Nvidia has been trying to buy Arm for $40 billion for over a year now but this week, the acquisition was hit with its biggest roadblock yet. On Monday, the Federal Trade Commission laid out the case to stop the merger from going through, arguing that the deal would stifle competing next-generation technologies.
Its the most significant attempt to reign in Big Tech yet under Lina Khans term as FTC chair, so theres a lot at stake, both for the FTC and the electronics industry at large. Arm is a hugely important company; the companys chip designs touch hundreds of billions of devices, including CPUs and ISPs for modern cars, embedded chipsets for wearable and medical devices, smart home gadgets like thermostats and routers, and of course, smartphone and laptop processors. The question of who controls it will have massive implications for all of them and the FTCs case now seems like itll be the biggest barrier to the acquisition going through.
Nvidia already competes in at least some of the same fields as Arm licensees. The FTC and other regulators in the EU and UK are concerned that, because of that involvement, Nvidia could influence Arms future product development. Its particularly worried that Nvidia would use its control over Arm to advance its own interests in emerging markets like data centers and autonomous vehicles, instead of working to ensure that all the companies that use Arm designs to compete with Nvidia in those fields can continue to do so on an equal playing field.
Crucially, Arm doesnt actually make its own chips: rather, it sells both licenses for companies to design their own chips that use Arms architecture (like Apples M-series chips for Macs), in addition to selling entire CPU and GPU designs (like the Cortex-X1 CPU and Mali GPUs found in the Google Tensor and Samsung Exynos 2100). But Arms architectures which offer better power efficiency and customization options for device manufacturers have steadily become a critical part of the computing landscape. Its Arms technology, not the traditional x86 designs used by Intel and AMD, that has fueled the massive growth of smartphones, tablets, and other mobile devices over the past two decades.
The FTC makes its case by looking at three specific areas where Nvidia already licenses Arms technology: Nvidias advanced driver assistance chips and two types of data center chips. One of those data center chips is particularly important: the DPU-based (data processing unit) SmartNIC, a core component of data center networking infrastructure, which provides both processing (thanks to Arm cores) and network interfacing for secure cloud infrastructure. Nvidia thinks theyre going to be a big deal, setting up that DPUs are set to be the third pillar of computing infrastructure, alongside traditional CPUs and GPUs. And virtually everyone that makes DPU SmartNICs even Intel, the biggest x86 chip company around uses Arm technology.
Its a similar case for automotive vehicle assistance. Arms technology is used in virtually all the chips for enabling Level 2 and Level 3 assistive features in cars (which covers basic automated tasks like acceleration or lane changing while still having a human operator on standby). With the exception of Intel-owned Mobileye, every major chip in this field uses Arm including Nvidia.
There are a couple of things to note here. The FTC is being very strategic in its examples, choosing areas that have a clear impact on the broader tech industry. But these three licensing deals also represent a very small part of Arms business. As a SoftBank presentation from 2020 shows, its bread and butter is focused in mobile phones (where it dominates more than 90 percent of the market) and IoT application processors. On the automotive side, Arm claims to have 75 percent market share but doesnt distinguish how much of that is for infotainment systems versus the kinds of driver assistance applications that the FTC is concerned about. And its presence in data centers is virtually nonexistent: Arms technology has just a 5 percent market share there.
The FTC is making a broad case here that a combined Nvidia / Arm would be willing to make moves that would hurt its competitors that rely on Arms architecture or designs, because the profits it could generate from better succeeding in these markets would outweigh the losses from licensees. But its relying on very specific parts of the business, which seems to open the door for some kind of compromise that would spin off the conflicting parts of the business while allowing the bulk of the acquisition to go through.
In practice, that kind of compromise has been hard to achieve. According to The Information, Nvidia offered to spin out an independent licensing company for licensing out designs in an attempt to mollify regulators, but the plan failed due to concerns that Nvidia would still control Arms development of new products. So while Nvidia could try to divest itself of, say, Arms data center technology, thanks to the common architecture shared by Arms products, it would still be in charge of what kinds of features Arm would focus on to include in those chip designs.
The FTC also highlights the fact that Nvidia would gain access to Arms customer list and be privy to sensitive information that companies share with Arm. Nvidias ownership of Arm would fundamentally upend Arms status as a neutral partner and, at the same time, enable Nvidia to obtain access to its rivals competitively sensitive information. The regulatory group also notes that Arm licensees that compete with Nvidia might be less willing to work with the company to help further improve Arm, in addition to skewing future development of Arms products in directions that benefit Nvidia specifically, rather than the broader Arm ecosystem.
Of all the FTCs arguments, Nvidia seems most prepared for this one: back when the deal was first announced, Nvidia CEO Jensen Huang told the Financial Times he could unequivocally state that Nvidia will maintain Arms open licensing model. We have no intention to throttle or deny Arms supply to any customer. The company has since reiterated that the merger would boost competition, [and] create more opportunities for all Arm licensees and expand the Arm ecosystem.
