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
Facebook
Twitter
RSS
175 Comments
View All Comments
BillBear - Friday, December 3, 2021 - link
I never saw how the acquisition made sense unless they intended to get rid of architectural licenses going forward.sharath.naik - Friday, December 3, 2021 - link
This is a terrible merger. Especially from a company that till date had refused to release up-to-date driver's for Linux. Nvidia has a History of stifling growth and support of platforms they donor like.pogsnet - Monday, December 20, 2021 - link
Agree, everything for them is not free.Lakados - Sunday, December 5, 2021 - link
NVidia spends more each year advancing their ARM chips than ARM spends advancing their whole platform. It would let NVidia turn that expense into an alternate revenue stream. They would also work to replace Mali with their own GPU technology, mobile gaming is a growth market and getting NVidia as the default GPU for all future ARM chips would guarantee them a huge consideration moving forward. It would do for NVidia in the mobile space what being in the consoles did for AMD. It would also let them be far more competitive in making bids on future consoles should they choose to pursue that direction.BillBear - Sunday, December 5, 2021 - link
NVidia has spent decades pushing proprietary tech.Perhaps if they had opened up CUDA for the use of competitors I would be willing to believe they were capable of being good stewards for an open ARM standard.
Instead they have been developed a well earned reputation for screwing over companies that partner with them.
mode_13h - Sunday, December 5, 2021 - link
> NVidia spends more each year advancing their ARM chips than> ARM spends advancing their whole platform.
Do you mean Nvidia's entire SoC or just their ARM cores? Because, their latest "Orin" generation now uses ARM's own Cortex A78AE cores. So much for Nvidia's in-house cores...
Also, I wonder how you know just how much they spend on them, as well as how much of that spend is in the form of software vs. hardware. The point being that the software-spend is mostly not comparable to what ARM does.
> They would also work to replace Mali with their own GPU technology
They already have a licensing deal for their GPU block to be incorporated by MediaTek. They don't need this acquisition to do such things.
sirmo - Friday, December 3, 2021 - link
Can impose your will on other companies while being a licensee. You need to be a licensor for that :)Spunjji - Sunday, December 5, 2021 - link
I've only been able to puzzle out advantages that amount to anti-competitive behaviour.ChrisGX - Saturday, December 11, 2021 - link
Well, ARM isn't the greatest microarchitectural innovator in the ARM ecosystem. And, Nvidia, for its part, can't really want ARM because it needs 40 billion dollars worth of patchy physical IP (that, according to an often told fairy story, Nvidia will get to keep for itself, after it cynically cancels the existing ARM licensing agreements once it gains control of ARM). No, lets be clear, Nvidia is willing to pay 40 billion dollars for ARM precisely because of its licensing model not for its less than stellar IP.Just as ARM has concluded that it needs to greatly increase its IP investments and therefore needs a patron like Nvidia to ensure that it gets the financial resources it needs to keep the company and the technologies that it licenses relevant, Nvidia, too, has concluded it needs to become an ARM company, indeed the ARM company, to ensure the ongoing success of its businesses. The thinking behind the desire to acquire ARM would go something like this: over time ARM + CUDA will outstrip x86 + Xe or x86 + RDNA/CDNA because from amongst these (and other) technological options out there what the biggest industries and addressable markets want or need (at this time or in the near future) is ARM. Nvidia is willing to pay a premium for ARM because a) ARM completes the strategic picture for Nvidia - it offers the opportunity to massively expand the reach of CUDA and to completely eliminate dependence on x86 architecture and the companies that control that architecture, and b) the whole world would have to come to Nvidia's ARM licensing operation if they want either i) ARM physical IP or ii) an architectural license to design and produce custom ARM parts.
Apple and Fujitsu are reaping the benefits of high performance ARM silicon implementations. Qualcomm, with its newly acquired NUVIA unit, will also be going down that path. It isn't hard to see how having an ARM operation capable of licensing high performance ARM IP to all takers would be a good fit for Nvidia. Nvidia is playing the long game here. Even if the planned ARM acquisition should be aborted, due to regulatory obstacles, I doubt that Nvidia will sharply change direction. It will probably continue to look for an IP licensing operation that offers some of the same benefits as an ARM acquisition. One way forward for Nvidia might be to look at high performance RISC-V instead of ARM.
mode_13h - Saturday, December 11, 2021 - link
> according to an often told fairy story, Nvidia will get to keep for itself, after it cynically> cancels the existing ARM licensing agreements once it gains control of ARM
This is not even mentioned in the FTC lawsuit.
And Nvidia was heavily invested in the ARM ISA, long before it made the offer to buy ARM. Even if the acquisition is cancelled, I don't foresee Nvidia switching to RISC-V in the near- or even medium-term.