BRUSSELS - 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 stepped up their scrutiny of tech giants' acquisitions of start-ups on concerns they may shut down the potential rivals.

Nvidia announced the acquisition of Israeli firm Run:ai 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 said it was happy to answer any questions regulators may have about Run:ai.

"After the acquisition closes, we’ll continue to make AI available in every cloud and enterprise, and help customers select any system and software solution that works best for them," a Nvidia spokesperson said.

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 and Elaine Hardcastle)