The news: The Federal Trade Commission announced last week that it is taking legal action to block the merger between Nvidia and Arm because of its potential to “stifle competing new generation technologies”, through The edge.
Why this is important: that of Nvidia 40 billion dollars The acquisition of Arm has been particularly controversial in a time of tightening Big Tech regulation due to its broader implications for the chip industry and Arm’s customers, who are also competitors of Nvidia.
- “FTC Suits to Block Largest Semiconductor Chip Meltdown in History to Prevent Chip Conglomerate from Stifling Innovation Pipeline for Next-Generation Technologies.” Holly Vedova, Director of the FTC Competition Bureau said in a statement.
- Given that Nvidia competes with many of Arm’s customers, regulators fear that Nvidia could use its position to put its competitors at a disadvantage. In the context, more 200 billion tokens were designed for various devices based on designs from Arm (more so than from any other registered company).
- The UK Competition and Markets Authority (CMA) has also started investigate the acquisition last month, and the European Union opened a formal investigation into the deal in October.
And after? Nvidia responded by promising that it would keep Arm’s existing open licensing model, where the company designs semiconductors for Apple, Qualcomm, Samsung, Amazon, Microsoft, and others.
- A spokesperson for Nvidia said in a statement to The Verge that “we will continue to work to demonstrate that this transaction will benefit the industry and promote competition.”
- “The FTC 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,” said Vedova of the FTC.
The problem: The regulatory review has placed the deal in a precarious position which could lead Nvidia and Softbank (who owns Arm) reassessing the acquisition.
- This sends a strong message to Big Tech, whose mergers, like Meta‘s acquisition of Giphy, are closely monitored and implemented. In Meta’s case, the UK CMA ordered him to sell Giphy.
- Jensen Huang, CEO of Nvidia expects the acquisition of Arms to be completed by March 2022. The trio of investigations by the CMA, the EU and the FTC and the resulting lockdown could indefinitely postpone the deadline or indefinitely. ‘cancel completely.