AI rivals like OpenAI, Nvidia, and Oracle are collaborating to build ‘Stargate’—but a Yale expert says it violates 135 years of antitrust law

Ellison was the initial speaker among the guests, proclaiming Stargate's potential to transform health-tech through the creation of apps for electronic record sharing “so that a doctor at an Indian reservation would be able to see how a doctor at [New York’s] Memorial Sloan Kettering or at Stanford would treat the patient,” and advancing the discovery of groundbreaking cancer vaccines. Following him, Son enthusiastically stated “this is the beginning of the golden age in America” and reassured Trump regarding “we wouldn’t have decided [to go forward] unless you won.”. Altman lauded Stargate “as the most important project of this era,” and, addressing Trump, declared: “We wouldn’t have been able to do this without you.”

The same day, OpenAI released a press statement outlining the complete list of Stargate participants. In addition to OpenAI and SoftBank, the roster includes Oracle and three other major players in the current deep learning landscape: Microsoft, Nvidia, and Arm. MGX, an AI investment firm supported by Abu Dhabi's sovereign wealth fund, is also part of the group. 

What's remarkable about this undertaking isn't primarily the immense level of funding—that's typical for AI—but rather that six industry leaders, who compete in various products to varying extents and are often fierce rivals, managed to join forces to create one entity. Isn't this comparable to letting GM, Ford, Toyota, suppliers Bosch and Lear, and auto software firm Continental AG, cooperate in constructing massive automotive plants? Moreover, isn't this precisely what over a century of antitrust legislation has aimed to prohibit? Specifically, the potential for stifling competition that arises when an organization combines capital, technology, and purchasing power for a group of six competitors?

Despite this, legal professionals and lawmakers in America haven't expressed significant disapproval. Furthermore, regulatory bodies haven't contested the extensive partnership. Congressional responses vary from strong endorsements by Senator Ted Cruz of Texas, where Stargate's largest operations are located, to near silence from most other officials. During a Senate Commerce, Science, and Transportation Committee hearing on May 8, titled “Winning the AI Race,”, both Altman and Cruz praised the Stargate approach, and no senator raised concerns about its legal standing. The phrase “antitrust” is absent from the entire transcript of the three-and-a-half-hour meeting.

The highest-profile slap at Stargate came from the biggest name not in the club, Elon Musk. The day after the announcement, the then DOGE head, working alongside Trump in the White House, trashed his boss’s prize deal, charging on X that the group really “doesn’t have the money” to fund Stargate. Musk also reposted an image of a crack pipe, accompanied by a joking allegation that longtime foe Altman and his associates were freebasing, as the original poster put it, “to come up with their $500 billion number on Stargate.” Those broadsides infuriated the president’s staff, and marked the start of rising tensions between the Tesla CEO and Trump, leading to Musk’s departure from DOGE in May.

However, Musk inadvertently aided the Stargate founders by omitting the genuine danger they represent to AI advancement and the likely cause of Ellison, Son, and Altman's gratitude toward Trump. He's bestowing upon them an unparalleled advantage by allowing their companies significant latitude to collaborate, a scenario where they'd typically be fiercely competing across numerous products. In essence, the Stargate approach might benefit them, but it's detrimental to regular and business clients, mirroring the actions of cartels—raising prices, limiting options, and stifling progress.

A Yale researcher provides the sole deep dive into the dangers of Stargate

To date, only a single publication, whether in the press or academic circles, has offered an in-depth examination of how Stargate could impede market rivalry. This is the article “Stargate or StarGatekeepers? Why this Joint Venture Deserves Scrutiny,”, penned by Madhavi Singh, a Yale Law School researcher and associate director of Yale’s Thurman Arnold Project, which focuses on antitrust matters. Singh’s work is slated for release in an upcoming edition of the Berkeley Technology Law Journal. However, a preliminary version is available on the Social Science Research Network (SSRN), and she distributed an updated draft to Coins2Day.

Singh contends the Trump administration has improperly moved away from strict enforcement of the Clayton and Sherman antitrust laws to very lenient regulation. She stated in a phone conversation, "The joint venture possesses explicit federal approval, making federal scrutiny improbable." She asserts the focus has changed to pursuing two goals: firstly, backing American AI leaders like “national champions in the U.S.-China trade war,”, and secondly, purportedly safeguarding national security by allowing these “flag-bearers” entities to collaborate, based on the belief that their combined efforts will enable the U.S. To domestically produce essential AI components, including those used in defense sectors. 

