U.S. Federal Trade Commission Sues to Block Nvidia's Planned Arm Acquisition

[MacRumors]

The United States Federal Trade Commission today announced that it has filed a lawsuit to block Nvidia from acquiring Arm in a deal worth $40 billion.

According to the FTC, the deal would give Nvidia, one of the largest chip companies, control over computing technology and designs that rival firms rely on to develop competing chips. The FTC believes an acquisition would stifle "innovative next-generation technologies." The combined firm would be able to "unfairly undermine" Nvidia's competitors.

"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. "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."

Nvidia's plan to acquire Arm from SoftBank was announced back in September 2020. At the time, Nvidia said that it would use the Arm acquisition to create the "world's premiere computing company for the age of AI." Nvidia pledged to continue Arm's open licensing model and customer neutrality, but that hasn't convinced companies like Qualcomm, which has opposed the deal.

Qualcomm in February told the FTC, the European Commission, the UK Competition and Markets Authority, and China's State Administration for Market Regulation that it was against Nvidia's acquisition of Arm. Qualcomm said that Nvidia could become the gatekeeper for Arm's technology, which could prevent other chipmakers from using it.

Qualcomm has suggested that the only way that Nvidia could make its acquisition profitable would be to restrict Arm's technology. Arm licenses its chip technology to more than 500 companies, including Apple, so there are major concerns around potential licensing changes.

The FTC has sided with Qualcomm, and believes that the merger would give Nvidia "the ability and incentive" to use control over Arm technology to undermine its competitors and reduce competition. According to the lawsuit, an Nvidia acquisition of Arm could impact high-level advanced driver assistance systems, DPU SmartNICs for datacenter servers, and Arm-based CPUs for cloud computing service providers.

An acquisition would also give the merged company "less incentive to enable otherwise new beneficial features or innovations" if Nvidia decides that these innovations would harm Nvidia.

Article Link: U.S. Federal Trade Commission Sues to Block Nvidia's Planned Arm Acquisition

 

[mdriftmeyer]

🍿 here. Hot buttery 🍿 here.

 

[TheYayAreaLiving 🎗️]

Putting a hold on $40 billion dollar business deal. They really got nothing better to do? 😂

Ouch! Get the popcorns ready. This is going to be a wild one.

 

[JosephAW]

I didn’t know Intel had lobbyists.
Meanwhile Apple is probably working on a Rosetta 3 that will run ARM code.

 

[Realityck]

FTC wants to ARM wrestle with Nvidia

 

[ghanwani]

A regulator that is finally waking up.

 

[Apple Knowledge Navigator]

Yikes. That’ll cost them an ARM and a leg!

🤷‍♂️ not even a chuckle?

 

[Blkant]

Oh please let the block be successful. Such bs there isn’t more of an outcry over this.

 

[nwcs]

It likely should be blocked. Too many of the recent mega acquisitions out there have increased prices and reduced competition.

 

[TinyMito]

As much I love Nvidia GPU, please block Nvidia. I really don't want other competitor falter because of Nvidia changes the policy anti-competition practice and this potentially can harm Apple, Qual and many smaller companies from development for better technologies.

We need diversity in technologies. <- whatever that means.

 

[KaliYoni]

By the time this gets resolved, as with most antitrust actions, it probably won't matter anymore. AT&T put itself back together, Netscape is gone, Sprint's continued existence hasn't made mobile service cheaper, etc, etc, etc...

 

[Analog Kid]

Whoa, this is unexpected. I'm not a huge fan of acquisitions and consolidation of competitors, but I'm not sure that's what this is, and I'm not sure I like the precedent...

CPU/GPU integration is obviously important this leaves fewer fully integrated competitors out there.

I'm open to arguments in favor though.

 

[alchemistmuffin]

Wouldn’t be surprised if Apple filed the objection to ARM being bought out by Nvidia considering how much they hate them for graphics card disaster, resulting in FTC suing Nvidia.

