@Cricket, if you feel this thread does not lie under the purview of the A&H subforum, then please consider moving it to the Games subforum, thanks.
OP Note: While very informative, I feel the original article (From HardOCP) is not really formatted properly to separate fact from opinion, thus, I will include the link to it here (no archives, because IMO, they deserve the ad revenue, and possibly your Patreon shekels), instead, I will include an analysis piece from Seeking Alpha, I checked both, and the Seeking Alpha piece is as consistent and informative as the original, if not more, because it includes additional info sourced from 3 Forbes pieces (1, 2, 3):
AMD: Is Nvidia's GeForce Partner Program Anti-Competitive?
Kumquat Research | Mar.26.18 | About: Advanced Micro (AMD)
Summary
OP Note: While very informative, I feel the original article (From HardOCP) is not really formatted properly to separate fact from opinion, thus, I will include the link to it here (no archives, because IMO, they deserve the ad revenue, and possibly your Patreon shekels), instead, I will include an analysis piece from Seeking Alpha, I checked both, and the Seeking Alpha piece is as consistent and informative as the original, if not more, because it includes additional info sourced from 3 Forbes pieces (1, 2, 3):
AMD: Is Nvidia's GeForce Partner Program Anti-Competitive?
Kumquat Research | Mar.26.18 | About: Advanced Micro (AMD)
Summary
- Some reports are claiming that Nvidia's GPP program takes a page out of Intel's anti-competitive practices playbook.
- GPP reportedly restricts partners from labeling any non-Nvidia GPUs with a gaming brand used for Nvidia GPUs.
- Joining the program is optional, but Nvidia's market dominance provides the company with leverage.
- If the reporting is accurate, GPP could have possible anti-competitive implications that impact AMD and consumer choice in general.
A Familiar Story
It's deja vu for Advanced Micro Devices (AMD). A decade after Intel (INTC) purportedly utilized anti competitive business practices to hamstring AMD, Nvidia (NVDA) is reportedly taking a page out of the same playbook with its GeForce Partner Program ("GPP"). Those add-in-board ("AIB") and OEM suppliers that join GPP get exclusive benefits, which I'll expand on later, and required in return is that partners exclusively market GeForce cards under certain gaming brands (I'll expand on this later as well). If the reporting about GPP's alleged anti-competitive implications are accurate, could this hurt competition in the graphics industry at the expense of AMD and consumer choice?
Nvidia Pulls A Page From Intel's Playbook?
This article discusses news that has largely flown under the radar in recent weeks, mainly due to the reluctance of Nvidia and other companies in the industry to answer questions about GPP, so I'll give an overview of the topic before we get into the analysis.
Most of the discussion surrounding the potentially negative impacts of GPP has been driven by a March 8 article published on HardOCP and written by Kyle Bennett.
Bennett starts out with an important disclosure that I think all readers need to hear before moving on, so here's the excerpt from the HardOCP article regarding that disclosure:
It appears from this disclosure that AMD has been trying to raise awareness about the alleged implications of GPP, but only provided the basic foundation for the story in an effort to ensure the resulting reporting remained untainted by bias. I think this was the correct approach by the company because, as we will see, the story speaks for itself in this situation. With that, let's get started.
What Is GPP?
Nvidia posted a blog entry on March 1 explaining GPP and the company's goals for the program. However, the whole post, in my opinion, contains a healthy dose of spin and very little substance. We'll go into why it sounds like spin a bit later on in this article, but for now, let's just understand how Nvidia wants us to view GPP. Here's an excerpt from the blog post:
From this excerpt, it appears that Nvidia is offering exclusive benefits to partners and, in exchange, partners will "associate their brand" with GeForce (whatever that means). Taken at face value, GPP seems rather tame and inconsequential in that there seems to be no downside for suppliers: Simply join the program, sell GeForce products, and you'll get exclusive benefits from Nvidia, no restrictions necessary.
