United States FTC Files Lawsuit to Block NVIDIA-Arm Acquisition
by Ryan Smith on December 2, 2021 7:45 PM EST
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
Quoque, which I did type. Thanks autodefect!Qasar - Wednesday, December 15, 2021 - link
and more bsJeffreyHF - Saturday, December 18, 2021 - link
It would also give Nvidia intimate knowledge of all R&D and product development roadmaps, of all ARM licensees, and the ability to prioritize ARM focus on areas that benefit Nvidia.WaltC - Saturday, December 4, 2021 - link
This isn't happening...there are too many powerful people against it. Much of it stems from getting burned by nVidia in past dealings--nVidia doesn't play "nice" and never has. Their bad reputation goes back decades--it's not new. I remember when nVidia was awarded the first xBox contract--Gates was still with Microsoft at the time. Right after the contract was fulfilled and Microsoft was preparing to award the contract for the second iteration of the xBox--nVidia sues Microsoft. Microsoft settled but it was obvious they were really pissed. nVidia never got another xBox contract--even though it kept submitting bids for many years thereafter. Whatever they pulled it pissed Microsoft off a great deal. I don't see this deal making it for nVidia--too many people don't trust the company. I don't--but I'm just a small fry here. nVidia made its bed...Oxford Guy - Saturday, December 4, 2021 - link
Corporations weren't designed to be nice.Oxford Guy - Saturday, December 4, 2021 - link
Here's the deal... since so many comments are using the false claim that some corporations are benevolent people and others are malevolent people.The deal is that the corporation exists to do one thing: enrich the wealthy. Henry Blodget isn't the only person to post plenty of hard data (charts) on that. But, his seminal article about why people are protesting (from the Occupy period) is a good a place to start. Find the one with dozens of charts. It shows, very clearly, the massive divide between the financial class and the masses (whose claim to fame is that they 'own' debt). Corporations are a machine designed by the former to milk the latter. The masses get some shiny toys and quality of life improvements to partially compensate them for the exploitation – to keep them pacified.
A corporation has no obligation to do anything altruistic, beyond providing just enough pacification (goods/services) to the masses to keep the corporation from being attacked politically in a manner that actually threatens its scope and survival.
Corporations can even be used to violate laws. When the fines are smaller than the profit it is an attractive proposition. Given that corporations frequently function to insulate against liability sweetens the corrupt pot. Insiders on MSNBC blithely stated that the DOJ has long had a policy of fining corporations rather than jailing executives.
The illogical claim is that it's better for ordinary workers, as if the corporation would suddenly be shut down — as if it couldn't simply get replacement executives. Imagine the idea of promoting workers at the company to the executive class. Egad! Of course the justification is illogical but such things are par for the course. The expectation is that the masses will hear the nice words, nod, and never unpack them to see the falsity.
You are worried about what 'Microsoft thinks' after what Microsoft's executives did to IBM via the OS/2 scam? What about how IBM bypassed superior available consumer hardware when building the first IBM PC — simply to maximize margin? Critics complained but stock holders smiled, as selling less for more is the point. One cynical view is that the function of the critics is to obscure the truth of what corporations are about.
GeoffreyA - Sunday, December 5, 2021 - link
Corporations are rotten. However, some are worse than others. If there were a rotteness scale, Nvidia would hit MAX till the bell broke off. Understandably, folk are up in arms about it, especially money-hungry dogs like Apple I'm sure. And you're right, perhaps it would have instigated a transition to RISC-V; but right now, there's too many invested in ARM.Oxford Guy - Sunday, December 5, 2021 - link
‘but right now, there's too many invested in ARM.’That doesn’t make sense in any sort of free market context. All you’re saying is that anti-competitive behavior is protectionism for certain companies.
mode_13h - Sunday, December 5, 2021 - link
> That doesn’t make sense in any sort of free market context.It does, unless you're advocating entirely laissez-faire capitalism (which I don't, and is largely theoretical). The goal of the FTC is to keep any market player from gaining an unfair advantage, through M&A activities. That's exactly what this is.
> All you’re saying is that anti-competitive behavior is protectionism for certain companies.
It's the overall market they're trying to protect. The ultimate test is in the plausible impact on consumers. A healthy market delivers better value for them.
Oxford Guy - Monday, December 6, 2021 - link
Capitalism in name only... all that.