The Federal Trade Commission has come out against Nvidia’s proposed USD 40 billion acquisition of UK-based chip design provider Arm. The FTC said that the combined firm would have the means and incentive to stifle innovative next-generation technologies, including those used to run data centres and driver-assistance systems in cars. The US regulator filed a lawsuit in court to block the deal.
The FTC found that the proposed merger would give Nvidia the ability and incentive to use its control of Arm's technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice. Three worldwide markets are at risk, where Nvidia competes using Arm-based products: high-level advanced driver assistance systems for passenger cars, DPU SmartNICs, and Arm-based CPUs for cloud computing.
The deal also would give Nvidia access to competitively sensitive information about Arm’s licensees, some of whom are Nvidia’s rivals. That it is likely to decrease the incentive for Arm to pursue innovations that are perceived to conflict with Nvidia’s business interests, the FTC said.
Arm licensees share their competitively sensitive information with Arm because Arm is a neutral partner, not a rival chipmaker. The FTC argues the acquisition is likely to result in a critical loss of trust in Arm and its ecosystem.
The Commission said it cooperated closely with staff of the competition agencies in the European Union, UK, Japan, and South Korea. The takeover is facing intense regulatory scrutiny in these areas as well.
The EU opened an in-depth investigation of the takeover first announced in September 2020. In November, the UK also said it would be conducting a national security review, in addition to its own phase 2 competition investigation. China has yet to begin the formal review of the deal.
