United States FTC Files Lawsuit to Block NVIDIA-Arm Acquisition
by Ryan Smith on December 2, 2021 7:45 PM EST
In the biggest roadblock yet to NVIDIA’s proposed acquisition of Arm, the United States Federal Trade Commission (FTC) has announced this afternoon that the regulatory body will be suing to block the merger. Citing concerns over the deal “stifling the innovation pipeline for next-generation technologies”, the FTC is moving to scuttle the $40 billion deal in order to protect the interests of the wider marketplace.
The deal with current Arm owner SoftBank was first announced in September of 2020, where at the time SoftBank had been shopping Arm around in an effort to either sell or spin-off the technology IP company. And while NVIDIA entered into the deal with bullish optimism about being able to close it without too much trouble, the company has since encountered greater political headwinds than expected due to the broad industry and regulatory discomfort with a single chip maker owning an IP supplier used by hundreds of other chip makers. The FTC, in turn, is the latest and most powerful regulatory body to move to investigate the deal – voting 4-0 to file the suit – following the European Union opening a probe into the merger earlier this fall. The
While the full FTC complaint has yet to be released, per a press release put out by the agency earlier today, the crux of the FTC’s concerns revolve around the advantage over other chip makers that NVIDIA would gain from owning Arm, and the potential for misconduct and other unfair acts against competitors that also rely on Arm’s IP. In particular, the FTC states that “Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets. This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals.”
To that end, the FTC’s complaint is primarily focusing on product categories where NVIDIA already sells their own Arm-based hardware. This includes Advanced Driver Assistance Systems (ADAS) for cars, Data Processing Units (DPUs) and SmartNICs, and, of course, Arm-based CPUs for servers. These are all areas where NVIDIA is an active competitor, and as the FTC believes, would provide incentive for NVIDIA to engage in unfair competition.
More interesting, perhaps, is the FTC’s final concern about the Arm acquisition: that the deal will give NVIDIA access to “competitively sensitive information of Arm’s licensees”, which NVIDIA could then abuse for their own gain. Since many of Arm’s customers/licensees are directly reliant on Arm’s core designs (as opposed to just licensing the architecture), they are also reliant on Arm to add features and make other alterations that they need for future generations of products. As a result, Arm’s customers regularly share what would be considered sensitive information with the company, which the FTC in turn believes could be abused by NVIDIA to harm rivals, such as by withholding the development of features that these rival-customers need.
NVIDIA, in turn, has announced that they will be fighting the FTC lawsuit, stating that “As we move into this next step in the FTC process, we will continue to work to demonstrate that this transaction will benefit the industry and promote competition.”
Ultimately, even if NVIDIA is successful in defending the acquisition and defeating the FTC’s lawsuit, today’s announcement means that the Arm acquisition has now been set back by at least several months. NVIDIA’s administrative trial is only scheduled to begin on August 9, 2022, almost half a year after NVIDIA initially expected the deal to close. And at this point, it’s unclear how long a trial would last – and how long it would take to render a verdict.
Source: United States Federal Trade Commission
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mode_13h - Saturday, December 4, 2021 - link
> Its weird AMD was allowed to buy ATI but this deal is not allowed.You misunderstand the objection. It's because ARM is an IP company that sells IP needed by lots of Nvidia's competitors. Having a chip company buy an IP company that's used by other chip companies creates a conflict of interest and an asymmetrical power dynamic.
domih - Saturday, December 4, 2021 - link
NVIDIA says it will maintain the ARM R&D and market "as is" but "good faith" and NVIDIA rarely coexist in the same sentence.NVIDIA does not give a s..t about the future of ARM in cell phones, appliances, SBCs, industrial boxes, etc. NVIDIA just wants to own a CPU architecture (and sell processors) to fight for data center and enterprise domination against INTEL and AMD.
