position in the smartphone market to “thwart” innovation, “throttle” competitors and discourage users from buying rival devices. Apple says the lawsuit is wrongheaded and that it will “vigorously defend” itself. Nonetheless the case marks an escalation in a regulatory onslaught against the once-charmed iPhone-maker.The suit is broader than those trustbusters have previously brought against Apple. Those have tended to focus on the company’s App Store, which is the only one allowed on its devices and from which it collects a 30% fee on most in-app purchases. The latest case, however, takes issue with the way Apple operates its entire business. It cites several examples of the firm supposedly stifling rivals as a way to bolster its own dominance. These include: blocking super-apps, which bring together multiple mini-services such as payments and messaging; preventing access to cloud-based gaming apps (which could encourage users to buy cheaper, less snazzy smartphones because games run well in the cloud); and ensuring poor service when rival gadgets, such as smartwatches, interact with iPhones. Apple’s share price fell by about 4% on the news.The case adds to Apple’s other legal headaches. The EU’s Digital Markets Act, which came into effect on March 6th, forced the company to make changes to the App Store. They included allowing developers of apps for the iPhone to both charge users and distribute their apps without using Apple’s apparatus, bypassing its 30% commission. Apple’s new system still collects hefty fees from app developers. Regulators in Brussels are reportedly preparing to investigate.Apple may also be forced to open up the App Store to outside payments in America as a result of a recent ruling to a suit brought by Epic, a video-game maker. Apple has floated a plan to comply. But Epic, as well as big-tech firms such as Meta and Microsoft, have filed complaints with the federal judge, arguing that it would still make alternative payments prohibitively hard. In a separate case, the DoJ has sued Google for deals it has struck with Apple and other firms to make it the default search engine on their devices. A loss could deprive Apple of $20bn each year in almost pure profit. Google denies wrongdoing.Apple will take solace from the fact that the government has flubbed some of its recent attempts to defeat big tech in court. America’s Federal Trade Commission, another regulator, tried to challenge Microsoft’s acquisition of Activision Blizzard, a video-game maker, but failed. It could not halt Meta’s purchase of Within, a virtual-reality (VR) fitness company. As Matt Perault, director of the University of North Carolina’s Centre on Technology Policy, says, “It may be easy to write antitrust op-eds and hold hearings, but actually winning cases is hard.”The battle with Apple may drag on for years. But even if the company wins, it could still suffer the consequences. Drawn-out legal turmoil can be a distraction for top executives. It can hurt the firm’s brand. Already the company has its work cut out trying to reinvigorate iPhone sales.If it loses, Apple could probably shrug off a fine. It will worry more that the court would try to break open its unique ecosystem in which its 2bn devices, and the services they provide, reinforce demand for each other. Apple defends this so-called walled garden, saying it is vital for preserving users’ safety and privacy. Whether that is true or not, the firm’s business could suffer if it is forced to make its iPhones more interoperable with rivals’ devices, such as smartwatches and VR headsets, rather than its own.As it is, technology never stands still. If big tech is dominant now, it may become even more so thanks to “generative” artificial intelligence (AI), which favours firms that have access to oceans of data, cash and IT talent. The “Magnificent Seven” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) account for 29% of the market value of the S&P 500, up from 20% at the start of 2023. This is largely thanks to the AI boom.Notwithstanding the trustbusters’ scrutiny, the giants are manoeuvring to stay ahead. This week it emerged that Apple is in talks with Google, owned by Alphabet, to let the search giant’s Gemini gen-AI model power some iPhone features, building on both companies’ search deal. American antitrust regulators are focused on the perceived sins of the past. Increasingly, that sounds like yesterday’s war. ■ More

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    Can anything stop Nvidia’s Jensen Huang?

