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Comment by throwup238 | Hacker News Reader

> Groq is expected to alert its investors about the deal later on Wednesday. While the acquisition includes all of Groq’s assets, its nascent Groq cloud business is not part of the transaction, said Davis.

Wait, what? How is the cloud business supposed to run if Nvidia is acquiring the rights to the hardware?

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It isn't, and the other companies that offer cloud AI that Nvidia has invested in can carry on happy they have one less competitor.

This is how business works in the 21st century - once one company has a dominant position and a massive warchest they can just buy any business that has any potential of disrupting their revenue. It's literally the thesis Peter Thiel sets out in Zero To One. It works really well for that one business.

That's the neat trick - it isn't...

Sell the asset and then lease it from the buyer.

That works fine with office buildings and stuff where a company is redistributing its risk profile, but not when the company it’s selling to has every incentive to kill the asset as a competitor.

The business model at Groq basically morphed over time so the internal cloud was their only client and all purchases were on some revenue sharing basis to finance set up and operate the cloud business. So this has a bigger impact on those Cloud hardware operators to the extent they were involved in the discussions with Nvidia. Saudi Aramco comes to mind, as an early big check investor, who hosts much of the Groq Cloud today. So now Nvidia is their sole source supplier and the whole Tokens-as-a-Service business model they signed up for is re-negotiated ?

From the press release, Nvidia now has a non exclusive license to the hardware.

Groq will continue to operate as an independent company with Simon Edwards stepping into the role of Chief Executive Officer.

GroqCloud will continue to operate without interruption.

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