Industry Regulation is Hard Sometimes.
When Nvidia sought a merger with Arm Limited, a key business in the computer chip industry, the FTC felt the need to step in. And in a big way too, lawsuits are powerful. In the FTC’s own words: “This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals.”
To be clear, Arm Limited doesn’t exactly supply people with computer chips – at least not directly. The Tokyo-based company licenses designs for other companies to use. Many companies have a dependency on Arm Limited, the FTC argues. A merger would give Nvidia the means and motive to stifle competition.
“Because Arm’s technology is a critical input that enables competition between Nvidia and its competitors in several markets,” the FTC’s statement reads, “the complaint alleges that the proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice, harming the millions of Americans who benefit from Arm-based products, the complaint alleges.”
According to the FTC, harm from this merger isn’t limited to PC gaming hardware. The security and automotive industries, and more, would all feel the merger’s weight. With all of this information, the FTC’s commissioners voted unanimously to stop the merger.
It won’t be until August of next year when the trials formally begin. What can you expect, the legal system can be slow sometimes. But if what the FTC is saying is true, this is some serious stuff – it’s better to be thorough.
It’s unclear to what extent Nvidia will be fighting this lawsuit. But if Arm Limited is half as important as the FTC claims… Yeah, it’s something Nvidia would want to get their hands on.