    Jensen Huang is a man on a mission—but not so much that he does not have time to tell a good story at his own expense. Last spring, when his semiconductor company, Nvidia, was well on its way to becoming a darling of generative artificial intelligence (AI), he and his wife bought a new home in the Bay Area. Mr Huang was so busy he could not spare much time to visit it before the purchase was completed. Pity, he admitted later, sneezing heavily. It was surrounded by plants that gave him hay fever.Mr Huang uses such self-deprecating humour often. When he took to the stage on March 18th for Nvidia’s annual developers’ conference, to be greeted by cheers, camera flashes and rock-star adulation from the 11,000 folk packed into a San Jose ice-hockey stadium, he jokingly reminded them it wasn’t a concert. Instead, he promised them a heady mix of science, algorithms, computer architecture and mathematics. Someone whooped.In advance, Nvidia’s fans on Wall Street had dubbed it the “AI Woodstock”. It wasn’t that. The attendees were mostly middle-aged men wearing lanyards and loafers, not beads and tie-dyes. Yet as a headliner, there was a bit of Jimi Hendrix about Jensen Huang. Wearing his trademark leather jacket, he put on an exhilarating performance. He was a virtuoso at making complex stuff sound easy. In front of the media, he improvised with showmanship. And for all the polished charm, there was something intoxicating about his change-the-world ambition. If anyone is pushing “gen AI” to the limits, with no misgivings, Mr Huang is. This raises a question: what constraints, if any, does he face?The aim of the conference was to offer a simple answer: none. This is the start of a new industrial revolution and, according to Mr Huang, Nvidia is first in line to build the “AI factories” of the future. Demand for Nvidia’s graphics-processing units (GPUs), AI-modellers’ favourite type of processor, is so insatiable that they are in short supply. No matter. Nvidia announced the launch later this year of a new generation of superchips, named Blackwell, that are many times more powerful than its existing GPUs, promising bigger and cleverer AIs. Thanks to AI, spending on global data centres was $250bn last year, Mr Huang says, and is growing at 20% a year. His firm intends to capture much of that growth. To make it harder for rivals to catch up, Nvidia is pricing Blackwell GPUs at $30,000-40,000 apiece, which Wall Street deems conservative.In order to reap the fruits of this “accelerated-computing”, Nvidia wants to vastly expand its customer base. Currently the big users of its GPUs are the cloud-computing giants, such as Alphabet, Amazon and Microsoft, as well as builders of gen-AI models, such as OpenAI, maker of ChatGPT. But Nvidia sees great opportunity in demand from firms across all industries: health care, retail, manufacturing, you name it. It believes that many businesses will soon move on from toying with ChatGPT to deploying their own gen-AIs. For that, Nvidia will provide self-contained software packages that can either be acquired off the shelf or tailored to a company’s needs. It calls them NIMs, or Nvidia Inference Microservices. Crucially, they will rely on (mostly rented) Nvidia GPUs, further tying customers into the firm’s hardware-software ecosystem.So far, so star-spangled. But it is not all peace and love at Woodstock. You need only to recall the supply-chain problems of the pandemic, as well as the subsequent Sino-American chip wars, to see that dangers lurk. Nvidia’s current line-up of GPUs already faces upstream bottlenecks. South Korean makers of high-bandwidth memory chips used in Nvidia’s products cannot keep up with demand. TSMC, the world’s biggest semiconductor manufacturer, which actually churns out Nvidia chips, is struggling to make enough of the advanced packaging that binds GPUs and memory chips together. Moreover, Nvidia’s larger integrated systems contain around 600,000 components, many of which come from China. That underscores the geopolitical risks if America’s tensions with its strategic rival keep mounting. Troubles may lie downstream, too. The AI chips are energy-hungry and need plenty of cooling. There are growing fears of power shortages because of the strain that GPU-stuffed data centres will put on the grid. Mr Huang hopes to solve this problem by making GPUs more efficient. He says the mightiest Blackwell system, known pithily as GB200NVL72, can train a model larger than ChatGPT using about a quarter as much electrical power as the best available processors.But that is still almost 20 times more than pre-AI data-centre servers, notes Chase Lochmiller, boss of Crusoe Energy Systems, which provides low-carbon cloud services and has signed up to buy the GB200NVL72. And however energy-efficient they are, the bigger the GPUs, the better the AIs trained using them are likely to be. This will stoke demand for AIs and, by extension, for GPUs. In that way, as economists pointed out during a previous industrial revolution in the late 19th century, efficiency can raise power consumption rather than reduce it. “You can’t grow the supply of power anything like as fast as you can grow the supply of chips,” says Pierre Ferragu of New Street Research, a firm of analysts. In a sign of the times Amazon Web Services, the online retailer’s cloud division, this month bought a nuclear-powered data centre.’Scuse me while I kiss AIMr Huang is not blind to these risks, even as he dismisses the more typical concerns about gen AI—that it will destroy work or wipe out humanity. In his telling, the technology will end up boosting productivity, generating profits and creating jobs—all to the betterment of humankind. Hendrix famously believed music was the only way to change the world. For Mr Huang, it is a heady mix of science, engineering and maths. ■ More