Nvidia really wants to drive that last point home, as the following excerpt from the blog demonstrates:
Essentially, GPP is free to join, carries no commitments to discount products, and doesn't restrict any partner from selling another company's products. Again, at face value, GPP seems like a nothing burger. This doesn't affect consumers or AMD at all, right?
Well, if GPP truly is just a run-of-the-mill partner program, the industry is being awfully mum about the whole thing. From the HardOCP article:
This is a strange response and HardOCP wasn't the only outlet getting the cold shoulder. Forbes contributor Jason Evangelho penned an article on Tuesday discussing GPP and had this to say about industry response to the program:
Nvidia is aggressively pushing the transparency angle with regard to GPP, claiming it provides consumers a clearer view of the GPU industry. But, ironically, the company and its suppliers have been anything but transparent in responding to questions about the program.
What GPP Is Really About
The key to why GPP might be concerning, and possibly why Nvidia is purportedly avoiding questions on the matter, is because, according to the reporting from Bennett, the program could have anti-competitive implications. While GPP does not restrict AIBs and OEMs from selling another company's products, it might restrict how they sell another company's product. From the HardOCP article, the exact requirement for GPP partners is to have their "gaming brand aligned exclusively with GeForce."
So, for example, Asus sells AMD and Nvidia graphics cards under its Republic of Gamers ("ROG") gaming brand. However, if Bennett's reporting is accurate, if Asus were to join GPP as a partner the company would not be able to sell both Nvidia and AMD cards under the ROG brand. More specifically, if Asus sells ROG-branded Nvidia cards, it would not be able to also sell ROG-branded AMD cards. This is what's meant by having a "gaming brand aligned exclusively with GeForce," according to the HardOCP article.
This could be seen as having anti-competitive implications because, if the reporting is accurate, Nvidia is essentially offering the middlemen between Nvidia/AMD and the consumers a list of exclusive benefits in order to hurt the visibility and mindshare of AMD's product offerings. Bennett describes these benefits in his article:
Sure, joining GPP is technically optional, but if one looks at the exclusive benefits offered to companies that join the program and one considers Nvidia's dominant market positioning, it's really not optional at all, in my opinion.
What's remarkable, and perhaps a bit puzzling, about GPP's terms is that they could be seen as similar to Intel's alleged anti-competitive behavior against AMD, which resulted in $1 billion-plus in fines for Intel. Specifically, Intel was fined in part due to using marketing development funds as leverage to get companies to cut AMD out of the equation. And it appears there could be parallels between that practice and what Nvidia is reportedly instituting with GPP (see the last benefit mentioned in the article excerpt above).
So, are we to believe that HardOCP's reporting is accurate and that Nvidia is possibly taking the plunge into anti-competitive behavior?
Why I Think GPP Is As Bad As Reported
The first factor to consider here, which we've mentioned already, is the reluctance of Nvidia or other companies in the industry to comment on GPP and its implications. While no one was willing to speak on the record about the program, Bennett mentions that he had conversations with multiple anonymous sources:
While this excerpt is part of the article for which we are trying to find supporting evidence, and so doesn't help us on its own, the fact that a similar sentiment is expressed in the Forbes piece, specifically the author's statement about having "two brief conversations that made it obvious (NASDAQ:GPP) was troublesome, to put it mildly," leads me to conclude that the reporting here is likely accurate. Beyond industry reaction, some other pieces of evidence that corroborate the negative implications of GPP have surfaced in recent days.
1) A look at MSI's global website shows that there are no AMD graphics cards under the GAMING X brand (MSI's top-tier gaming brand), while many Nvidia chips are still being marketed on the site using the GAMING X branding. AMD's cards are being marketed under the ARMOR branding instead. This is interesting because, though the global site only has ARMOR-branded AMD cards, MSI's US site still has GAMING X-branded ones. Perhaps MSI has joined GPP and is just selling off the rest of its US-based, GAMING X-branded AMD stock in order to sell Nvidia cards under the GAMING X brand exclusively? Maybe it's an issue with MSI's website? Perhaps it's a simply a change in marketing strategy? There's no way to answer this question because MSI hasn't released any official response to questions about GPP.
