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Nvidia's $20B antitrust loophole

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Re: Nvidia's $20B antitrust loophole

#131

Post by nwellinghoff »

DivingForGold wrote: post #114
spiantino wrote: post #46

I don't think you can treat owners of the same shares differently in the way this is suggesting. The VC shareholders and the employee shareholders are probably on equal footing and getting the same price. VCs will own preferred but I doubt that is enough to windfall them at the expense of the common shareholders. So if VCs are getting paid a certain share price, employees with vested stock almost certainly are gettin…

EXCELLENT analysis Ossama >"Non-exclusive" means no monopoly concerns (anyone can license Groq's tech) - except that you can bet only Nvidia gets the absolute top of the line architechture and design - - - - - all others get 2nd best or worse. >The "non-exclusive" label is legal fiction. When you acquire all the IP and hire everyone who knows >how to use it, exclusivity doesn't matter. But the “non exclusive” part is…

The “non exclusive” thing may come back to bite them. If another big player comes in to lic the tech and get “different” tech than nvidia it opens up law suits. Also this seems like it’s just a bet on time. The head engineer who invented this technology will be replicated. But I guess that will take a while and the margin money machine will print Bs while the dust settles.

Re: Nvidia's $20B antitrust loophole

#132

Post by SilverElfin »

LogicFailsMe wrote: post #128
SilverElfin wrote: post #127

Earlier quoted context omitted.

Why are you assuming the employees’ equity participates in this licensing deal at all? They just have ownership in the leftover dying company as far as I can tell. How will they make that worth something, and get liquidity?

And you don't think they'd be squealing like stuck pigs in the blogosphere if that were the case? There isn't even anything like that on Blind currently, but there sure are a lot of people with no skin in this deal whining about it to high heaven. This is not a winning attitude. $20B for Groq just normalized $1B for AI startups in general. Maybe less concern trolling here and more building something is in order?

My assumption is employees are mostly out on holidays since the deal was known widely only on Christmas, and so they’re busy with their personal lives, quietly discussing this issue with trusted coworkers, and if there are serious problems, they are coordinating a lawsuit instead of saying something they shouldn’t in public.

You should be asking why no one has dispelled the criticisms of how employee equity is treated in this deal - neither Nvidia nor Groq’s founders nor regular employees. Lots of people have raised this concern. Should be simple to answer, right?

As for people with no skin in this deal “whining” - why wouldn’t people raise concerns? It’s a disturbing trend. These are highly unusual deals made to circumvent the law and break norms, on antitrust and employee compensation. They’re suspicious and prior examples have stolen from employees. So distrust and scrutiny by default is completely justified.

Re: Nvidia's $20B antitrust loophole

#133

Post by peter_d_sherman »

>"The question isn't just why Nvidia paid $13.1B more than market rate for technology they could build themselves (they have the PDK, volume, talent, infrastructure, and cash). The question is why they structured it this way.

Where the premium was spent:

Regulatory arbitrage:

Non-exclusive licensing avoids years of antitrust review. Structure the deal as IP licensing + talent acquisition, and regulators have no grounds to block it.

This alone is worth billions in time and certainty."

Isn't that fascinating!

Observation: For any given Deal (in business or in life in general) -- there may be one or more legal components -- to it...

But (equal-and-oppositely!) there also may NOT be one or more legal components to it!

What each deal has in some legal components -- it may lack in other legal components...

Conversely, what each deal does not have in some legal components -- it may have in other legal components...

Now, perhaps this may sound like a "self-evident truth", and as such, apparently may not be worthy of a deeper exploration, but it seems that there exists an:

Intersection of Set Theory and Legal Aspects -- applied to Deals

(AKA "Transactions", "Exchanges", "Barters", "Trades", "Exchanges Of Value", etc., etc.) in various jurisdictions (which can be thought about as how contracts, both legal and natural, arising from such exchanges are, or would be interpreted through its courts, through its regional statutes (aka "Laws") IF there are inter-party disputes which subsequently require a court for such interpretation...)

And that intersection -- could well be worthy of further study!