The High Performance Computing (HPC), hyperscale and exascale computing war between INTEL + Multiple acquisitions, AMD + Xilinx and NVIDIA + Mellanox (+ ARM ?) is ramping up and it will be a bloody one.
NVIDIA is still years ahead of INTEL and AMD for compute with CUDA. But AMD is slowly catching up with AMD ROCm and INTEL with INTEL oneAPI. This puts NVIDIA in a difficult position for the future: not having an in-house CPU architecture is a big no-no in this war.
The $40 billion deal is just a "pond" compared to these markets next 10-year data center and corporate expenditures.
No wonder NVIDIA is trying to appear nice and candid.
When NVIDIA says it will continue to develop ARM, it runs contrary to history. High technology companies pursuing two gigantic goals rarely succeed in both. One of the two always suffers badly.
NVIDIA not able to buy ARM is very bad news for... NVIDIA and very good news for... the rest of the world (companies and consumers) with ARM continuing to flourish unimpended by one technology corporation agenda.
The x86/64 industry is a duopoly, but thanks to ARM dozens of companies CAN STILL design cheap processors and hundreds of small companies can buy them for small runs, e.g. a few thousands units.
Apple, Fujitsu, Hitachi and Samsung are not the only ones making ARM-based CPU. Add Broadcom, Qualcomm, Marvell, Rockship, AMLogic, Mediatek and many other ones. Anybody in the world who wants to create a small appliance, phone, TV, medical or industrial box, SBC will probably go with ARM because it is low power, does not cost too much and there is a wide range of processor models adapted to many cases.
Putting ARM's destiny into the oven guy hands will obviously be a disaster. NVIDIA can try to appear nice and candid with its long con, there is no escaping from the fact that it would destroy the ARM market on which so many rely.
If the EU is smart it would buy ARM from SoftBank, keep it as a private company with public investment. The EU will need it when the computing war between China and the US goes hotter because China is not going to stop wanting its independence from the West technology behemoths. Last but not least, it would maintain ARM as a "neutral" CPU architecture. The EU could even make money out of it. Thanks to Brexit, the British would go balistic. But they do not have the money to buy it back. The EU does.
Drae - Saturday, December 4, 2021 - link
> NVIDIA says it will maintain the ARM R&D and market "as is" but "good faith"> and NVIDIA rarely coexist in the same sentence.
Even disregarding nvidia's history - the UK has seen a number of important acquisitions over the past fifteen to twenty years where the purchasing company has made "iron-clad" promises. Only for those "promises" to be quickly reversed the moment the term expires.
> If the EU is smart it would buy ARM from SoftBank, keep it as a private company
> with public investment. The EU will need it when the computing war between
> China and the US goes hotter because China is not going to stop wanting its
> independence from the West technology behemoths.
Why would the UK, the birthplace and home of ARM (in every respect) allow the "EU" to purchase it? How would the "EU" actually do this (you know what the EU is, right)? The EU has no ability to do such a thing even if the UK regulators were to allow it.
The "best" thing to happen would be for the UK Government to say to Softbank "you cannot sell ARM to any third party, list on the LSE and if you must NASDAQ, we will retain a golden share to stop this happening again". Then the government should do what the U.S. do with Intel/Cray/et al and engage ARM to design and develop supercomputing resources (for which the UK given it's size and capabilities woefully lacks), purchase said systems drawing in further expertise from elsewhere - perhaps a cutting edge fab or two. Alas this will not happen because the "political science"/law/media graduates who populate the civil service at the appropriate level don't "get it" and won't end up with high paid consultancy jobs as they would for fintech, banking and the like.
Oxford Guy - Saturday, December 4, 2021 - link
'good faith'Don't anthropomorphize inanimate inventions like corporations.
Corporations are inherently a bad-faith model, too. They're designed to sell less for more. That's the basis of turning a profit. It relies on tricking people (the field of advertising, as well as the field of politics — see all the 'incentives'/bribery to get corporations to place their stuff in 'your' area) into parting with more of themselves (money is life) than they're getting in return.
