United States FTC Files Lawsuit to Block NVIDIA-Arm Acquisition
by Ryan Smith on December 2, 2021 7:45 PM EST
In the biggest roadblock yet to NVIDIA’s proposed acquisition of Arm, the United States Federal Trade Commission (FTC) has announced this afternoon that the regulatory body will be suing to block the merger. Citing concerns over the deal “stifling the innovation pipeline for next-generation technologies”, the FTC is moving to scuttle the $40 billion deal in order to protect the interests of the wider marketplace.
The deal with current Arm owner SoftBank was first announced in September of 2020, where at the time SoftBank had been shopping Arm around in an effort to either sell or spin-off the technology IP company. And while NVIDIA entered into the deal with bullish optimism about being able to close it without too much trouble, the company has since encountered greater political headwinds than expected due to the broad industry and regulatory discomfort with a single chip maker owning an IP supplier used by hundreds of other chip makers. The FTC, in turn, is the latest and most powerful regulatory body to move to investigate the deal – voting 4-0 to file the suit – following the European Union opening a probe into the merger earlier this fall. The
While the full FTC complaint has yet to be released, per a press release put out by the agency earlier today, the crux of the FTC’s concerns revolve around the advantage over other chip makers that NVIDIA would gain from owning Arm, and the potential for misconduct and other unfair acts against competitors that also rely on Arm’s IP. In particular, the FTC states that “Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets. This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals.”
To that end, the FTC’s complaint is primarily focusing on product categories where NVIDIA already sells their own Arm-based hardware. This includes Advanced Driver Assistance Systems (ADAS) for cars, Data Processing Units (DPUs) and SmartNICs, and, of course, Arm-based CPUs for servers. These are all areas where NVIDIA is an active competitor, and as the FTC believes, would provide incentive for NVIDIA to engage in unfair competition.
More interesting, perhaps, is the FTC’s final concern about the Arm acquisition: that the deal will give NVIDIA access to “competitively sensitive information of Arm’s licensees”, which NVIDIA could then abuse for their own gain. Since many of Arm’s customers/licensees are directly reliant on Arm’s core designs (as opposed to just licensing the architecture), they are also reliant on Arm to add features and make other alterations that they need for future generations of products. As a result, Arm’s customers regularly share what would be considered sensitive information with the company, which the FTC in turn believes could be abused by NVIDIA to harm rivals, such as by withholding the development of features that these rival-customers need.
NVIDIA, in turn, has announced that they will be fighting the FTC lawsuit, stating that “As we move into this next step in the FTC process, we will continue to work to demonstrate that this transaction will benefit the industry and promote competition.”
Ultimately, even if NVIDIA is successful in defending the acquisition and defeating the FTC’s lawsuit, today’s announcement means that the Arm acquisition has now been set back by at least several months. NVIDIA’s administrative trial is only scheduled to begin on August 9, 2022, almost half a year after NVIDIA initially expected the deal to close. And at this point, it’s unclear how long a trial would last – and how long it would take to render a verdict.
Source: United States Federal Trade Commission
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mode_13h - Sunday, December 5, 2021 - link
> Corporations are rotten.The ideal of capitalism is to minimize harm and maximize the benefit of self-interested market participants. People need to understand this. It's the reason we need good laws and effective enforcement.
Consider the alternatives. Are you going to simply wish they weren't rotten? As long as bad behavior produces growth, it's a race to the bottom. If their competitors don't adopt similar tactics, they'll be run out of business.
GeoffreyA - Monday, December 6, 2021 - link
I just can't grasp the ins and outs of capitalism. But I do side with it, something my younger self would've been shocked by. Non-capitalist systems are usually some form of state capitalism masquerading as "equality and ownership for all." Well, I know that if I've privately toiled and sweated for something, it's mine. Nobody has the right to take it away. But, and correct me if I'm wrong, a lot of non-capitalist feeling often seems to me a secret desire to take away what belongs, usually by toil, to someone else.Idealistically, I would subscribe to something like Star Trek's non-feasible system, where everyone works but there doesn't appear to be any money!
Oxford Guy - Monday, December 6, 2021 - link
Mode believes that governments should pick the winners and losers. It's not capitalism.GeoffreyA - Tuesday, December 7, 2021 - link
I think what he's saying is: in the real world, it can end up being a dirty game, so there's got to be regulation. As in sport, there must be rules and umpires.mode_13h - Tuesday, December 7, 2021 - link
> Mode believes that governments should pick the winners and losers.Generally, no. I do think it's best if no market participant has too much power. In short, I believe capitalism needs to be regulated, both to keep a level playing field and to mitigate the damage caused by its excesses.
mode_13h - Tuesday, December 7, 2021 - link
> something my younger self would've been shocked by.As a teenager, I found the idea of socialism to be alluring. That was until I saw how poorly it tended to work, in practice.
> Non-capitalist systems are usually some form of state capitalism
> masquerading as "equality and ownership for all."
If the constant is greed, then we shouldn't be surprised to see it manifest in one way or another, no matter what the system. So, the challenge is then one of devising the most effective system to manage & even harness that greed for the benefit of society.
I don't argue that greed is good. I merely argue that it's fundamental and it's what we make of it.
GeoffreyA - Friday, December 10, 2021 - link
So much that we do is driven by simpler, fundamental currents in our nature. How often is vanity or desire for applause the root of virtuous behaviour? Quite often, the real drive is hidden even from ourselves or, if visible, we don't wish to accept it. I don't mind: the proof of the pudding is in the eating, not the ingredients or oven. But it can play out in more sinister ways when people are hitting out on some social issue but really are pushing for their own interest. To me a lot of ill feeling against the rich seems that way. What is it, except envy? Envy for the rich man's wealth. Then, highfalutin rhetoric and philosophies are built up in the universities (all that Marxist nonsense?) to sanction stealing another man's property.mode_13h - Saturday, December 11, 2021 - link
> What is it, except envy?Justice is a real and fundamental social concept. In controlled experiments, primates have repeatedly and consistently reacted negatively, when they've observed one of their peers getting cheated or getting a worse deal.
Some people are more sensitive and activated by the perception of injustice than others. I think there is some legitimate outrage that *not* born out of envy, when some reap in excess at the seeming (or actual) expense of those with little.
For this and other reasons, I think the legitimacy of the system hinges on some degree of fairness. Fairness in both the rules and their enforcement.
GeoffreyA - Sunday, December 12, 2021 - link
You're right. I was being overly cynical against my better reason. The main thing we all want is fair, equal dealing. What is good for one is good for all. And when one sees the disparities between rich and poor, it's hard not to be moved by the picture. Concerning the primate experiments, I believe there are neural correlates that have a bearing on this, when one is being treated differently, being left out, etc. It causes an effect similar to physical pain.(And while it may seem I was defending the rich because I'm well off, the truth is, I work for small wages, have struggled to get a job, and grew up in a home where we weren't well-to-do at all.)
GeoffreyA - Sunday, December 12, 2021 - link
Thinking about my comment, it struck me that my muddled sentiment was trying to say: if society is divided into three segments---the high, the middle, and the low---it is the middle who have hidden motive to install themselves in place of the high, using lip service to equality and brotherhood to get the low on their side. What's more, they come up with all sorts of intellectual cant in the universities to back their aims. Once they, the middle, have displaced the high, the proletariat will still be in the spot they've always been. Take it, I was hitting out against that. When I hear talk of yachts, etc., I fancy I can almost sense the envy of this upward-aiming group.