FTC sues to block Nvidia’s $40 billion acquisition of Arm

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  • The Federal Trade Commission is suing Nvidia to block its $40 billion acquisition of Arm from SoftBank on antitrust grounds.
  • By far the biggest hurdle in the transaction is US action, and threats to whether the deal will be completed.
  • Arm’s role in the chip industry has historically been that of a neutral supplier, raising concerns that Nvidia may cut off competitors with essential Arm technology.

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The Federal Trade Commission on Thursday filed a lawsuit to block Nvidia’s $40 billion acquisition of Arm from SoftBank on antitrust grounds.

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The deal has faced scrutiny from regulators since its announcement last year. The US action is by far the biggest hurdle, and threatens whether the deal will be completed.

“The proposed vertical deal would give one of the largest chip companies control over the computing technology and design that rival companies rely on to develop their own competing chips,” the FTC said. said in an announcement,

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The announcement was more than 2% on Thursday Nvidia stock before, and has not advanced significantly on the news. FTC complaint is not yet public.

Arm is the main supplier of architecture technology to most semiconductor companies. Its Arm instruction set is at the core of nearly all mobile processors powering smartphones, including those made by Apple and Android devices that use Qualcomm chips.

But the company’s role in the chip industry has historically been that of a neutral supplier, raising concerns that Nvidia may cut off competitors with essential Arm technology. Some of Nvidia’s processors also use Arm-designed cores and its Arm architecture, although the company is best known for graphics processors, which use different architectures.

The complaint alleges that the proposed merger would undermine Nvidia’s ability to use its control of this technology to undermine its competitors, reduce competition, and ultimately result in lower product quality, lower innovation, higher prices and fewer options. There will be further incentives,” the FTC said in its statement.

FTC Extends Antitrust Enforcement

FTC Chairman Lena Khan, who is President Joe Biden has appointed to lead immediately after the agency confirmed the agency at the beginning of this year, indicating an interest in more robust antitrust enforcement. Khan studied unique methods to gain spent studying your time major technology companies as an academic and congressional employees before the nomination and power in digital markets by these firms.

During the Trump administration, the FTC sued Facebook on antitrust grounds, and outlets including Businesshala reported that it had started investigating Amazon during that period as well.

The FTC said Thursday that Arm’s licensees, which include competitors from Nvidia, share competitive information with the technology firm. The FTC’s lawsuit focused on Arm Microchips for chips, networking products and cloud computing servers for driver assistance. The FTC voted unanimously to issue the complaint, it said.

The arm deal has also received scrutiny overseas. The European Commission announced in October a thorough investigation into the deal.

“As we move through this next step in the FTC process, we will continue to work to demonstrate that this transaction will benefit the industry and encourage competition,” an Nvidia representative said in a statement.

“NVIDIA will invest in Arm’s R&D, accelerate its roadmap, and expand its offerings in ways that foster competition, creating more opportunities for all Arm licensees and expanding the Arm ecosystem. NVIDIA will expand Arm’s open licensing Committed to preserving the model and ensuring that its IP is available to all interested licensees, present and future,” it continued.

Earlier, the company said that it expects the Arm transaction to close in 2022. The FTC said Thursday that it expects administrative trials to begin in August 2022.

Businesshala’s Lauren Feiner

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