Singh's prose is as direct as her legal reasoning is measured and exact. “The latest and most flagrant example of the government’s enabling private sector companies to expand and entrench their power under the guise of protecting American tech supremacy,” she states, “was the launch of Project Stargate.”

Singh's examination prompts the larger inquiry into whether the collaborations, stake acquisitions, buyouts, and similar pacts that are increasingly linking numerous competitors in AI, and which are quite uncommon in other sectors, warrant review under antitrust legislation.

Stargate’s exact structure is unclear, but it’s pushing the biggest current data center build-out in all of AI

Singh notes that a number of Stargate partners operate in identical or comparable industries. This overlap will probably influence the distribution of responsibilities within this significant data center initiative.

Stargate has provided minimal details regarding its ownership stakes, management structure, and the involvement of its various collaborators. The primary source of our understanding is the initial announcement from OpenAI. This release characterizes Stargate as an independent “new company” that “will deploy $100 billion immediately”—contrary to Musk's assertion of lacking funds—and includes four stakeholders: SoftBank, OpenAI, Oracle, and MGX from Abu Dhabi. Oracle, OpenAI, and Nvidia “will collaborate closely to build and operate this computing system.” The understanding is that OpenAI and Oracle, significant entities in equipping data centers and participating in other AI sectors “stack,”, would acquire or rent the necessary chips and systems for data centers, along with their operation, while Nvidia, the leading GPU provider, would furnish its premier custom chips.

Regarding Microsoft, it seems it won't provide capital expenditures or computing capacity at Stargate campuses, unlike OpenAI and Oracle. However, it's a “key technology partner” that could potentially lease computing power within these centers for purposes like operating its Copilot product. The role of Arm, a publicly traded firm that licenses intellectual property to software vendors, remains unclear.

Kyle Grillot—Bloomberg/Getty Images

One Stargate megaproject was already in the works at the time of the White House announcement: A behemoth in Abilene, Texas, slated to cover roughly the size of Manhattan’s Central Park and harbor 1.2 gigawatts in power capacity, sufficient to light and heat as many as 1 million homes. Then in late September, OpenAI trumpeted plans for a staggering array of new facilities under the Stargate umbrella. The announcement implies that the different sites are being developed by varying sets of partners within the consortium. Oracle is supplying the computing capacity in Abilene, Nvidia is furnishing racks of superchips, and OpenAI this time is a customer, deploying the GPUs and integrated AI software to advance its next-gen research.

The September release also disclosed that a $300 billion–plus program in which Oracle will furnish 4.5 gigawatts of capacity for three data centers run by OpenAI, this time in operator mode, will also fall under the consortium. Their locations: Texas, New Mexico, and, as later revealed, rural Michigan—by the way, the Great Lakes State is giving that a project a big tax break. Two other sites comprising another 1.5 gigawatts, one each in Ohio and Texas, will rise over the next 18 months, erected by an arm of SoftBank that builds and wires a data center’s physical shell, and connects the facility to the local power grid. OpenAI has named SoftBank as its collaborator, apparently signaling that the GPT inventor and the Japanese conglomerate will act as partners in fitting out and operating the centers. OpenAI will likely be its own customer as well.

Collectively, these initiatives, along with numerous smaller undertakings, represent a $400 billion expenditure on AI infrastructure, amounting to seven gigawatts, which is enough electricity to supply half of Georgia's homes. OpenAI also indicated in its autumn announcement that it anticipates meeting its pledge of $500 billion, encompassing 10 gigawatts, by the end of 2025. Even within the context of AI development, this half-trillion dollar sum is remarkable. It is approximately double the combined cost of Saudi Arabia's King Abdullah Economic City and the International Space Station, which was funded by the U.S., Russia, Japan, Canada, and Europe.

Singh identifies the ways Stargate could effectively forge near-monopolies, and how its practices may breach today’s antitrust laws

Singh's article offers an introduction to the “AI stack,”, explaining its three-tiered structure. The base layer comprises the “infrastructure”, which encompasses two segments: hardware like Nvidia's GPUs and TSMC's CPUs, and cloud platforms providing processing power, notably Amazon's AWS and Microsoft's Azure. The middle layer consists of “models”, exemplified by GPT. These models then drive the uppermost layer, which includes consumer-oriented applications like ChatGPT and business-focused tools such as Microsoft Copilot. 