 

[Dwalls90]

The pandemic and chip shortage has gone to show us how important chips are to the future of every facet of life. It's probably good there is an increased focus on this area of the economy, particularly given the absurd amounts NVIDIA is charging for their latest GPU's pre-acquisition.

 

[ian87w]

I’m surprised they took this long. The deal was proposed long time ago. It is definitely a concern.

 

[Unregistered 4U]

Wouldn’t be surprised if Apple filed the objection to ARM being bought out by Nvidia considering how much they hate them for graphics card disaster, resulting in FTC suing Nvidia.

Apple’s got no objections, their license would still be in place after the merger.

 

[crazy dave]

Wouldn’t be surprised if Apple filed the objection to ARM being bought out by Nvidia considering how much they hate them for graphics card disaster, resulting in FTC suing Nvidia.

As stated in the article, it was Qualcomm who filed the objection. While Apple might not be thrilled, unlikely that they objected as they aren’t actually affected by this potential merger. They have a perpetual ISA license. The potential conflicts of interest center around the core licenses and ancillary technology licenses which directly affects Nvidia and its competitors/customers.

 

[bakerzdosen]

Wouldn’t be surprised if Apple filed the objection to ARM being bought out by Nvidia considering how much they hate them for graphics card disaster, resulting in FTC suing Nvidia.

I dunno.

Officially, I haven't seen a single peep out of Apple about it. There have been others (notably Google, MS, and Qualcomm) who have publically objected to it, but Apple hasn't joined them.

I *think* this might be because Apple doesn't really care. They have a perpetual architecture license. I really wish I could track down the article right now, but it's my understanding that it really doesn't matter what happens to ARM ownership. Apple's license will survive that and allow it to continue with business as usual.

I know Apple isn't Nvidia's biggest fan right now, but now that Apple make their own CPUs and GPUs, I can't really say that AMD would be Apple's biggest fan either. They are basically competitors now.

In other words, I think that as long as ARM has deep pockets behind it to continue development, Apple's happy.

Edit: Found it the article I was remembering.

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[dannyyankou]

We need tougher antitrust laws. It's so easy for companies to just buy out the competition, without adding any value to the actual business. It increases prices, stifles innovation, and gives consumers less choice.

 

[now i see it]

This problem was obvious the day the first buyout headline came out. From what I’ve read, Nvidia is a horrible company to do business with. (But then again so is Qualcomm). They definitely shouldn’t be the gatekeeper of ARM IP

 

[kalsta]

Who would this merger benefit? Arm’s customers? Consumers? Anyone…?

Click here

 

[crazy dave]

Whoa, this is unexpected. I'm not a huge fan of acquisitions and consolidation of competitors, but I'm not sure that's what this is, and I'm not sure I like the precedent...

CPU/GPU integration is obviously important this leaves fewer fully integrated competitors out there.

I'm open to arguments in favor though.

It’s pretty straightforward really and not that surprising. While the FTC is the first regulatory agency to formally object, pretty much all of them (the UK, EU, China, Japan) were looking into it and making unhappy noises. ARM is already an integrated GPU/CPU licensing body and the crux of the matter for Nvidia’s competition is how does Nvidia plan on making their $40bn acquisition profitable? Where’s the benefit from owning ARM as opposed to licensing from them? The easiest way is to cut off IP that doesn’t benefit Nvidia and sequester IP that does. And nobody is buying Nvidia’s promises that they won’t do either. Maybe Nvidia means it, but nobody believes them.

 

[BuffaloTF]

If this gets blocked, there should just be an industry consortium put together to purchase it and maintain its development and licensing model.

 

[BuddyTronic]

It likely should be blocked. Too many of the recent mega acquisitions out there have increased prices and reduced competition.

SoftBank CEO is a brilliant player

 

[_Spinn_]

This really should be blocked. I don't know who should get ARM if SoftBank wants to sell it but it definitely shouldn't go to Nvidia. I'm really surprised that there isn't more push back on this deal.