However, there was a recent exchange on MSI India's Facebook page that is relevant and interesting:
In a follow-up article to his original piece on GPP, Forbes' Jason Evangelho concluded the following from the above exchange:
While the statements contained in this comment thread can't be considered any kind of official confirmation of MSI's alignment with the Nvidia GeForce Partner Program, there is no trace of a denial either. It's repeatedly defensive of the program rather than deflective of involvement.
A later response from MSI stated: "We apologize for making an inappropriate comment. It did not represent MSI's official views." Though I should note that this response came in the form of a comment on the same Facebook thread and was buried under hundreds of other comments.
Again, there has still been no official response from MSI to GPP and its implications. The exchange on MSI India's Facebook page and the removal of GAMING X-branded AMD cards from the company's global website don't prove anything, though they are certainly something to keep an eye on considering the current reporting surrounding GPP.
2) Another potential piece of evidence was highlighted in the Forbes article. Gigabyte released GPU enclosures for Nvidia graphics cards recently and then announced a GPU enclosure for AMD this week. Can you spot the difference?
1. Nvidia GPU Enclosure
2. AMD GPU Enclosure
For those of you who didn't catch the subtle difference, the Nvidia enclosure is being marketed with Gigabyte's AORUS branding while the AMD enclosure has the generic GIGABYTE branding. Now, this difference could be due to any number of things, but interestingly enough, Gigabyte actually responded to questions about the branding discrepancy by claiming the AMD RX 580 enclosure wasn't a gaming-focused product so didn't get the AORUS branding.
However, the page where I got the second image is directly from Gigabyte's website where the product is literally called the "RX 580 Gaming Box." The fact that Gigabyte provided such a weak explanation for the discrepancy makes me more inclined to believe it has something to do with GPP whereas, without any explanation from the company, we would have been confined to mere speculation. This isn't a smoking gun, but it's certainly a bit strange and coincidental if nothing GPP related is going on here.
If GPP is truly what HardOCP reports it is, then I think that we could see a higher frequency of these discrepancies and that they will become more obvious as well.
Ultimately, HardOCP's report on GPP seems reliable and legitimate, and though there's little hard evidence to support it at the moment, I find it hard to believe that the outlet would risk its reputation and its relationship with Nvidia for a story without merit. With Forbes corroborating the claim of industry sources being reluctant to speak about GPP and with examples popping up of unusual branding by AIBs and OEMs, I think investors should be extremely wary of Nvidia's moves here and how it could affect AMD.
Investor Takeaway
I wanted to leave discussion of the investor perspective for the end of this article because the issue at hand is complex enough as is without adding another layer to the analysis. By this point, I hope you have a solid grasp of GPP and its implications, which will be essential to understanding the investor takeaway.
The primary point to understand here is that the competitive landscape in the GPU market looks like it's about to heat up, and it could be to the detriment of AMD. If GPP is structured as reported by Kyle Bennett, AMD could lose mindshare and likely market share. There's a reason Asus, MSI, Gigabyte, and others market their cards with gaming brands: To differentiate them from the competition and to project an air of prestige.
Think of when you go to the supermarket and you see a standard brand item and a store-brand item. The perception in this situation is that the store-brand item is essentially a knock-off with the only benefit being that it's marginally cheaper. That's the general perception of AMD vs. Nvidia now in that AMD is seen as the cheap knock-off of Nvidia, which is exactly the perception Nvidia would like to promote and prolong. What better way to accomplish that goal than by forcing the middlemen to present this perception every time a consumer wants to buy a graphics card?
