F.T.C. Sues to Block Nvidia’s Takeover of Arm

WASHINGTON – The Federal Trade Commission sued the lockdown Thursday The $ 40 billion acquisition of Nvidia Another chip company, Arm, halted one of the semiconductor industry’s largest deals in history as federal regulators pushed for corporate consolidation to curb.

The FTC said the deal between Nvidia, which makes chips, and Arm, which licenses chip technology, would stifle competition and harm consumers. The proposed deal would give Nvidia control of the computer technology and designs that competing firms rely on to develop competing chips.

“Tomorrow’s technologies depend on sustaining today’s competitive, cutting-edge chip markets,” said Holly Vedova, director of the FTC’s Competition Bureau. “This proposed deal would skew Arm’s incentives in the chip markets and allow the combined company to unfairly undermine Nvidia’s rivals.”

The federal cartel authorities have promised to examine mergers more closely and curb monopolies in order to revive competition in the economy. The lawsuit against the deal is the Federal Trade Commission’s first major merger decision under the leadership of Lina Khan, a critic of large corporate mergers and technology monopolies. Ms. Khan is one of a number of top antitrust officials Chosen by President Biden to contain the power of the Silicon Valley giants.

The administration also has promised to break open the gas, telecommunications and pharmaceutical markets to lower consumer prices at the pump and for the internet and home prescriptions. Last month, sued the Justice Department Penguin Random House, US largest publisher, from taking over rival Simon & Schuster.

In a statement, Nvidia said it would contest the FTC lawsuit. “We will continue to work to show that this transaction benefits the industry and promotes competition.”

If successful, the FTC lawsuit would not have a major financial impact on Nvidia or Arm. But it would be a blow to Nvidia’s ambitions to help shape the direction of the computer industry – especially in the field of artificial intelligence.

Arm, a British company owned by the Japanese conglomerate SoftBank Bought in 2016, licensed designs for microprocessors and other technologies that other companies use in their semiconductors. Its technology was extremely successful and offers the computing functions in practically all smartphones and many other devices. Arm recently estimated that its technology is used in about 25 billion chips a year.

California-based Nvidia is a dominant supplier of chips for rendering graphics in video games, a technology that has been adapted in recent years to also power artificial intelligence applications used by cloud companies and self-driving cars.

Jensen Huang, the company’s CEO, has pushed the company into becoming a broader, full-stack, computing technology provider. In April, for example, Nvidia announced that it would build an ARM-based microprocessor for servers in data centers.

Announcing the September 2020 deal to purchase Arm, Mr. Huang said the combination would create a leader in the advancement of AI technology. He also promised to run Arm without changing its business model, act independently, and treat all chip customers fairly.

Mr. Huang said at the time that artificial intelligence would spark a new wave of computing and that “our merger will create a company that is superbly positioned for the age of AI”.

But the deal was controversial from the start as some of Arm’s big customers, like Qualcomm, worried about increased competition from Nvidia and the possibility of a rival gaining access to their confidential information.

The FTC said the deal would give Nvidia access to sensitive information about its competitors who license Arm’s technologies and designs.

“Licensees rely on Arm when it comes to support in the development, design, testing, debugging, troubleshooting, maintenance and improvement of their products,” said a statement from the FTC. “Arm licensees share their competitive information with Arm because Arm is a neutral partner and not a competing chip manufacturer. The takeover will likely lead to a critical loss of trust in Arm and its ecosystem. “

The decision to block the merger was unanimous among FTC commissioners and an administrative process for the lawsuit is slated for May 10, the agency said.

This is a developing story. Check again for updates.