Hugging Face has no path to substantial profitability and the investors and employees want liquidity. Nvidia doesn't want this to look like a bubble pop (as they have lots of GPU data center build outs to complete), they've got plenty of cash on hand, and they're an extremely good natural fit for the company.

Nvidia is seeing its top frontier model customers develop their own chips to sidestep Nvidia and as a counter, Nvidia is investing in the open source ecosystem. Open source means more competition and more demand for GPUs rather than single all-powerful labs that can will their own chips into existence and begin to push Nvidia aside. Plus Nvidia is betting big on local inference for robotics. All of this is bolstered by open source.

It's not like you can't just post model weights anywhere. There's really no lock in that Hugging Face has.

If you're looking for real monopoly issues that distort market economics and make it hard to compete without paying taxes to your competitor, consider Google's ownership of 92% of URL bars or the Google / Apple duopoly of smart phone software distribution.

I was also theorizing that part of their acquisition was to get more intel on that, though I feel like in practice that whole thing right now is just theatre for inflating the cybersec market

Why would they sue one of their most important customers?

Wasn’t official