This puts the FTC in a delicate position as it heads to court. But the specific examples that regulators are using to prove it are very specific and less integral to Arms overall business strategy than, say, concerns about competition for its major CPU and GPU products. After decades of relatively lax oversight, its hard to say how any antitrust case will fare in court so even the slightest weakness in the case could be fatal.
On the other hand, the FTC also doesnt necessarily have to win to block the deal. It just has to hold out long enough that Nvidia decides that the deal isnt worth the trouble, especially since Nvidias deal with current Arm owner SoftBank only gives the US chip company until the end of 2022 to clear regulatory approval.
Behind all of it is a very nervous electronics industry. Google, Microsoft, Qualcomm, and Tesla have all objected to the deal, and the concerns that Nvidia ownership could influence Arms development and stifle innovation are very real. The only question now is whether the FTC can make the case work in court.
- Big tech vs. data privacy: It wasnt meant to be this way - VentureBeat - May 25th, 2022
- How the regulation of big tech can affect your business - Information Age - May 25th, 2022
- The big tech thats shaping tomorrow today - Tech Wire Asia - May 25th, 2022
- Americans are united in wanting Congress to rein in Big Tech's power over news publishing, by Douglas Schoen - Press of Atlantic City - May 25th, 2022
- This era of big tech exceptionalism has got to end: Australian eSafety Commissioner - ZDNet - May 25th, 2022
- California bill would allow parents to sue Big Tech over social media addiction - Washington Examiner - May 25th, 2022
- Big Tech, Merchants, and a Range of Data and Fintech Firms Now Account for 35% of the Value of the Financial Services Industry, According to Oliver... - May 25th, 2022
- No Magic Bullet: The Difficulties of Reforming Big Tech - The National Interest Online - May 25th, 2022
- Events Roundup: Big tech parties and conferences are coming to Pittsburgh this June - Technical.ly - May 25th, 2022
- Big Tech Takes Texas to the Supreme Court - The New York Times - May 25th, 2022
- No housing bubble, Davos is back, and rout of Big Tech shares - The Irish Times - May 25th, 2022
- The Good, the Bad & the Artificial: How Big Data & Tech Are Infiltrating the Alcohol Industry - VinePair - May 25th, 2022
- Europe Is Getting Tough on Big Tech. When Will the US Do the Same? - CEOWORLD magazine - May 25th, 2022
- Douglas Schoen: Americans are united in wanting Congress to rein in Big Tech's power over news publishing - Chicago Tribune - April 25th, 2022
- Communication ETFs fall to 18-month lows ahead of big tech earnings - Seeking Alpha - April 25th, 2022
- Just Another Manic Monday Big Tech Weak? - TheStreet - April 25th, 2022
- Big Tech hiring cements Canada's status as Silicon Valley North but there's a catch - CBC News - April 25th, 2022
- In the Battle Against Illiberalism, Don't Take Big Tech for Granted - The National Interest Online - April 25th, 2022
- Will the internet's third iteration free our virtual selves from Big Tech's control? - The New Statesman - April 25th, 2022
- Global Digital Health Market Outlook 2022 - Big Tech Using On-demand Services in Primary Care to Strengthen its Hold in Healthcare - PR Newswire - April 25th, 2022
- Antitrust Reformers Debate Partnering With Bigots To Take On 'Big Tech' - Techdirt - April 15th, 2022
- Here's the typical pay for a Big Tech worker in Austin - Austonia - April 15th, 2022
- MLB forays into the future with new tech for the old ball game - TechCrunch - April 15th, 2022
- Apple privacy protections expected to cost big tech firms $16 billion in coming year - MarTech - April 15th, 2022
- Common Knowledge: Big tech and the digital commons - Resilience - April 15th, 2022
- DuckDuckGo readying browser to compete with big tech products from Google, Apple - Washington Times - April 15th, 2022
- Big Techs battle for the metaverse will come down to ethics - Quartz - April 15th, 2022
- IonQ: Enormous Valuation And The Competition Is Big-Tech - Seeking Alpha - April 15th, 2022
- Panelists Urge Government Resist Getting Involved in Content Moderation - BroadbandBreakfast.com - April 15th, 2022
- Daily Tearsheet: CarbonPay's sustainability-focused payment card, and tech's newfound interest in carbon capture Tearsheet - Tearsheet - April 15th, 2022
- The Senate bill that has Big Tech scared - Ars Technica - April 11th, 2022
- What the Wiki Big Tech Site Tells Us About Competition - CDOTrends - April 11th, 2022
- Cathy ONeil: Big tech makes use of shame to profit from our interactions - The Guardian - April 11th, 2022
- Dr. Oz Wants To Fight Big Tech In The Senate. He Owns At Least $10 Million In Shares Of Alphabet, Amazon, Apple And Microsoft. - Forbes - April 11th, 2022
