The License That Ate the Company: Ex-Groq Engineers Sue Over Nvidia's $20 Billion Deal

On Christmas Eve 2025, Groq announced what it called a non-exclusive licensing agreement: Nvidia would license the startup’s inference technology, founder and CEO Jonathan Ross would move to Nvidia along with other senior leaders, and Groq itself would carry on under a new chief executive. The price tag — roughly $20 billion — made it the largest purchase in Nvidia’s history, yet nobody described it as an acquisition.

Last Friday, that framing landed in Delaware’s Court of Chancery. Two former Groq engineers and shareholders, Benjamin Serebrin and Joshua Rubin, sued the company’s board, alleging that the transaction was effectively an acqui-hire that transferred “Groq’s valuable technology and the engineers who built Groq” to Nvidia while billions of dollars in benefits flowed to insiders, senior management and affiliated funds — benefits “that it did not share with Groq’s other stockholders.” The Financial Times reported the complaint on October 5, turning a regulatory skirmish into a live damages action.

What the deal actually looked like

The structure, as reported by the FT and CNBC, had two main pieces. Nvidia paid approximately $17 billion in licensing fees, shared among Groq’s backers. Separately, a pool of roughly $3 billion in Nvidia stock was set aside for the engineers who made the move — including founder Jonathan Ross and president Sunny Madra.

The lawsuit tells a darker version of the same story. The plaintiffs allege that Nvidia hired “nearly all” of Groq’s engineers — as many as 200 people, by some counts roughly nine in ten employees — while the licensing label kept the company nominally alive. Common stockholders, they argue, were cashed out cheaply. Ross and other top executives, by contrast, were permitted to “take a discount on those shares and be paid separately for following the technology to Nvidia” — two very different payouts extracted from a single transaction.

The complaint also attacks the process. It alleges the board was riven by conflicts of interest, that four affiliated funds — BlackRock, Social Capital, Infinitum and Disruptive — benefited from the structure, and that some shareholders were denied a vote entirely. On top of that, the plaintiffs contend that routing roughly $17 billion through licensing fees rather than an acquisition price left the payout taxable at the entity level and erased any claim on the technology’s future upside.

Three enforcement tracks, one contested price

The Delaware suit is the newest front, but not the only one. The Justice Department opened an antitrust investigation shortly after the December announcement and has since sent Nvidia a formal request for information, the New York Times reported in September. According to Reuters, the department is examining whether the structure was designed to dodge standard merger review — including the premerger notification requirements of the Hart-Scott-Rodino Act.

Congressional pressure has built in parallel. In February, Senators Elizabeth Warren, Ron Wyden and Richard Blumenthal asked the DOJ and FTC to investigate “reverse acqui-hire” deals by Meta, Google and Nvidia, describing them as de facto mergers in which Big Tech licenses technology and siphons top talent. In March, Warren and Blumenthal wrote directly to Jensen Huang, telling the Nvidia CEO that the Groq deal “appears to be structured to evade scrutiny by antitrust regulators” and that Nvidia had “effectively acquired Groq in all but name.” The DOJ’s antitrust chief publicly called acqui-hires a “red flag” the following month.

Even the headline number is disputed. The FT and CNBC put the transaction near $20 billion, Reuters has described a $17 billion figure for the license alone, and Dealroom calculated the licensing portion at roughly $14.7 billion. For context, Groq’s last funding round before the deal, in September 2025, valued the company at $6.9 billion — meaning the headline price was roughly triple its most recent private mark. The spread matters: the plaintiffs’ damages theory depends on how the total was split between shareholders and the engineers’ stock pool, and a package this large raises the question of whether it should have been reported as an acquisition at all.

Why the Delaware case is the one to watch

The shareholder suit targets the board’s fiduciary duties rather than the merger itself — which means it can proceed even if antitrust agencies ultimately decline to act. The plaintiffs themselves concede that no Delaware decision directly answers whether an acqui-hire warrants merger-style review, which makes the case a potential first test of the license-plus-hiring model in the country’s dominant corporate-law forum.

The technology at stake sits at the heart of Nvidia’s inference strategy — the business of running AI models once they are trained, widely projected to become the larger half of AI compute. Groq built its reputation on LPU chips that it claimed could run some AI models faster and more efficiently than Nvidia’s GPUs. Nvidia’s first product based on Groq technology was unveiled in March 2026 and reached full production in August.

The company left behind tells its own story. Groq has pivoted to operating an AI inference “neocloud,” and in August it raised $350 million at a $3.5 billion valuation — roughly half its pre-deal worth — in a round led by Disruptive, one of the very funds the complaint identifies as benefiting from the original structure. Nvidia was reported set to participate.

The bigger question: how Big Tech buys

Strip away the numbers and the case is about a template. Licensing-plus-hiring lets a buyer acquire a company’s technology and its people while sidestepping merger review, retention of legacy liabilities, and — if the plaintiffs are believed — fair treatment of common shareholders. If the Delaware court credits the complaint’s description of a license as a de facto sale in early motions, every similar deal gets repriced. Senators have already flagged Meta and Google arrangements in the same breath; the DOJ has a formal information request pending; and any remedy here could range from additional consideration for excluded shareholders to a restructuring of the deal itself.

The next catalysts are concrete: early procedural rulings in Delaware, the DOJ’s next move beyond its information request, and replies to the senators’ letters. However it ends, the Groq case is already the reference point for how Big Tech prices and structures licensing-plus-hiring transactions — and the first hard look at what the word “license” is willing to cover.