This should be a major concern for AMD investors. With GPP (as reported) in effect, consumers will continue to see AMD as the knock-off and Nvidia as the premium, illustrious offering, regardless of whether it's true or not. Further, GPP could just be a test run. If Nvidia sees that it can get away with something like this, the incentive to utilize its existing leverage to further cut AMD out of the GPU market would only increase.
On the legal side here, I think we could use Intel's practices against AMD as a reference point. As I mentioned, Intel was forced to pay $1.4 billion in fines to AMD but still ended up dominating the CPU market in part due to the practices for which it was "punished." The fear here for AMD investors should be, just like what happened with Intel, if Nvidia decides to go the anti-competitive route, the benefits of doing so might outweigh the potential consequences.
To be clear, I'm not claiming that AMD should sue Nvidia over GPP or even that GPP is anti competitive. There are still many details to come in this story and it's a development I think AMD investors should be watching extremely closely.
What's the ultimate takeaway here? It's too early to say where Nvidia is taking GPP and how it will affect the graphics market, but I think this should be toward the top of every AMD investor's priority list. I hope to provide further updates as we learn more information about GPP, which companies are participating, and whether the terms of the agreement would qualify as allegedly anti competitive or not.
Based on the information we have right now and the reporting that's out there in tech media, Nvidia's GPP looks like it might potentially have negative implications for consumers and for AMD. I don't think investors need to necessarily make any moves with their AMD shares at the moment based on the information in this article, but GPP is certainly a development on which to keep tabs.
Best of luck!
If you want to stay up-to-date on my articles, you can do so by clicking "Follow" at the top of this page or by going to my author page.
Thanks for reading!
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
It's deja vu for Advanced Micro Devices (AMD). A decade after Intel (INTC) purportedly utilized anti competitive business practices to hamstring AMD, Nvidia (NVDA) is reportedly taking a page out of the same playbook with its GeForce Partner Program ("GPP"). Those add-in-board ("AIB") and OEM suppliers that join GPP get exclusive benefits, which I'll expand on later, and required in return is that partners exclusively market GeForce cards under certain gaming brands (I'll expand on this later as well). If the reporting about GPP's alleged anti-competitive implications are accurate, could this hurt competition in the graphics industry at the expense of AMD and consumer choice?
Nvidia Pulls A Page From Intel's Playbook?
This article discusses news that has largely flown under the radar in recent weeks, mainly due to the reluctance of Nvidia and other companies in the industry to answer questions about GPP, so I'll give an overview of the topic before we get into the analysis.
Most of the discussion surrounding the potentially negative impacts of GPP has been driven by a March 8 article published on HardOCP and written by Kyle Bennett.
Bennett starts out with an important disclosure that I think all readers need to hear before moving on, so here's the excerpt from the HardOCP article regarding that disclosure:
"Before we go any further, in the effort to be as transparent as possible, we need to let you know that AMD came to us and presented us with "this story." AMD shopped this story with other websites as well. However, with the information that was presented to us by AMD, there was no story to be told, but it surely pointed to one that was worth looking into. There needed to be some legwork done in collecting facts and interviews."
It appears from this disclosure that AMD has been trying to raise awareness about the alleged implications of GPP, but only provided the basic foundation for the story in an effort to ensure the resulting reporting remained untainted by bias. I think this was the correct approach by the company because, as we will see, the story speaks for itself in this situation. With that, let's get started.
What Is GPP?
Nvidia posted a blog entry on March 1 explaining GPP and the company's goals for the program. However, the whole post, in my opinion, contains a healthy dose of spin and very little substance. We'll go into why it sounds like spin a bit later on in this article, but for now, let's just understand how Nvidia wants us to view GPP. Here's an excerpt from the blog post:
"So the new program means that we’ll be promoting our GPP partner brands across the web, on social media, at events and more. And GPP partners will get early access to our latest innovations, and work closely with our engineering team to bring the newest technologies to gamers.