- Jaws Actor Richard Dreyfuss Says Big Tech's Censorship Is A "Despicable" Practice That Threatens Free Speech - Bounding Into Comics - April 11th, 2022
- GoTo Shares Jump After Raising $1.1 Billion in One of 2022s Biggest IPOs - Yahoo Finance - April 11th, 2022
- 'Birtherism' to the 'Big Lie': Inside Obama's fight to counter disinformation - WDJT - April 11th, 2022
- Big Abortion's Big Tech Allies Aim to Censor Pro-Lifers. They Won't Win. - Daily Signal - April 9th, 2022
- Despite railing against Big Tech and Big Pharma, records show Dr. Oz has invested millions in both - ABC News - April 9th, 2022
- Elizabeth Warrens plan to break up Big Tech and other mergers - Vox.com - April 9th, 2022
- Canada wants Big Tech to share its riches with news publishers - The Register - April 9th, 2022
- The Metaverse is a Huge Opportunity for Education. Big Tech Must Not Ruin It | Opinion - Newsweek - April 9th, 2022
- Russian Disinformation, Canadian Big Tech, WideOpenWest Sale, Broadband Emerging Leaders - BroadbandBreakfast.com - April 9th, 2022
- 'Don't Break my Prime?' Actually, it's time to move fast and break....Big Tech bobsullivan.net - Bob Sullivan.net - April 9th, 2022
- Downtown Austin is looking like itself again as big tech returns to the office - Austonia - April 9th, 2022
- These people lead sustainability within Big Tech. Here's how much power they actually have. - Protocol - April 9th, 2022
- Why Elon Musk's Twitter move is supercharging the Big Tech debate - Fox News - April 9th, 2022
- Big Tech's fast-and-dirty employment honeymoon is over as Amazon unionises - City A.M. - April 9th, 2022
- Is Big Tech 'Targeting' the Elderly a Point of Concern? - hackernoon.com - April 9th, 2022
- Why Alibaba And Other Big Tech Stocks Are Shooting Up In Hong Kong Today - Benzinga - Benzinga - April 9th, 2022
- Americans Deserve a Fair Fight Against Big Tech InsideSources - InsideSources - April 2nd, 2022
- Government tech shouldnt be the minor leagues - Protocol - April 2nd, 2022
- To Stop Online Hate, Big Tech Must Let Those Being Targeted Lead the Way - Algemeiner - April 2nd, 2022
- Big tech is fixing bugs faster. Will that influence trickle down? - CIO Dive - April 2nd, 2022
- Media and Big Tech censorship is alive and well - Washington Times - April 2nd, 2022
- Power Moves: A new focus for Lynsie Campbell and big tech names on CMU's list of honorary degree recipients - Technical.ly - April 2nd, 2022
- How Google and Amazon bankrolled a 'grassroots' activist group of small business owners to lobby against Big Tech oversight - CNBC - March 31st, 2022
- DOJ backs bills that could kneecap Big Tech - Axios - March 31st, 2022
- Watchdog Group Publishes Encyclopedia of All the Nasty Things Big Tech Has Done - Gizmodo - March 31st, 2022
- Local Tennessee officials need to regulate big tech and protect our small businesses | Opinion - Tennessean - March 31st, 2022
- Freedom to Think by Susie Alegre review the big tech threat to free thought - The Guardian - March 31st, 2022
- In a Climate Crisis, the Future Relies Alarmingly on Big Tech - The New York Times - March 31st, 2022
- S&P 500 ends higher with financials as Treasury yields jump - Reuters - March 31st, 2022
- U.S. Senate votes to move forward with Alvaro Bedoya's nomination to the FTC - Fox Business - March 31st, 2022
- Physics - Seeking Diversity When Faced with Adversity - Physics - March 29th, 2022
- A Big Swing at Big Tech - The New York Times - March 27th, 2022
- Australia to make Big Tech hand over misinformation data - Reuters - March 27th, 2022
- States Could Let Parents Sue Big Tech for Addicting Kids. Here's What That Really Means. - TIME - March 27th, 2022
- If Congress Doesn't Rein In Big Tech, Censors Will Eliminate The Right From Public Discourse - The Federalist - March 27th, 2022
- Michael Hiltzik: That big tech exodus out of California turns out to be a bust - The Denver Gazette - March 27th, 2022
- Stigler Conversation: How the Chinese Government Thinks About Big Tech - ProMarket - March 27th, 2022
- Liberals and conservatives bash Big Techs preparations for midterm elections - Washington Examiner - March 27th, 2022
- ACCC vs Big Tech: Round 10 and counting - University News: The University of Western Australia - March 27th, 2022
- Rajeev Chandrasekhar: Need to relook laws to de-risk Indian internet, make it difficult for Big Tech to be weaponised - The Indian Express - March 27th, 2022
- A Populist Attack on Big Tech - Econlib - March 4th, 2022
- Big Tech companies are harming not helping healthcare - MedCity News - March 4th, 2022
- This Big Tech company 'surprises and delights employees to keep them happy - CNBC - March 4th, 2022
- How are the big tech companies responding to the invasion of Ukraine? - Sky News - March 4th, 2022
- Tech companies like Facebook and Twitter have a Russia problem - Vox.com - March 4th, 2022
- Covid News: U.S. to Offer Covid-Fighting Tech to Other Nations - The New York Times - March 4th, 2022