Phrased another way -- it (and this article!) are highly interesting from a legal perspective!

(And also a Set Theory / Set Theoretical one!)

Re: Nvidia's $20B antitrust loophole

#134

Post by theptip »

chii wrote: post #129
theptip wrote: post #116

Earlier quoted context omitted.

Don’t the founders (and the board) still have fiduciary duty to the common holders? You can’t stop the founders from leaving, but selling the crown jewel IP in a transaction that doesn’t benefit the shareholders seems a stretch.

> fiduciary duty to the common holders? as long as the transaction is reasonable, they've held up this fiduciary duty. And the minority holders will need to sue for damages in any case, it's not an "automatic" crime. The cost of that suit will be more than the value of the gains and damages awarded. Therefore, minority shareholders in a startup are highly likely to get screwed - not to mention they don't get a say in…

> The cost of that suit will be more than the value of the gains and damages awarded.

In many cases this is so, but here we are talking about tens of billions in value. Even a few percent of value won is worth lawyering up to the hilt for.

> as long as the transaction is reasonable

What does “reasonable” mean? If the OP is correct and selling the IP guts the company then it seems hard to justify. I also don’t think you can reduce the concept of fiduciary duty in this way. It’s a well-defined term of art with specific precedent.

Re: Nvidia's $20B antitrust loophole

#135

Post by neilv »

neilv wrote: post #79
georgeburdell wrote: post #25

This behavior is extremely damaging to the startup scene. Who would join a startup these days unless it’s run by a close friend or relative? At least in that case, the scorned junior employees would have social recourse.

I was talking with a great-sounding few-person early startup (nice people, non-evil business, interesting work, etc.), and they wanted me to fill a highly-skilled role... in-office in a VHCOLA, for $110K and "0.5%" in usual option schedule. (Presumably also with the usual barriers to options ever being exercised or liquidated equitably.) Even fresh grads with no experience take home more in this town. I live to work,…

Absolutely, downvote down calls for founding engineers paid to get meaningful equity.

We wouldn't want someone accepting a small fraction of their market salary to get even 1% pre-dilution of an early startup (even in dark-pattern options), because that might align them with company success, or even be fair.

Re: Nvidia's $20B antitrust loophole

#136

Post by mahirsaid »

jimnotgym wrote: post #30

IANAL, and am especially weak on US law, but I suspect this is only an antitrust loophole if the administration chooses not to act. Substance over form must apply? Pretty sure this wouldn't fly in European law.

Acquiring a company due to a loophole strategy is worth exponentially more than what they paid for. Its a good strategy if the aim is to beat the AI bubble and survive it after the smoke clears. not bad. Better than financing numerous data centers for no use when the bubble crashes.

Re: Nvidia's $20B antitrust loophole

#137

Post by iancmceachern »

cj wrote: post #124
ece wrote: post #119

Earlier quoted context omitted.

If you join a startup, be ready to hire a lawyer.

Or accept the fact that stock options are worthless, and don't accept a job offer if you're unhappy with the offer sans stock options.

This is the way

Re: Nvidia's $20B antitrust loophole

#138

Post by moralestapia »

>And 10x better energy efficiency because you're not constantly moving data across a memory bus.

Moving data is not that expensive, many times there's no overhead over the nominal consumption of your system.

The rest of the article is spot on, though.

Re: Nvidia's $20B antitrust loophole

#139

Post by jiveturkey »

spiantino wrote: post #46

I don't think you can treat owners of the same shares differently in the way this is suggesting. The VC shareholders and the employee shareholders are probably on equal footing and getting the same price. VCs will own preferred but I doubt that is enough to windfall them at the expense of the common shareholders. So if VCs are getting paid a certain share price, employees with vested stock almost certainly are gettin…

> owners of the same shares differently

it’s true, you can’t. however the VCs and the employees don’t own the same shares. even the VCs in different rounds don’t own the same shares.

where TFA analysis falls short is assuming employees have to be paid out at all. since the execs are moving over, there’s definitely some equity being traded in this “non-exclusive licensing deal” but it doesn’t have to involve common stock at all.

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