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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  • Oxford Guy - Wednesday, December 15, 2021 - link

    ‘the internet is not some fundamental thing that existed before time. It's a thing that we collectively created, and we can collectively change it.’

    No relevance to what I wrote and no substance either. Pretty words, though.
  • Lakados - Sunday, December 5, 2021 - link

    The UK is fearful that NVidia who already does much of the same R&D ARM does will close offices and lay off employees which would see as many as 5000, highly paid engineers hitting the unemployment line.

    China is afraid NVidia will fight them on the ARM-China stuff as it is now a direct competitor to ARM. They don’t want to risk loosing that control.

    The US congress, and FTC, are being lobbied heavily by Qualcomm, Intel, and a few others about how it’s bad for consumers because…. Reasons? When mostly they are fearful that NVidia’s patent portfolio would make their stuff non competitive and cause years of their R&D to go down the drain as it just doesn’t stack up.
  • Oxford Guy - Sunday, December 5, 2021 - link

    The high pay that the corporate world gives is supposed to be balanced by the reduced job security. Otherwise, public sector jobs should be paying at the same level. So, if those engineers lose their jobs they’re supposed to get new ones. Or, they can always become secondary math and science teachers making very little money.

    The FTC doesn’t seem to be particularly concerned with catering to China. I don’t know about the UK in terms of that.

    Protecting Intel from RISC-V seems to be a foolhardy endeavor. The world is moving toward open source, just as microcomputing went from dozens of incompatible platforms to mostly x86.
  • 0x1874DE4C - Saturday, December 4, 2021 - link

    Can't see what the fuss is about. NVIDIA's acquisition of ARM would only do one thing - accelerate the transition to RISCV and ultimately waste a lot of NVIDIA's cash.
  • Oxford Guy - Saturday, December 4, 2021 - link

    So, basically exactly what I said in the post right above yours. I wonder if anyone has a substantive rebuttal to this point.
  • mode_13h - Sunday, December 5, 2021 - link

    The mere potential for the industry to eventually re-balance, after any harms done by the acquisition, is not the standard to which these M&A activities are held. The standard they must meet is that the move not do substantial harm. If it gives Nvidia a short-term advantage over its competitors, that harms consumers (i.e. in the form of higher prices, and since we're talking about Nvidia, that's not even a theoretical point) and shareholders of those other companies.

    Also, RISC-V & its various ISA extensions have not been deployed at the same scale or variety of applications as ARM. I think it's still too early to say that its patent situation is entirely stable. If credible patent claims emerge about some key ISA extensions, that could easily nullify the benefits of using it vs. Nvidia-controlled ARM, for some/many applications.
  • Oxford Guy - Thursday, December 9, 2021 - link

    If you want to talk about consumer harm there is a list of actual things to focus on rather than canards.

    Ethylene oxide. ‘Inert’ ingredients that are thousands of times more toxic to human cells and up to 25,000 times more toxic to creatures such as bee species.

    You talk a good game but it’s all fluff. Corporate welfare isn’t about protecting consumers.
  • mode_13h - Saturday, December 11, 2021 - link

    > If you want to talk about consumer harm there is a list of actual things to focus
    > on rather than canards.

    Stop playing whataboutism. We're talking about *this* acquisition and the basis upon which it should be evaluated.

    > Ethylene oxide.

    Has nothing to do with this. That's not in the FTC's bailiwick.

    > Corporate welfare isn’t about protecting consumers.

    When did I say anything about corporate welfare?
  • Qasar - Sunday, December 12, 2021 - link

    " You talk a good game but it’s all fluff. " as do you oxford guy, more then any one here. most of your posts are nothing but a fallacy, and BS
  • Oxford Guy - Wednesday, December 15, 2021 - link

    Tu quotient fallacy there. Shocking.

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