. . . GPP ensures our engineering and marketing efforts support brands consumers associate with GeForce. That transparency will give gamers the confidence needed to make their purchase, whichever products they choose."
. . . GPP ensures our engineering and marketing efforts support brands consumers associate with GeForce. That transparency will give gamers the confidence needed to make their purchase, whichever products they choose."
From this excerpt, it appears that Nvidia is offering exclusive benefits to partners and, in exchange, partners will "associate their brand" with GeForce (whatever that means). Taken at face value, GPP seems rather tame and inconsequential in that there seems to be no downside for suppliers: Simply join the program, sell GeForce products, and you'll get exclusive benefits from Nvidia, no restrictions necessary.
Nvidia really wants to drive that last point home, as the following excerpt from the blog demonstrates:
"The program isn’t exclusive. Partners continue to have the ability to sell and promote products from anyone. Partners choose to sign up for the program, and they can stop participating any time. There’s no commitment to make any monetary payments or product discounts for being part of the program."
Essentially, GPP is free to join, carries no commitments to discount products, and doesn't restrict any partner from selling another company's products. Again, at face value, GPP seems like a nothing burger. This doesn't affect consumers or AMD at all, right?
Well, if GPP truly is just a run-of-the-mill partner program, the industry is being awfully mum about the whole thing. From the HardOCP article:
HardOCP has been in the computer hardware review business for over 20 years now, and we have made an abundance of contacts along the way. In order for our preparation to write this article, we have spent the last three weeks talking to OEMs and AIBs in the industry that do business with Nvidia on a large scale... We have contacted seven companies about their part in Nvidia GPP and not one of the seven would talk to us on the record if they spoke to us about it at all. The ones that did speak to us have done so anonymously, in fear of losing their jobs, or having retribution placed upon them or their companies by Nvidia.
This is a strange response and HardOCP wasn't the only outlet getting the cold shoulder. Forbes contributor Jason Evangelho penned an article on Tuesday discussing GPP and had this to say about industry response to the program:
"Since publishing the story, all of Bennett's contacts have gone silent, including Nvidia. My own follow-up to his investigation is stalled. I'd secured a commitment from a few companies to speak off the record, but they have also gone dark. Prior to that happening I had two brief conversations that made it obvious the program was troublesome, to put it mildly."
Nvidia is aggressively pushing the transparency angle with regard to GPP, claiming it provides consumers a clearer view of the GPU industry. But, ironically, the company and its suppliers have been anything but transparent in responding to questions about the program.
What GPP Is Really About
The key to why GPP might be concerning, and possibly why Nvidia is purportedly avoiding questions on the matter, is because, according to the reporting from Bennett, the program could have anti-competitive implications. While GPP does not restrict AIBs and OEMs from selling another company's products, it might restrict how they sell another company's product. From the HardOCP article, the exact requirement for GPP partners is to have their "gaming brand aligned exclusively with GeForce."
So, for example, Asus sells AMD and Nvidia graphics cards under its Republic of Gamers ("ROG") gaming brand. However, if Bennett's reporting is accurate, if Asus were to join GPP as a partner the company would not be able to sell both Nvidia and AMD cards under the ROG brand. More specifically, if Asus sells ROG-branded Nvidia cards, it would not be able to also sell ROG-branded AMD cards. This is what's meant by having a "gaming brand aligned exclusively with GeForce," according to the HardOCP article.
This could be seen as having anti-competitive implications because, if the reporting is accurate, Nvidia is essentially offering the middlemen between Nvidia/AMD and the consumers a list of exclusive benefits in order to hurt the visibility and mindshare of AMD's product offerings. Bennett describes these benefits in his article:
"Nvidia will tell you that it is 100% up to its partner company to be part of GPP, and from the documents I have read, if it chooses not to be part of GPP, it will lose the benefits of GPP which include: high-effort engineering engagements - early tech engagement - launch partner status - game bundling - sales rebate programs - social media and PR support - marketing reports - Marketing Development Funds (MDF)."
