Basically, don’t Think Big.
In September 2020, Nvidia CEO Jensen Huang stated that the impending merger with Arm Limited would “create a company fabulously positioned for the age of AI”. Last month, however, the UK government launched an investigation into the deal, citing supply chain and national security issues with the merger. And not long afterwards, the US followed suit.
Which leads to now, where the FTC has declared that the company post-merger would be too big, and would have both means and motivation to “to stifle innovative next-generation technologies”, and filed suit against Nvidia. From a statement given by the FTC Bureau of Competition director, Holly Vedova:
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. The FTC’s lawsuit should send a strong signal that we will act aggressively to protect our critical infrastructure markets from illegal vertical mergers that have far-reaching and damaging effects on future innovations.
Holly Vedova, director, FTC Bureau of Competition
Arm’s chip manufacturing runs the gamut, from graphics to AI processing, and everything in between. And they don’t just design and sell products to Nvidia; they do so to Nvidia’s competitors, as well. Which leads to the problem: if this deal was allowed to go through, Nvidia would, regardless of intent, have entirely too much power over their competitors. According to the FTC, the merger would have a negative impact on the following three global markets.
- High-Level Advanced Driver Assistance Systems for passenger cars. These systems offer computer-assisted driving functions, such as automated lane changing, lane keeping, highway entrance and exit, and collision prevention.
- DPU SmartNICs, which are advanced networking products used to increase the security and efficiency of datacenter servers.
- Arm-Based CPUs for Cloud Computing Service Providers. These new and emerging products leverage Arm’s technology to meet the performance, power efficiency, and customizability needs of modern datacenters that provide cloud computing services.
Coincidentally, due to the fact that all of the companies that do business with Arm by necessity share trade secrets with them, this would also give Nvidia access to said secrets. Once again, from the press release:
Today, Arm’s licensees – including Nvidia’s rivals – routinely share competitively sensitive information with Arm. Licensees rely on Arm for support in developing, designing, testing, debugging, troubleshooting, maintaining, and improving their products, according to the complaint. Arm licensees share their competitively sensitive information with Arm because Arm is a neutral partner, not a rival chipmaker. The acquisition is likely to result in a critical loss of trust in Arm and its ecosystem, the complaint alleges.
A spokesperson made a statement on behalf of Nvidia to PC Gamer, saying that they would “continue to work to demonstrate that this transaction will benefit the industry and promote competition.”
Nvidia will invest in Arm’s R&D, accelerate its roadmaps, and expand its offerings in ways that boost competition, create more opportunities for all Arm licensees and expand the Arm ecosystem. Nvidia is committed to preserving Arm’s open licensing model and ensuring that its IP is available to all interested licensees, current and future.
Anyone familiar with early-20th-century history might well have a decent idea as to why that pledge isn’t going to get the FTC to back down. Coincidentally, all four FTC commissioners voted against allowing the merger to proceed. The administrative trial for the case is set for August 9, 2022.
Source: PC Gamer
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