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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  • StevoLincolnite - Friday, December 3, 2021 - link

    Trillionaires don't exist yet.
  • mode_13h - Friday, December 3, 2021 - link

    The point seemed to be referring to the respective companies' valuations, based on market cap.
  • Silver5urfer - Friday, December 3, 2021 - link

    Central Banks do exist and they control the world wide money supply & they are privately owned.
  • mode_13h - Friday, December 3, 2021 - link

    > they are privately owned.

    WTF? Stop watching conspiracy videos on youtube.
  • Silver5urfer - Saturday, December 4, 2021 - link

    You comment on every single thing here. You know everything ? Go back to Woodrow Wilson signing of the Fed act, just read what he says from his own mouth.

    Conspiracy on youtube ? lol negative IQ showcase.
  • mode_13h - Sunday, December 5, 2021 - link

    Everyone in the US *should* understand more about the Federal Reserve system, because it *is* systemically important to our economy. Furthermore, because it's complex and seemingly mysterious, it often factors into conspiracy theories. The Act is indeed a decent starting point:

    I'm not going into a detailed "debate" about it, but the idea that not being outright-owned by the government means they're somehow equivalent to a private individual or corporation in the ways they can act is not borne out by the facts (i.e. how they're governed and the charter under which they operate).

    I just find it suspicious that you seized on central banks, rather than the obvious institutions of such size and power. Besides the tech firms that were obviously intended by the comment, we could also talk about investment firms, some of which indeed *do* have $Trillions under management. That's a lot of power for truly private citizens & corporations to control.
  • melgross - Monday, December 6, 2021 - link

    It’s actually not. It’s more of a quasi governmental bank.
  • Silver5urfer - Friday, December 3, 2021 - link

    I wonder what's the user/consumers have benefit here. There's no benefit to people here. If a product is successful it will make money irrespective of user benefit, see AirPods.

    Nvidia taking over ARM will push ARM to next level due to Nvidia's HPC and AI expertise and the IoT market. This move would only hurt Apple and Qcomm. Samsung is on Nvidia side because of their exclusive partnership, I don't think they are a part of lobby to smite Nvidia. AMD also probably no horse in this race. As for M$ I doubt. Since their bread and butter is Services market unless those rumors of making a Graviton type clone for their own Azure instances. Plus ARM emulation on Windows is downright pathetic.

    This move is caused by Apple and Qcomm heavily lobbying against Nvidia. It would have been amazing to see Apple getting crushed by Nvidia, unfortunately only Apple gets to ruin other companies - They killed Imagination tech, GT Advanced, Dialog Semi. Wanted their pet Broadcom to ruin Qcomm. Google is irrelevant, their Tensor is utter trash. And their silicon expertise is nothing substantial.

    There are far worst M&As done in the past with zero resistance - Google/Fitbit/Motorola. ATT take over of Warner, Disney on Fox properties, Facebook Whatsapp, IBMThinkpad Lenovo, Comcast Universal, these have long lasting impacts and have real effect on the world.
  • mode_13h - Saturday, December 4, 2021 - link

    > Nvidia taking over ARM will push ARM to next level due to Nvidia's HPC
    > and AI expertise and the IoT market.

    I think Nvidia has said ARM will continue to operate independently. Don't assume that ARM employees will suddenly have access to all of Nvidia's IP or that the architects from the respective businesses will be chatting every day.

    > AMD also probably no horse in this race.

    AMD probably had an ARM core somewhere in the development pipeline, when the deal got announced.

    > ARM emulation on Windows is downright pathetic.
    > Google is irrelevant, their Tensor is utter trash.

    Why do you think these companies need (in your opinion) successful execution to have an interest in the deal? If the deal runs counter to their strategic ambitions, that's enough for them to take a stand against it, regardless of how credible those ambitions were.
  • Silver5urfer - Saturday, December 4, 2021 - link

    Companies do not operate for what people care. That's why I mentioned all the other M&As. This was done by Apple and Qcomm precisely. More of an Apple move. They have huge pockets and they do not want Nvidia in their ARM processors.

    Google has a huge command and they control Android. They can work with Nvidia with close partnership for a better SoC than Exynos based Tensor garbage. Strategic Ambition for Google doesn't exist. That company is incapable of breaking even 5% of marketshare in N.A handset. That's why they are irrelevant.

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