Sure, joining GPP is technically optional, but if one looks at the exclusive benefits offered to companies that join the program and one considers Nvidia's dominant market positioning, it's really not optional at all, in my opinion.
What's remarkable, and perhaps a bit puzzling, about GPP's terms is that they could be seen as similar to Intel's alleged anti-competitive behavior against AMD, which resulted in $1 billion-plus in fines for Intel. Specifically, Intel was fined in part due to using marketing development funds as leverage to get companies to cut AMD out of the equation. And it appears there could be parallels between that practice and what Nvidia is reportedly instituting with GPP (see the last benefit mentioned in the article excerpt above).
So, are we to believe that HardOCP's reporting is accurate and that Nvidia is possibly taking the plunge into anti-competitive behavior?
Why I Think GPP Is As Bad As Reported
The first factor to consider here, which we've mentioned already, is the reluctance of Nvidia or other companies in the industry to comment on GPP and its implications. While no one was willing to speak on the record about the program, Bennett mentions that he had conversations with multiple anonymous sources:
"All of the people that I did interview at AIBs and at OEMs did however have the same thoughts on GPP. 1.) They think that it has terms that are likely illegal. 2.) GPP is likely going to tremendously hurt consumers' choices. 3.) It will disrupt business with the companies that they are currently doing business with, namely AMD and Intel."
While this excerpt is part of the article for which we are trying to find supporting evidence, and so doesn't help us on its own, the fact that a similar sentiment is expressed in the Forbes piece, specifically the author's statement about having "two brief conversations that made it obvious (NASDAQ:GPP) was troublesome, to put it mildly," leads me to conclude that the reporting here is likely accurate. Beyond industry reaction, some other pieces of evidence that corroborate the negative implications of GPP have surfaced in recent days.
1) A look at MSI's global website shows that there are no AMD graphics cards under the GAMING X brand (MSI's top-tier gaming brand), while many Nvidia chips are still being marketed on the site using the GAMING X branding. AMD's cards are being marketed under the ARMOR branding instead. This is interesting because, though the global site only has ARMOR-branded AMD cards, MSI's US site still has GAMING X-branded ones. Perhaps MSI has joined GPP and is just selling off the rest of its US-based, GAMING X-branded AMD stock in order to sell Nvidia cards under the GAMING X brand exclusively? Maybe it's an issue with MSI's website? Perhaps it's a simply a change in marketing strategy? There's no way to answer this question because MSI hasn't released any official response to questions about GPP.
However, there was a recent exchange on MSI India's Facebook page that is relevant and interesting:
In a follow-up article to his original piece on GPP, Forbes' Jason Evangelho concluded the following from the above exchange:
While the statements contained in this comment thread can't be considered any kind of official confirmation of MSI's alignment with the Nvidia GeForce Partner Program, there is no trace of a denial either. It's repeatedly defensive of the program rather than deflective of involvement.
A later response from MSI stated: "We apologize for making an inappropriate comment. It did not represent MSI's official views." Though I should note that this response came in the form of a comment on the same Facebook thread and was buried under hundreds of other comments.
Again, there has still been no official response from MSI to GPP and its implications. The exchange on MSI India's Facebook page and the removal of GAMING X-branded AMD cards from the company's global website don't prove anything, though they are certainly something to keep an eye on considering the current reporting surrounding GPP.
2) Another potential piece of evidence was highlighted in the Forbes article. Gigabyte released GPU enclosures for Nvidia graphics cards recently and then announced a GPU enclosure for AMD this week. Can you spot the difference?
1. Nvidia GPU Enclosure
2. AMD GPU Enclosure
For those of you who didn't catch the subtle difference, the Nvidia enclosure is being marketed with Gigabyte's AORUS branding while the AMD enclosure has the generic GIGABYTE branding. Now, this difference could be due to any number of things, but interestingly enough, Gigabyte actually responded to questions about the branding discrepancy by claiming the AMD RX 580 enclosure wasn't a gaming-focused product so didn't get the AORUS branding.
