The United States Federal Trade Commission has filed a lawsuit to stop the acquisition of Arm by Nvidia.
According to the FTC, the deal would give one of the largest chip companies control over computing technology and designs that rival firms rely on to develop competing chips. The FTC believes that an acquisition would stifle innovation. The combined firm would be able to undermine their competitors.
The FTC is trying to block the largest chip merger in history to prevent a chip conglomerate from hurting innovation. Today's chip markets are important for tomorrow's technologies. Arm's incentives in chip markets would be distorted by the proposed deal. 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.
The plan to acquire Arm from SoftBank was announced in September 2020. At the time, the company said it would use the Arm acquisition to create the world's premiere computing company for the age of artificial intelligence. The deal has been opposed by companies that don't like Arm's open licensing model.
In February, the FTC, the European Commission, the UK Competition and Markets Authority, and China's State Administration for Market Regulation were all told that it was against the acquisition of Arm. It was said that the technology could prevent other chipmakers from using it.
The only way that the acquisition could be profitable would be to restrict Arm's technology. There are major concerns around potential licensing changes because Arm licenses its chip technology to more than 500 companies.
The FTC believes that the merger would give Nvidia the ability and incentive to use control over Arm technology to undermine its competitors and reduce competition. The lawsuit states that an acquisition of Arm by Nvidia could have an impact on advanced driver assistance systems, DPU SmartNICs for datacenter server, and Arm-based CPUs for cloud computing service providers.
If the merged company decides that the innovations would harm the company, there would be less incentive to enable them.
