NVIDIA has hit what appears to be its biggest stumbling block yet in its long and windy road to acquiring British chip designer Arm. As revealed in a press release published yesterday, the Federal Trade Commission has decided to sue the premier GPU company, arguing that the deal, valued at $40 billion, will ultimately stifle and harm competition. Higher prices and less choice are just two of the consequences that Americans will face if the merger were to go through, the FTC alleges.
The complaint lists the following worldwide markets that would be harmed by the merger:
1. 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;
2. DPU SmartNICs, which are advanced networking products used to increase the security and efficiency of datacenter servers; and
3. 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. “Cloud computing” refers to the increasingly popular computing business model in which large datacenter operators provide computing services remotely and/or directly offer computing resources for rent, as well as provide other support services to customers who can then run applications, host websites, or perform other computing tasks on the remote servers—i.e., “the cloud.”
“The FTC is suing to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies,” said 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.”