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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  • GeoffreyA - Monday, December 6, 2021 - link

    Just a bit of humour. Reply
  • Wereweeb - Friday, December 3, 2021 - link

    In the end of the second paragraph, there's a lone "The" Reply
  • Kamen Rider Blade - Friday, December 3, 2021 - link

    Good, now for the rest of th World's Government to dog pile on top of this and file their own lawsuits or injunctions to block the merger. Reply
  • Kamen Rider Blade - Friday, December 3, 2021 - link

    Honestly, I think nVIDIA would have an easier time acquiring one of the remaining x86 Licenses. Reply
  • webdoctors - Friday, December 3, 2021 - link

    But with their current stock price this deal was valuing ARM for like $70B. There's no way they're going to get that much anywhere else.

    Its weird AMD was allowed to buy ATI but this deal is not allowed. ATI had a ton of customers, and post merger the ATI+Intel partnership dissolved completely. Seems like no consistencies here.
    Reply
  • Einy0 - Friday, December 3, 2021 - link

    That was a completely different set of circumstances. ATI was not doing well and AMD was starting to fail as well. It was more of a desperation move by AMD to stay relevant, and it prevented ATI from going bankrupt. Nvidia is a shrewd tech giant, more in the mold of a modern Apple Inc. ATI sparingly licensed it tech for non-competitive usage. ARM solely runs on licensing its IP and ARM IP is everywhere. It is not financially struggling.

    If Nvidia ever showed one ounce of good faith toward another company, I would maybe say this isn't a bad thing. But Nvidia has a track record of pushing around its own customers and as well as anyone who gets in its way. It's an industry bully, and I have zero doubts that it will make all the ARM IP holders suffer if it gets control. ARM IP holders will be left with Nvidia's table scraps as it feasts on the tech market.
    Reply
  • Oxford Guy - Saturday, December 4, 2021 - link

    'If Nvidia ever showed one ounce of good faith toward another company,'

    Don't anthropomorphize inanimate entities. Corporations are not people.
    Reply
  • mode_13h - Saturday, December 4, 2021 - link

    > Corporations are not people.

    They're not, but I don't know why you're so threatened by the idea of judging them as if they were. They surely wouldn't come off looking any better for it.

    The issue of treating them as people isn't in how we judge their behavior, it's that they're granted legal rights of people, while *not* sharing many of the other obligations and constraints that bound actual human adults.

    I think we're in agreement that it'd be best if they weren't regarded as people in *any* sense.
    Reply
  • Oxford Guy - Saturday, December 4, 2021 - link

    'They're not, but I don't know why you're so threatened by the idea of judging them as if they were.'

    That statement is illogical twice over. The first problem is that it's self-contradictory. The second is that it embeds one of your usual ad homs.

    When I read an ad hom in your post (I actually started at the beginning this time, hoping for a break from the pattern) I skip the rest of it. So, if you managed to move from the double-illogic opening salvo to something substantive... better luck next time.
    Reply
  • GeoffreyA - Sunday, December 5, 2021 - link

    Corporations aren't people. But what if the behaviour of that entity---the corporation---approximated abstract human behaviour? Then, isn't it fair to say, using economy of language, that so-and-so acted in bad faith? It's an everyday convention, tied to language's figurative nature, and quite useful. Reply

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