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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  • Vitor - Monday, December 6, 2021 - link

    Fookin hell, only Nvidia+Arm can compete against Apple chips. Stop being dumb, FTC.
  • mode_13h - Tuesday, December 7, 2021 - link

    Apple won't be king of the heap forever. Many tech giants that once seemed unbeatable have receded somewhat, and no longer dominate as before. IBM, Microsoft, Cisco, and even Google seems to have plateaued quite a bit.

    So, it's not enough to justify the concerns & potential harms listed in the lawsuit that there's a more advanced player the combined entity would be better positioned to possibly dethrone. Indeed, if Apple is seen to abuse its power, the proper solution is anti-trust litigation against *it*. Otherwise, Apple will eventually slip up, or others will simply catch up to it. I fully believe either Intel or AMD could compete with it, if they'd just be willing to leave x86 behind.
  • JeffreyHF - Saturday, December 18, 2021 - link

    I don't get your point. Apple is not a merchant vendor of chips, and Nvidia doesn't compete with Apple. There's nothing Nvidia can't do with an architectural license from AEM, and a stellar engineering team, that they could do if they owned ARM - that is, if they intend to compete on a technological field, rather than manipulate, handicap, and control other licensees.
  • melgross - Monday, December 6, 2021 - link

    I’m curious as to what governments would have been thinking if Apple hadn’t sold off it’s approximately one third share of stock in the early 2000’s. As Apple was one of the founders, they couldn’t have been shrugged off as Nvidia is here.
  • pogsnet - Monday, December 20, 2021 - link

    Surely if Nvidia gets the ARM, they will share information which makes the rest slower while they hide something that is needed to make it faster. Therefore there own product will be better than the rest.

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