Singh asserts that the second two “upper” areas, namely models and apps, are abundant with competitors, options, and novel products, citing China’s DeepSeek and numerous other entities challenging ChatGPT in open-source AI as a prime illustration. According to Singh, the threat to competition originates at the infrastructure level. “The competition is only at the level of the models and apps,” she explains, noting that, conversely, chips and cloud services are significantly consolidated. She points out that three entities, Amazon, Google, and Microsoft, dominate 70% of cloud services, and that Nvidia commands 80% to 95% of the GPU market, with TSMC responsible for 60% of all chip manufacturing. 

Singh cautions that infrastructure, particularly chips and cloud services, is Stargate's core strength, significantly narrowing the competitive landscape by uniting several key players. Oracle, Microsoft, and OpenAI are major participants in the limited cloud provider market; these three are now challenging the established dominance of Nvidia and Arm within the AI chip sector, who are also part of the consortium. 

Singh examines how Stargate might contravene both prevailing antitrust laws. Initially, she references the Clayton Act. “It states that a court will block a joint venture if it shows probable harm to future competition,” she states in the document. “It doesn’t have to be showing harm yet, but potential damage of loss from head-to-head competition, such as higher prices, reduced choice, and reduced innovation.”

Singh contends that by reducing the number of independent entities, Stargate increases the potential for them to “work together to protect their competitive moats.”. She points to the Oracle and Microsoft situation as an illustration. Previously, she explains, Oracle competed with Microsoft and other major cloud providers by setting lower prices and implementing a fixed-fee model. “Oracle has been a disruptive force in the market. Now it may adopt Microsoft’s pricing strategy,”, according to Singh. “That would raise prices and lower options for customers. Stargate risks elimination of a maverick,”, referring to Oracle. Arm currently supplies crucial IP software to Nvidia. Could Stargate deter Nvidia from creating its own IP and competing with its recent collaborator?

The same temptation to divide markets and align interests under Stargate’s shield lurks in chips as well as cloud, says Singh. Today, Microsoft, Google, and Amazon are all developing their own custom offerings in both GPUs and CPUs to escape the strongholds respectively of Nvidia and Arm. Because of Stargate, “Microsoft might stop challenging Arm and Nvidia in chips,” she writes. For Singh, Stargate blunts the essence of the Clayton Act by potentially eliminating competition down the road. She adds that the FTC blocked a proposed merger between Arm and Nvidia in 2021 precisely because even though they didn’t make the same types of chips, their union would erase a potential competitor. If left independent, each might be tempted to enter the other’s market, providing more choices and lower prices to chip customers.

The Sherman Act bans agreements “in restraint of trade.” “Now, Arm, Nvidia, and Microsoft separately decide what types of chips they produce [or design],” Singh asserts. “The Sherman Act prohibits activity that deprives the market of independent centers of decision-making and therefore the diversity of economic interests,” asserts Singh. “This is precisely what Stargate does.”

How Stargate could ‘cartelize’ Big Tech

The chief argument against Singh’s take: Right now, it appears that the AI giants, and notably the Stargate members, are fighting hard to capture one another’s turf. A key example: the hyperscalers’ drive to develop and market their own GPUs in a gambit to escape Nvidia’s near-monopoly prices—a quest they are following separately, at least for now. OpenAI got into data centers to reduce its reliance on a small set of huge customers longing to hammer its prices, especially its Stargate partner Microsoft, and Nvidia is courting such “neoclouds” as CoreWeave to lessen its dependence on the dominant hyperscalers.

But for Singh, the temptation to coordinate will prove irresistible for a simple reason—it’s the ticket to maximum profitability. “All of these tech markets seem initially competitive,” she told me in our interview. “But it takes a bit of time for anticompetitive barriers to get erected. A lot of these players realized that instead of competing in each other’s markets, it makes economic sense to earn monopoly profits, and give each other a share by giving out such favors as IP licenses that are really designed to reward competitors for staying in their own lanes. The idea is, ‘I’ll take the monopoly in one kind of chips, and you take the monopoly in IP for those or another kind of chips.’”

Singh stands almost alone in questioning Stargate's negative impact on competition. If the Trump administration's approach enriches a select few protected companies while reducing benefits for our citizens and producers, it represents a poor outcome for America.