By ByteBot
On December 24, 2025, Nvidia dropped $20 billion on AI chip startup Groq—its largest deal ever, three times bigger than the previous record. But here’s the twist: Nvidia insists it’s NOT acquiring Groq. Instead, Jensen Huang calls it “licensing Groq’s IP” while the company remains “independent.” CNBC reports a “$20 billion acquisition.” Groq claims it’s staying independent but just lost its founder, CEO, and president to Nvidia. When you pay $20 billion, hire the entire executive team, and license all the core technology, you can call it whatever you want—but developers aren’t buying the “independence” story.
The Deal Nobody Believes In
Nvidia gets Jonathan Ross (Groq’s founder and the engineer who created Google’s TPU), Sunny Madra (president), and other key engineers. Nvidia also gets a “non-exclusive” license to Groq’s LPU inference technology—chips that claim 10x faster performance and 1/10th the energy of traditional GPUs for AI inference. Groq keeps its company structure, GroqCloud API service, and a new CEO (former CFO Simon Edwards). But can a company truly innovate after losing its founder, president, and core IP to a “licensing partner”? History suggests not.
The $20 billion question: How is this NOT an acquisition? If it walks like an acquisition and quacks like an acquisition, calling it “licensing” doesn’t change reality. This is antitrust engineering, not a partnership.
The Real Story: How Modern Monopolies Work
Nvidia learned from its $40 billion Arm acquisition failure. The FTC blocked that deal in 2022 over antitrust concerns—buying Arm would’ve given Nvidia control over chip architecture used in 95% of smartphones. So Nvidia adopted a new playbook: Don’t call it an acquisition. Structure deals as “licensing + acquihire” to sidestep the Hart-Scott-Rodino Act, which triggers formal FTC merger reviews.
Microsoft pioneered this approach with Inflection AI in 2024, licensing technology and hiring executives without buying the company outright. Now Nvidia’s copying the strategy with Groq. A Bernstein analyst noted: “Antitrust would seem to be the primary risk here, though structuring the deal as a non-exclusive license may keep the fiction of competition alive.”
It’s working. The DOJ has been investigating Nvidia for antitrust violations since 2024—allegations include penalizing customers who don’t exclusively use Nvidia chips and making it difficult to switch suppliers. Nvidia already controls 85-95% of the AI chip market. Yet the FTC just cleared Nvidia’s $5 billion Intel investment on December 19, 2025. Regulators are slow, and this creative deal structuring is outpacing them.
Why Jonathan Ross Is the Real Acquisition
This deal isn’t about Groq’s technology—it’s about acquiring Jonathan Ross. In 2011, Ross created Google’s TPU (Tensor Processing Unit) as a side project. It deployed across Google’s data centers in 15 months and became Google’s secret weapon in the AI race. Ross left Google in 2016 to found Groq, where he built the LPU (Language Processing Unit)—a chip optimized for AI inference that claims to outperform GPUs by 10x while using a tenth of the energy.
Ross is the world’s top inference chip designer. He’s built two of the most important AI chips in existence: Google’s TPU and Groq’s LPU. Nvidia isn’t licensing IP—it’s hiring the brain that created that IP. The irony: Ross built Google’s chip, left to compete, and now he’s joining Nvidia to fight Google. This is an arms race, and Nvidia just recruited the opposition’s star player.
What Happens to GroqCloud?
Groq’s GroqCloud API serves 2+ million developers with fast, cheap AI inference. Customer testimonials tout 7.41x speed increases and 89% cost reductions compared to competitors. GroqCloud supported open-source models like Llama and Mixtral affordably, making them competitive alternatives to closed-source AI.
Groq claims the service continues “uninterrupted” under new CEO Simon Edwards. But developers on Hacker News aren’t convinced. One commenter asked: “Are they buying Groq to slow down open source models and protect the massive amounts of money they make from OpenAI, Anthropic, Meta?” With over 300 comments, 80% expressed skepticism about Groq’s “independence.” Can GroqCloud innovate without its founder and president? Can it compete when Nvidia controls its technology roadmap? Don’t bet on it.
For developers, this acquisition removes a competitive pricing alternative. GroqCloud offered fast, affordable inference that pressured larger providers to lower prices. With Groq under Nvidia’s control, that competitive pressure disappears. Fewer choices mean higher costs long-term.
The Bigger Inference War
Nvidia sees the threat: The AI industry is shifting from training models to deploying them (inference), and hyperscalers are building custom chips to cut costs. Google’s TPU offers 44% lower total cost of ownership than Nvidia’s GB200, and Anthropic just committed to 1 million TPU chips in a multi-billion-dollar deal. OpenAI is using Google TPUs to cut inference costs and diversify from Microsoft. AWS has Trainium for training and Inferentia for inference. Azure has Maia.
Nvidia dominates AI training (85-95% market share), but the inference market is fragmenting. Acquiring Groq eliminates one competitive threat. But Google, Amazon, and Microsoft are too big to buy—they’ll keep building in-house chips. Nvidia’s strategy: License or acquire smaller competitors while the hyperscalers defend with vertical integration.
Call It What You Want
Nvidia paid $20 billion for Groq’s founder, executives, and technology. Call it licensing, call it an acquihire, call it a strategic partnership—it’s still consolidation. This is how modern monopolies work: Creative legal structures that avoid regulatory scrutiny while eliminating competition. Regulators are slow to adapt, and Big Tech is exploiting that lag.
For developers, the takeaway is clear: Don’t rely on a single inference provider. GroqCloud’s future is uncertain without its founder. Build multi-cloud strategies with fallbacks. When competition disappears, costs rise—no matter what you call the deal that killed it.
