FTC sues to block Nvidia’s takeover of Arm

Why is it important: This week, the US Federal Trade Commission (FTC) filed a lawsuit to block Nvidia’s $ 40 billion acquisition of Arm. The FTC says the deal will give Nvidia too much leverage over companies that rely on Arm for their technology, including Nvidia’s competitors. The merger is already undergoing an antitrust investigation in the EU.

Federal Trade Commission announced The lawsuit on Thursday, citing concerns about innovation and competition as the main reason. The Commission is concerned that Nvidia’s oversight could distort Arm’s incentives for licensees and stifle innovation, especially in areas such as driver assistance systems, data center technology, and cloud processors. Arm licenses its chips to tech companies, which use them for technology in devices such as smartphones, tablets, and automotive systems. These include companies like Samsung and Apple.

Another potential problem is that licensees are sharing important information about their products with Arm that could have flowed to Nvidia if it acquired Arm. In addition to influencing competition and innovation, it could also undermine other companies’ confidence in Arm’s neutrality when sharing information on chip designs.

The FTC voted unanimously to file the claim, and the administrative trial is scheduled for August 9, 2022. The FTC works closely with other competition agencies in the UK (where Arm is located), Japan (where the company that currently owns Arm is based), South Korea and the European Union.

The EU is already investigating the deal. Nvidia has indicated it will make concessions to ensure competition if the Arm merger takes place.

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