The US Federal Trade Commission (FTC) has filed a lawsuit seeking to block the US $ 40 billion acquisition of British Arm by Nvidia. According to the American antitrust regulator, “the vertical deal will give one of the largest chip manufacturers control over the technology and development that rival firms rely on to create their chips.” The FTC’s lawsuit alleges that the combined firm “will have the means and incentives to suppress next-generation innovative technologies, including those used to power data centers and driver assistance systems in cars.”
The plaintiff recalls that the Californian company Nvidia is one of the largest and most expensive computer companies in the world. It designs and markets chips and devices, best known as the dominant supplier of GPUs for personal computers and data centers. Nvidia also develops and markets products for today’s networks and cars. In these areas, both Nvidia and its main competitors rely on Arm technology.
In turn, Arm, owned by Tokyo-based Softbank Group, does not supply or sell off-the-shelf chips or devices. He designs and licenses microprocessor architectures to other technology companies, including Nvidia. These companies rely on Arm’s developments to produce processors used in a wide range of modern devices, from smartphones and tablets to driver assistance systems and servers in large data centers.
Since Arm technology is a critical factor that allows competition between Nvidia and its competitors in multiple markets, the lawsuit alleges that the proposed merger will give Nvidia an opportunity and incentive to use its control over the technology to undermine its competitors. The lawsuit alleges that declining product quality, less innovation, higher prices and fewer choices “will hurt the millions of Americans who benefit from Arm-based products.” The lawsuit also alleges that the acquisition will harm competition by giving Nvidia access to the confidential information of Arm licensees, which include Nvidia’s competitors, and that it could reduce Arm’s incentive to innovate so as not to run counter to Nvidia’s business interests.
The process is scheduled to begin on August 9, 2022.