Jen-Hsun Huang, president and chief executive officer of Nvidia Corp., speaks during the company's event at Mobile World Congress Americas in Los Angeles, California, U.S.
The FTC is trying to block the acquisition of Arm by SoftBank.
The deal was announced last year. The biggest hurdle it has faced so far is the U.S. action.
The FTC said that the proposed vertical deal would give one of the largest chip companies control over the computing technology and designs that rival firms rely on to develop their own competing chips.
The news did not move much on the news, and the stock of the company was up 2% before the announcement. The complaint is not public.
Arm is a core supplier of architecture technology. The Arm instruction set is used in nearly all mobile processors that power phones.
Concerns were raised that the company could cut off competitors from essential Arm technology. The company is best known for its graphics processors, which use different architecture, but some of its processors use Arm-designed cores and Arm architecture.
According to the FTC, the proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice.
The FTC Chair, who was appointed by President Joe Biden to lead the agency shortly after her confirmation to the agency earlier this year, has signaled an interest in more robust antitrust enforcement. Prior to her nomination, Khan was an academic and a congressional staffer, studying large technology companies and the unique ways they can amass power in digital markets.
During the Trump administration, the FTC sued Facebook on antitrust grounds, as well as Amazon, and outlets including Bloomberg have reported that the FTC began investigating the company as well.
The FTC said on Thursday that Arm's licensees share competitive information with the technology firm. The FTC is suing for chips for driver assistance, networking products, and Arm chips for cloud computing. The complaint was unanimously approved by the FTC.
The Arm deal has received scrutiny. In October, the European Commission announced an investigation into the deal.
An Nvidia representative said in a statement that they will continue to work to demonstrate that the transaction will benefit the industry and promote competition.
NVIDIA will invest in Arm's R&D, accelerate its roadmaps, and expand its offerings in ways that boost competition, create more opportunities for all Arm licensees and expand the Arm ecosystem. Arm's open licensing model and its intellectual property are important to the future of the company.
The trial before the FTC's own administrative law judge is scheduled to start in August of 2022. The FTC can either bring cases in-house or in federal court. The decision can be appealed in federal court.
The Arm transaction is expected to close in 2022.
