UPDATE 1-Nvidia needs EU approval to buy AI startup Run:ai, regulators say

(Adds European Commission comment, details)

By Foo Yun Chee

BRUSSELS, Oct 31 (Reuters) - U.S. chipmaker Nvidia

will have to seek EU antitrust clearance for its proposed acquisition of AI startup Run:ai because it threatens competition in the markets where the companies operate, the European Commission said on Thursday.

The move by the EU antitrust enforcer may require Nvidia to offer concessions to secure its approval for the deal. Regulators on both sides of the Atlantic have recently increased their scrutiny of tech deals, especially by tech giants.

Nvidia announced the acquisition of the Israeli firm in April which will be bought for around $700 million according to a report by Tech Crunch.

Run:ai's technology allows developers and teams to manage and optimize their artificial intelligence infrastructure.

While the deal does not meet the EU turnover threshold requiring Nvidia to request EU approval, it was notified to the Italian competition agency which subsequently asked the EU watchdog to take up the case.

The Commission said it accepted the Italian request and warned of the competition risks from the deal.

"The transaction threatens to significantly affect competition in the markets where NVIDIA and Run:ai are active, which are likely to be at least European Economic Area-wide and therefore include the referring country Italy," it said in a statement.

Nvidia has posted soaring profits and revenues over the past year as its processors become the gold standard in the chip industry due to their ability to power AI applications, including training models like ChatGPT.

(Reporting by Foo Yun Chee;Editing by Sudip Kar-Gupta;Editing by Elaine Hardcastle)

((foo.yunchee@thomsonreuters.com; +32 2 585 2866; Reuters Messaging: foo.yunchee.thomsonreuters.com@reuters.net))