The image is by Alex Castro.
The Federal Trade Commission is trying to block the merger because it believes that the combined companies would stifle competition. The FTC launched an investigation into the deal after complaints from several companies.
Holly Vedova, director of the FTC Bureau of Competition, said in a statement that the FTC is suing to block the largest chip merger in history. Preserving today's chip markets is important for tomorrow's technologies. The proposed deal would allow the combined firm to undermine its rivals and distort Arm's incentives. 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 damaging effects on future innovations.
Another regulatory roadblock for Arm.
High-level advanced driver systems for vehicles, Arm-based CPUs for cloud computing, and DPU SmartNICs are some of the products that Nvidia uses. The concern is that by acquiring Arm, Nvidia would gain an unfair advantage.
The FTC is concerned that Arm licensees who already compete with Nvidia would gain access to sensitive information from Arm licensees who already compete with Nvidia, in addition to de-incentivizing Arm from working on new products and designs that would conflict with Nvidia's own interests.
Arm has an open licensing model in which it provides designs to a massive list of companies, including Apple, Amazon, and more. In an editorial for the Financial Times, Jensen Huang wrote that he could "unequivocally state that Nvidia will maintain Arm's open licensing model." Arm's supply to any customer is not intended to be throttle.
The European Union opened a formal investigation into the deal in October, while the UK's Competition and Markets Authority started a more in-depth examination of potential national security risks and competition concerns last month.
In August, Huang told the Financial Times that the regulatory review would likely take longer than the company had originally estimated, but he was confident that regulators would recognize the benefits of the acquisition. The original plan was for the merger to be completed in March of 2022. With the FTC suing to block the deal, it seems that the list of hurdles has just gotten longer.
