Nvidia is buying the place where open-source AI lives

Nvidia has reportedly agreed to buy Hugging Face for $12.9 billion, according to The Information, though Business Insider, which first reported the takeover interest, put the valuation above $13 billion and cautioned that no agreement had yet been signed. The asset is not a model. It is a platform with around 13 million users, more than 2 million public models, over 500,000 public data sets and roughly 500,000 organisations: distribution, developer relationships, and control over an important route by which models reach production. The history makes the price more interesting than the number. Nvidia was among the investors in Hugging Face's $235 million 2023 Series D at a $4.5 billion valuation, and Hugging Face turned down a $500 million Nvidia investment late last year at a $7 billion valuation, saying it did not want a dominant investor able to sway its decisions. Our view is that this is a textbook move on a layer rather than a product. In a market where the thing being sold is commoditising fast, the defensible position is not the best version of the product, it is the place everyone has to pass through on the way to using it. The question we would put to any client watching this: in your own category, who owns that layer, and are you quietly renting access to it? (TechCrunch)