However, the page where I got the second image is directly from Gigabyte's website where the product is literally called the "RX 580 Gaming Box." The fact that Gigabyte provided such a weak explanation for the discrepancy makes me more inclined to believe it has something to do with GPP whereas, without any explanation from the company, we would have been confined to mere speculation. This isn't a smoking gun, but it's certainly a bit strange and coincidental if nothing GPP related is going on here.
If GPP is truly what HardOCP reports it is, then I think that we could see a higher frequency of these discrepancies and that they will become more obvious as well.
Ultimately, HardOCP's report on GPP seems reliable and legitimate, and though there's little hard evidence to support it at the moment, I find it hard to believe that the outlet would risk its reputation and its relationship with Nvidia for a story without merit. With Forbes corroborating the claim of industry sources being reluctant to speak about GPP and with examples popping up of unusual branding by AIBs and OEMs, I think investors should be extremely wary of Nvidia's moves here and how it could affect AMD.
Investor Takeaway
I wanted to leave discussion of the investor perspective for the end of this article because the issue at hand is complex enough as is without adding another layer to the analysis. By this point, I hope you have a solid grasp of GPP and its implications, which will be essential to understanding the investor takeaway.
The primary point to understand here is that the competitive landscape in the GPU market looks like it's about to heat up, and it could be to the detriment of AMD. If GPP is structured as reported by Kyle Bennett, AMD could lose mindshare and likely market share. There's a reason Asus, MSI, Gigabyte, and others market their cards with gaming brands: To differentiate them from the competition and to project an air of prestige.
Think of when you go to the supermarket and you see a standard brand item and a store-brand item. The perception in this situation is that the store-brand item is essentially a knock-off with the only benefit being that it's marginally cheaper. That's the general perception of AMD vs. Nvidia now in that AMD is seen as the cheap knock-off of Nvidia, which is exactly the perception Nvidia would like to promote and prolong. What better way to accomplish that goal than by forcing the middlemen to present this perception every time a consumer wants to buy a graphics card?
This should be a major concern for AMD investors. With GPP (as reported) in effect, consumers will continue to see AMD as the knock-off and Nvidia as the premium, illustrious offering, regardless of whether it's true or not. Further, GPP could just be a test run. If Nvidia sees that it can get away with something like this, the incentive to utilize its existing leverage to further cut AMD out of the GPU market would only increase.
On the legal side here, I think we could use Intel's practices against AMD as a reference point. As I mentioned, Intel was forced to pay $1.4 billion in fines to AMD but still ended up dominating the CPU market in part due to the practices for which it was "punished." The fear here for AMD investors should be, just like what happened with Intel, if Nvidia decides to go the anti-competitive route, the benefits of doing so might outweigh the potential consequences.
To be clear, I'm not claiming that AMD should sue Nvidia over GPP or even that GPP is anti competitive. There are still many details to come in this story and it's a development I think AMD investors should be watching extremely closely.
What's the ultimate takeaway here? It's too early to say where Nvidia is taking GPP and how it will affect the graphics market, but I think this should be toward the top of every AMD investor's priority list. I hope to provide further updates as we learn more information about GPP, which companies are participating, and whether the terms of the agreement would qualify as allegedly anti competitive or not.
Based on the information we have right now and the reporting that's out there in tech media, Nvidia's GPP looks like it might potentially have negative implications for consumers and for AMD. I don't think investors need to necessarily make any moves with their AMD shares at the moment based on the information in this article, but GPP is certainly a development on which to keep tabs.
Best of luck!
If you want to stay up-to-date on my articles, you can do so by clicking "Follow" at the top of this page or by going to my author page.
Thanks for reading!
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
