The US Justice Department has asked how Nvidia's (Nasdaq: NVDA) $12.93 billion deal to buy Hugging Face would affect competition in artificial intelligence, including whether owning the open-source model platform would let Nvidia "capture a fundamental distribution point for AI," Reuters reported on October 28, citing two people familiar with the matter.
CNBC confirmed the inquiry the same day with a person familiar with the matter. The questions reach a platform that more than 200,000 companies use "to discover, evaluate, customize and deploy AI," Nvidia said in September, and that Nvidia has promised to keep open to other chipmakers.
What the department is asking
Reuters reported these questions about the deal, from the same two people:
Whether it would let Nvidia capture a fundamental distribution point for AI
How Nvidia might use the platform to harm rivals in the AI market
Whether Nvidia could use the newly acquired business "to gain leverage"
Questions about Hugging Face's competitors
The questions sit alongside a years-long investigation of Nvidia's conduct, begun under former President Joe Biden, whose recent questioning covers its acquisitions, investments and sales practices and whether it has pressured customers, the two people told Reuters. That investigation has examined Nvidia's purchases of SchedMD and Run:ai and its conduct after a 2025 licensing deal with chip startup Groq, Reuters reported, and may not result in any action. An investigation is not evidence of wrongdoing.
What the department and the companies said
A Justice Department spokesperson declined to comment on matters before the department, citing longstanding policy, Reuters reported. Nvidia declined to comment, and Hugging Face representatives did not respond to Reuters. Nvidia, Hugging Face and its co-founder and CEO, Clem Delangue, had not posted about it on X by 5:30 p.m. ET on October 29.
Nvidia's public case is the one founder and CEO Jensen Huang made in his September 3 post announcing the deal:
NVIDIA compute will not be required to build on or deploy through Hugging Face.Jensen Huang, founder and CEO of Nvidia, on the NVIDIA Blog, September 3, 2026
Delangue told CNBC's Squawk Box that day that the goal was to keep Hugging Face running as a neutral platform within Nvidia.
The deal and where its review stands
Nvidia signed a definitive agreement on September 2, its Form 8-K says: about $11.9 billion payable to Hugging Face stockholders, subject to adjustments, plus an equity-based retention program of up to about $1.0 billion for employees who join Nvidia. The retention program is up to about 7.7% of the $12.93 billion headline price, by SaasBuzz's calculation. Closing is expected in the first half of 2027, subject to conditions that include required regulatory approvals.
Under the Hart-Scott-Rodino Act, large deals are filed with the Federal Trade Commission and the Justice Department, and a "second request" for more information extends the 30-day wait and keeps a deal from closing until the companies comply and a second wait ends, the FTC says. Neither the 8-K nor the two reports say whether the companies have filed or whether a second request has been issued. The spokesperson told Reuters that "it would be inappropriate for the Department to conduct a merger investigation under the guise of a conduct investigation."
How the price compares with GitHub
CNBC called GitHub, which Microsoft (Nasdaq: MSFT) bought in 2018, the closest comparable to Hugging Face's business. Divided by the developer counts each buyer cited at announcement, Nvidia is paying about $718 per developer, about 2.7 times the roughly $268 Microsoft paid, in nominal dollars, by SaasBuzz's calculation.
Measure | Hugging Face | GitHub |
|---|---|---|
Announced | Sept. 3, 2026 | June 4, 2018 |
Price | $12.93B | $7.5B |
Developers cited | 18M+ | 28M+ |
Per developer | $718 | $268 |
Closing | H1 2027, expected | Oct. 26, 2018 |
Days to close | 120 to 300 | 144 |
Sources: Nvidia's 8-K and Huang's post; Microsoft's announcements of June 4, 2018 and October 26, 2018; SaasBuzz calculations. Developer counts are minimums, so per-developer prices are upper bounds.
What it means for software companies that build on Hugging Face
The department's question is about position, and Hugging Face's is large. Its model index listed 3,197,149 models when SaasBuzz checked at 5:27 p.m. ET on October 29, and Nvidia counted more than 18 million developers, researchers and creators on the platform. For software companies that pull open models into their products, that reach is the distribution point in question.
Nvidia's 8-K says it "has committed to, among other things, keep Hugging Face's platform open, consistent with Hugging Face's existing practices," and spells out what that covers:
Under this commitment, Hugging Face would continue to permit model makers, developers, and users to upload and download models and datasets of their choosing and to support other silicon vendors.Nvidia's Form 8-K, filed September 3, 2026
The second clause matters more as rival chips spread across clouds; Oracle (NYSE: ORCL), for one, will offer Google's TPU chips from 2027. But the filing does not say how long the commitment lasts, to whom it is made or how it would be enforced, and Nvidia did not file the merger agreement with it. Companies relying on the pledge cannot yet check those terms.
Nvidia's filing also flags a different government risk. Governments may impose requirements on AI models, including open-source ones, that "could restrict the models or datasets available through Hugging Face," it said, adding that "many of the world's most popular and successful open-source models originated in China." For teams building on models that originated in China, that is the buyer's own warning.
Nothing in the inquiry changes how the hub works today. Teams that depend on particular models can pin them with the revision parameter in Hugging Face's client library, which downloads files at a specific branch, tag or commit, its documentation says, and keep a local copy of the exact files they tested.
What happens next
Nvidia expects to close in the first half of 2027. The broader investigation of its conduct is continuing, Reuters reported, and staff-led investigations at the department often take years.
Photo license: CC BY 2.0.