The corporation is an invention to, as Ambrose Bierce stated, provide individual profit sans individual responsibility. Specifically, it's to siphon life from the ecosystem and ordinary people so the yacht owning class can have larger bowling alleys in their homes.
mode_13h - Saturday, December 4, 2021 - link
> The corporation is an invention to ...Yeah, we get it. They're greedy. There are also plenty of greedy individuals. Greed is an intrinsic property of life. Whatever the actor, laws and regulations are needed to protect us from that greed.
It's too easy to focus only on the ills of corporations, capitalism, etc. These things have done a lot to benefit people. The core idea of capitalism is to harness intrinsic greed for the benefit of society. Too often, members of the public seem unaware that effective regulations are an essential ingredient in that formula. Regulations and their enforcers *are* the harness, without which there's little benefit and much potential harm.
Oxford Guy - Sunday, December 5, 2021 - link
‘Yeah, we get it. They're greedy. There are also plenty of greedy individuals.’No, you don’t. You have recycled the same illogic that you led off with in a prior post — the conflation of corporation and individual. Expanding on that to a ‘greed is life’ formula is even less clarifying.
As for the rest it’s a lot of hand waving and an undefined reference to regulators. Regulation means nothing on its own.
mode_13h - Sunday, December 5, 2021 - link
> You have recycled the same illogic that you led off with in a prior postIf you don't read my posts, I'll just have to repeat them. The next part was:
me> The issue of treating them as people isn't in how we judge their behavior,
me> it's that they're granted legal rights of people, while *not* sharing many
me> of the other obligations and constraints that bound actual human adults.
> As for the rest it’s a lot of hand waving ...
It's all too easy for you to bash corporations and capitalism. These aren't perfect institutions, but perfection isn't a realistic goal. If you have any better ideas that have actually been demonstrated to work *at scale*, then let's hear them. Otherwise, we should try to focus on improving the system we have.
BTW, I'm incredibly suspicious of "revolutionary change" as a solution. Revolutions have a very poor track-record of actually yielding improvements for the people.
mode_13h - Saturday, December 4, 2021 - link
> NVIDIA does not give a s..t about the future of ARM in cell phones,> appliances, SBCs, industrial boxes, etc.
As an owner of ARM, they would. That's a major part of ARM's revenue stream.
> NVIDIA just wants to own a CPU architecture (and sell processors) to fight for data center
> and enterprise domination
No, they're also really heavily-invested in self-driving cars and robotics. What cores do you think those chips use?
And then, there's Nintendo Switch....
> But AMD is slowly catching up with AMD ROCm
LOL. I'm sure they'd like us to think so.
> When NVIDIA says it will continue to develop ARM, it runs contrary to history.
If that's the terms it agrees to with various regulatory agencies, then failing to do so could put them in legal jeopardy. They could face lawsuits, with the consequences being as serious as a forced break-up.
That's why I think this lawsuit didn't take issue with that commitment, but rather focused on more subtle ways the merger could result in an uneven playing field.
> If the EU is smart it would buy ARM from SoftBank
I doubt they have any way of doing that. I doubt the ECB can just buy companies. It also would raise concerns among many, if ARM is in *any* "state" hands.
> it would maintain ARM as a "neutral" CPU architecture.
While I think the EU would be the least bad government to hold it, they're still not neutral.
Oxford Guy - Saturday, December 4, 2021 - link
We like capitalism; it's great. We like it as long as the corporations we have invested in are protected from competition — from capitalism. That it eats itself is something we just won't admit to.Oxford Guy - Saturday, December 4, 2021 - link
I must be missing something because it seems to me that if the worst-case scenario fears happen (that Nvidia acquiring ARM leads to ARM becoming too expensive for many companies to take advantage of) it simple opens the door for more investment/development in other things, like RISC-V.Isn't that how supply and demand (aka capitalism) is supposed to work? So... why should this merger be blocked? What am I missing?