The FTC is suing NVIDIA in order to block its acquisition of Arm
NVIDIA has run into hurdle after hurdle in its acquisition of Arm, and it seems things are going to get a whole lot worse. The Federal Trade Commission in the U.S. is now suing NVIDIA in an attempt to prevent the deal, saying that it would “stifle competing next-generation technologies.” This adds the FTC to the long list of concerned parties, including the European Commission and the U.K. Competitions and Market Authority.
“The FTC is suing to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies,” said FTC Bureau of Competition Director Holly Vedova in a statement (via The Verge). “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. The FTC’s lawsuit should send a strong signal that we will act aggressively to protect our critical infrastructure markets from illegal vertical mergers that have far-reaching and damaging effects on future innovations.”
Arm’s technology is powering an ever-growing number of devices, from smartphones to the MacBook Pro 16 (2021), so it’s not too surprising that government agencies want to verify the deal won’t harm the global technology industry.
The FTC points out that not only does NVIDIA make use of Arm technologies in some of its products, but that it would then benefit from the knowledge of some of Arm’s agreements with NVIDIA’s competitors. This would result in a “critical loss of trust in Arm” and its ecosystem. Qualcomm, Microsoft, and Google have all voiced concerns about the deal.
Furthermore, it would give NVIDIA both the incentive and the ability to restrict those competitors from accessing Arm’s technology, stifling market competition and potentially damaging consumers in the process. The complaint names both NVIDIA and Arm’s owner, SoftBank. The trial is scheduled to begin in August 2022.
Given the length of the investigation, it might get a bit tight for NVIDIA to complete the acquisition of Arm. The company said in September last year that the acquisition was scheduled to be completed within 18 months. However, Jensen Huang, NVIDIA CEO, admitted in August that it may take a little bit longer than expected. Arm’s current owner, SoftBank, agreed with NVIDIA that the acquisition should be completed by the end of 2022.