Major American tech companies are joining in on calls for antitrust enforcement against Nvidia’s forthcoming acquisition of ARM, according to Bloomberg. This follows news from earlier this January that UK authorities would be performing their own investigation into the merger, as ARM is a UK-based licenser.
According to Bloomberg’s sources, the group of companies calling for these extra checks includes Google, Microsoft and Qualcomm, with at least one of the three wanting “the deal killed.”
Google’s involvement here is especially notable, as the company is currently facing its own antitrust investigations from both the US DOJ and all 50 state AGs.
The drama stems from concerns that Nvidia would end ARM’s history of open licensing for its chips. Nvidia’s promised before to maintain the company’s neutrality, with Bloomberg saying that Nvidia has used the deal’s up to $40 billion price tag as evidence that it’s unlikely to change how ARM does business. However, given that Arm lost $400 million in the fiscal year of 2020, it’s possible that Nvidia might have to make some kind of changes at ARM to justify such a large investment.
Other concerns erupt from Nvidia’s larger place in the chip scene compared to ARM’s current parent company, SoftBank, and how Nvidia could use the acquisition to restrict the supply of chip licenses to its rivals.
In addition to the UK-based merger investigation, Nvidia’s purchase is also currently under investigation by the FTC, the EU and China, due to the global nature of the company’s reach. As such, it’s unclear what specifically Google and other Nvidia competitors are calling for, aside from an opportunity to express their general disapproval. Bloomberg’s sources did not provide specifics, and the FTC declined to comment when the publication reached out.
However, Bloomberg does note that changing leadership at the FTC could seriously hamper the merger. While the commission is currently split evenly between both parties, newly elected Democratic President Joe Biden is expected to pick two new candidates to fill both an open chair and a vacancy that will presumably be left by Democratic commissioner Rohit Chopra after the Senate approves his nomination to take over the Consumer Financial Protection Bureau.
This would give Democrats a majority in the commission, and likely usher in greater scrutiny over vertical mergers like Nvidia and Arm. While vertical mergers, which is when a company acquires another company that is not a direct competitor, have been given a degree of leniency in the past, both Chopra and current FTC Commissioner Rebecca Kelly Slaughter wrote in December that “Moving forward, we need to aggressively enforce against the harms of vertical mergers.”
Specifically, the duo promised that they “look forward to turning the page on the era of lax oversight and to beginning to investigate, analyze, and enforce the antitrust laws against vertical mergers with vigor.”
Throw in support from Nvidia rivals and ARM customers like Google and Microsoft, and Nvidia’s purchase could at least likely be significantly delayed, if not canceled. And given that ARM has previously said that the deal won’t be completed until 2022, even a delay presents a problem.
As for the impetus behind the outcry, it likely comes from battles over data center control. While consumer tech enthusiasts might not immediately consider companies like Nvidia and Microsoft to be rivals, data centers were key to Nvidia’s growth last year. And given that many companies, like Microsoft, are either already using or are currently moving to ARM-based chips for their data centers, Nvidia’s ARM purchase could spell bad news for them if the merger goes through.
