A lawsuit by Groq shareholders alleges that Nvidia’s $20 billion licensing deal transferred the startup’s key technology and talent while leaving other shareholders with less value and limited upside.
A recent lawsuit filed by two engineers who owned shares in Groq has shed light on the upheaval that Nvidia’s $20 billion licensing deal allegedly caused within the company. The legal complaint, filed on Friday in a Delaware corporate law court, alleges that Groq’s board improperly sold the company’s assets and transferred its top employees to the $5 trillion tech titan in 2025, leaving a skeletal crew behind.
While the transaction was framed by Nvidia at the time as a “non-exclusive” licensing arrangement, under which Groq would have remained an independent and functioning company, the lawsuit alleges that Groq’s board was driven by conflicts of interest and failed to meet its legal obligations to secure the best price and structure for all shareholders. The plaintiffs also allege that some shareholders were not allowed to vote on the transaction.
The deal allegedly transferred Groq’s valuable technology and engineers who were integral to its senior management, according to Benjamin Serebina and Joshua Rubon, two former Groq engineers.
The lawsuit said common stockholders were cashed out cheaply, while Ross and other top Groq employees were allowed to “take a discount on those shares and be paid separately for following the technology to Nvidia,” according to the lawsuit.
Congress disapproves Nvidia’s deal
Nvidia’s deal, along with other similar Big Tech transactions, has drawn condemnation from Democrats. Senators including Elizabeth Warren, Richard Blumenthal and Ron Wyden said earlier this year that “acquihires” appear to be designed to evade antitrust scrutiny and risk further consolidating the Big Tech industry. The lawmakers were referring to a technique in which companies acquire key talent from another company without formally buying the target.
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A final payout to shareholders who were left out also allegedly shortchanged them because it did not account for the future upside of Groq’s technology and potential synergies with Nvidia, according to the lawsuit. The decision not to acquire Groq in full also meant that the $17 billion licensing payment was treated as taxable income for the startup, according to Yahoo Finance.
What does the lawsuit demand?
According to the Financial Times, Delaware law requires transactions involving a change of control to face strict scrutiny of the sales process and the ultimate terms of the transaction.
Nvidia has already unveiled the first new chip based on Groq’s technology, which entered full production in August.
The acquihire strategy at the center of the case is a relatively new phenomenon in Silicon Valley. Companies including Meta, Microsoft and Google have pursued similar arrangements to gain an edge in the AI race without the risk of competition regulators blocking a full acquisition.