The Federal Trade Commission (FTC) of the United States has filed a lawsuit seeking to block the acquisition by the American company Nvidia of the British company Arm for $ 40 billion. According to the US antitrust regulator, “the vertical deal will give one of the largest chip companies control over the technologies and developments that competing firms rely on to create their chips.” The FTC lawsuit alleges that the combined firm “will have the means and incentives to stifle next-generation innovative technologies, including those used to run 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 develops and sells chips and devices, being best known as the dominant supplier of GPUs for personal computers and data centers. Nvidia also develops and sells products for modern networks and cars. In these areas, both Nvidia and its main competitors rely on Arm technology.
In turn, Arm, owned by the Tokyo company Softbank Group, does not supply or sell ready-made chips or devices. It develops 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.
Because Arm’s technology is a critical factor that makes competition between Nvidia and its competitors in multiple markets possible, the lawsuit argues that the proposed merger will give Nvidia the opportunity and incentive to use its control over the technology to undermine competitors. The lawsuit alleges that declining product quality, reducing the amount of innovation, higher prices and fewer choices “will hurt the millions of Americans who benefit from Arm-based products.” The lawsuit also argues that the acquisition will hurt competition by giving Nvidia access to the confidential information of Arm licensees, which include Nvidia’s competitors, and that it could reduce Arm’s interest in innovating so as not to run counter to Nvidia’s business interests.
The trial is scheduled to begin on August 9, 2022.
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