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
> if the worst-case scenario fears happen ... it simple opens the door for more> investment/development in other things, like RISC-V.
Ultimately, the problem is the amount of disruption that happens in between. A lot has been invested in ARM-based solutions and this move gives Nvidia too much influence/power over its competitors, if it's allowed to snatch up ARM. Worse, if the industry were deflected away from ARM, it's not only the hardware vendors that would suffer, but also those who've poured vast amounts of time, money, and effort into developing & refining the ARM software ecosystem.
> Isn't that how supply and demand (aka capitalism) is supposed to work?
Capitalism, left to its own devices, tends to involve lots of harsh corrections that cause substantial amounts of collateral damage. The proper role of government is to smooth out market dynamics, which includes ensuring that no actor wields too much power (i.e. monopoly).
Oxford Guy - Sunday, December 5, 2021 - link
‘Ultimately, the problem is the amount of disruption that happens in between’False dilemma.
Oxford Guy - Sunday, December 5, 2021 - link
Emulation works.mode_13h - Sunday, December 5, 2021 - link
Emulation is not a viable solution for many markets where ARM is dominant or ascendant. It always involves some power & performance penalty -- both key considerations for cloud, mobile, and embedded applications. Furthermore, it doesn't address much of the OS and driver-level software, which would have to be rewritten. Finally, we don't know that it wouldn't still run afoul of ARM ISA patents that Nvidia would ultimately hold.Taking a step back, I think your suggestion that the existence of some plausible alternative is not the standard used to judge these situations. The most common standard for evaluating mergers & acquisitions seems to focus on whether it's harmful to consumers. And that standard doesn't require that possible competitors are completely and perpetually barred from entry into the market, it just requires that there be some significant harm resulting from the move.
Oxford Guy - Monday, December 6, 2021 - link
Emulation works as a stop-gap, for your worst-case false dilemma scenario.And... if you truly believe what you're writing you're claiming that capitalism simply is impossible.
mode_13h - Tuesday, December 7, 2021 - link
> Emulation works as a stop-gapWould you not agree that imposing something like a >= 30% slowdown constitutes a harm? If so, then how can you say Nvidia's potential abuse of ARM doesn't pose a significant threat of harm to thousands of companies and billions of consumers?
> if you truly believe what you're writing you're claiming that capitalism simply is impossible.
Explain.
Oxford Guy - Tuesday, December 7, 2021 - link
Having large corporations use governments to create walls against competition is mercantilism not capitalism. Having governments do that of their own volition is also mercantilism, not capitalism.Consumers are supposed to benefit by the competition involved in free trade. Seizing private IP as if it’s public domain is the antithesis of that. So long as mega corps, duopolies, and the like are being tolerated by regulators there is zero credibility in blocking this purchase. All it will do is stifle innovation (such as by slowing RISC-V) so a small number of large corporations won’t have to spend a bit more money. It harms Nvidia’s ability to compete whilst helping its competitors — without credible justification.
ARM’s IP is not in the public domain.
This isn’t a credible anti-trust maneuver. What would be is starting with the more powerful monopolists and duopolists and working one’s way down. How about starting with Internet search? If anything is in need of the commons-first commie approach it’s that. Mega corps are deciding what content we’re allowed to find and how. That’s not what the Internet is supposed to be — a giant honeypot for ad revenue and mega corps’ control, hand-in-hand with government authoritarianism. But, the priority is never on what is more needed by the masses. Not one bit. So, instead of actions to free people from censorship we have the priority being protecting a few large corporations from minor inconvenience.
Oxford Guy - Tuesday, December 7, 2021 - link
You wanted to know what I’d do? My magic wand would get governments to enable an open-source World Search for searching the Internet — free of profiteering censorship. It would have everything indexed, would not respect robots.txt, and would cache content to preserve it against censorship erasure.The free flow of knowledge vastly outweighs ARM’s spindly IP when it comes to anti-trust prioritization. But, people are so accustomed to the ridiculous nature of the search situation as to barely question it. That the Internet came into being as a military-corporate complex entity perhaps helps to explain why too few demand that it be something more efficient.
GeoffreyA - Tuesday, December 7, 2021 - link
You know what I'd do? I'd make search engines disappear, and then people will have to type the URL like we used to.mode_13h - Wednesday, December 8, 2021 - link
> then people will have to type the URL like we used to.LOL.
Heh, I still remember the days when Yahoo tried to maintain a topical index of all the sites on the web.