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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  • GeoffreyA - Sunday, December 5, 2021 - link

    Meant as reply to Oxford Guy. Reply
  • Oxford Guy - Sunday, December 5, 2021 - link

    It’s extremely misleading — definitely not useful. Reply
  • mode_13h - Sunday, December 5, 2021 - link

    > isn't it fair to say, using economy of language, that so-and-so acted in bad faith?

    Yes, it's an entirely fair claim.

    OG's reaction to it is a clear overreach. I think I understand his concern, but (as usual) he's more concerned with advancing his anti-corporate agenda than trying to be reasonable.
    Reply
  • mode_13h - Sunday, December 5, 2021 - link

    > When I read an ad hom in your post ... I skip the rest of it.

    Sure, if you want to cede the point to me, I'll take the win.

    Your approach of crying "ad hom", every time I seem to put my finger on your underlying motive, just comes across as confirming my suspicions. Beyond that, it just looks weak.
    Reply
  • Tams80 - Sunday, December 5, 2021 - link

    Companies are composed of people though and do rely to varying degrees on good faith between leaderships.

    Hency why Apple, Microsoft, and Sony want little to do with Nvidia.
    Reply
  • Oxford Guy - Monday, December 6, 2021 - link

    Tams80, your point sounds valid but under light scrutiny it collapses.

    Firstly, the fundamental defining factor of the corporation is to sell less for more. That makes it fundamentally a bad-faith organization.

    Secondly, corporations are inanimate/lifeless. People will be replaced if their morality interferes with profiteering. Google's Schmidt mocked the 'don't be evil mantra', saying he wanted a definition of evil and also that it interfered with various plans. It is worthy of mockery because it runs against the defining quality of the corporation.

    Corporations are mechanisms for insulating the wealthy against the repercussions of their exploitation politics. As Bierce stated: individual profit (for wealthy individuals) without individual responsibility. The responsibility (cost) is pushed onto the commons/environment/masses.
    Reply
  • mode_13h - Tuesday, December 7, 2021 - link

    > fundamental defining factor of the corporation is to sell less for more.
    > That makes it fundamentally a bad-faith organization.

    Bad-faith is a standard of behavior, not motives.

    https://en.wikipedia.org/wiki/Bad_faith#In_law

    > Secondly, corporations are inanimate/lifeless.

    Not really. Just because it's not a singular, fleshy organism doesn't mean it lacks many of the essential characteristics of life.

    https://en.wikipedia.org/wiki/Life#Definitions

    What's unclear about your anti-corporate rants is what you envision, instead. Do you reject the very notion of collective human action? If not, there surely must be some formalized structures for such organizations and how they operate. And would you have a single individual be held accountable for all actions of the entire collective? That seems a bit unfair, given that no human can truly be omniscient and omnipresent.

    As I've said before, it's easy to look at the status quo and point out all the negatives. However, the modern world depends on something *like* a corporation. You can't just abolish them without destroying much of what enables our world to function. That's why it seems like so much tilting at windmills.

    We don't have to pretend the negatives don't exist, nor do we need to accept the status quo. However, what I don't see in your posts is anything I recognize as a realistic or pragmatic position. It's as if your only objective is to sew discontent and anti-capitalist sentiment.
    Reply
  • Oxford Guy - Tuesday, December 7, 2021 - link

    ‘What's unclear about your anti-corporate rants is what you envision, instead. Do you’

    Another tired fallacy. Stick to the subject.
    Reply
  • mode_13h - Wednesday, December 8, 2021 - link

    > Another tired fallacy. Stick to the subject.

    As usual, you either miss the point or seize on anything that lets you avoid the hard questions I pose.
    Reply
  • Qasar - Wednesday, December 8, 2021 - link

    and then claim its a fallacy, or ad hom, or something stupid to avoid the whole thing. 🤣😂🤣😂🤣😂🤣😂🤣😂🤣😂🤣
    Reply

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