On December 2, local time, the US Federal Trade Commission (FTC) sued to block Nvidia’s acquisition of Arm. Following the United Kingdom, this US$40 billion acquisition made waves again in the United States. The FTC believes that the combined company (Nvidia and Arm) will have the ability and motivation to stifle the next generation of innovative technologies, including chip technology for data centers and automotive driver assistance systems.
Holly Vedova, head of the FTC Competition Bureau, said: “Future technological innovation comes from maintaining current market competition. This transaction (the acquisition of Arm by NVIDIA) will distort Arm’s innovation momentum in the chip market and allow The combined company unfairly weakened Nvidia’s competitors.""
Arm, a subsidiary of the SoftBank Group, does not supply or sell finished computer chips or equipment. It develops and licenses microprocessor architecture and designs for technology companies including Nvidia, and provides important related support and services. These technology companies rely on Arm processor technology to manufacture computer chips that power a variety of modern computing devices, with applications covering smartphones, tablets, driving assistance systems, and large data center computers. Arm is known as the ""Switzerland"" of the semiconductor industry to provide external licenses in a neutral and open licensing manner.
Nvidia is one of the largest and most valuable computing companies in the world. It develops and sells computer chips and equipment, and is famous for supplying GPUs for personal computers and data centers. In addition, NVIDIA also develops and sells CPU and assisted driving products for advanced networks and data centers. In these areas, Nvidia and its competitors rely on Arm's technology.
Therefore, the FTC claims that the proposed merger will give Nvidia the ability and motivation to use its control of Arm technology to weaken competitors, thereby reducing competition and ultimately leading to lower product quality, reduced innovation, higher prices, and fewer consumer choices.
According to the FTC's complaint, the acquisition will damage Nvidia's three global markets based on Arm products: advanced driver assistance systems for automobiles; smart network card DPUs for improving the security and efficiency of data center servers; and cloud computing service providers The Arm-based CPU.
The complaint also stated that the transaction will enable Nvidia to obtain competitively sensitive information from Arm licensees (some of them are Nvidia's competitors). Arm's licensees rely on Arm to provide support in the development, design, testing, debugging, troubleshooting, maintenance and improvement of their products, and therefore often share competitively sensitive information with Arm. The trust between the two parties is based on Arm’s neutral position, but this acquisition may result in the loss of partners’ trust in Arm and its ecosystem.
In addition, this acquisition may reduce Arm’s motivation to pursue certain innovations that are contrary to NVIDIA’s commercial interests. Once NVIDIA determines that certain innovations may harm itself, some beneficial functions or innovations may not be developed or enabled.
According to FTC public information, the administrative lawsuit is called the FTC v. Nvidia, Arm, and Softbank case and will be heard on August 9, 2022