FTC complaint against Nvidia’s $40 billion deal to buy Arm
The purchase of a company by another company is a normal and common thing in the world of technology, and there are many large companies whose ownership has changed hands many times between other companies; Among the clear examples in this field, we can refer to Change of ownership of Nokia mobile division to Microsoft in 2013 and then its transfer to the HMD group in 2016 mentioned the story Motorola and Transfer of its ownership from the parent company to Google and then to Lenovo also seems another familiar story reach The story of Arm is different from all the mentioned cases in this field and creating an unpleasant development in this field can affect the entire mobile industry.
Concerns about the transfer of ownership of Arm to another company stem from the fact that currently 95% of today’s smartphones use the architecture of Arm processors, and the change of ownership of this company to Nvidia may be a complete nightmare. For chipset makers to have access to new Arm designs. This concern is reflected in the FTC’s press release: “The proposed vertical deal would give one of the largest chip [makers] control over the computing technology and designs that rival companies rely on to develop their competitive chips.” are. The FTC’s complaint alleges that the combined company would have the means and incentive to stifle innovation in next-generation technologies, including those used in data centers and driver assistance systems in cars. has it.” In this article, the term vertical deal refers to an agreement between companies that are at different levels of the supply chain, for example, a contract between an electronic equipment manufacturer and a retailer to advertise and sell the original company’s product for a lower price.
In the meantime, although Nvidia is known more than anything else for its graphics solutions, some of the company’s own products also use Arm designs. In relation to its complaint, the FTC adds: “The complaint alleges that the proposed merger would provide Nvidia with the ability and incentive to use its control over this technology to undermine competitors, reduce competition, and ultimately degrade product quality, reduce innovation. , use higher prices and less selection.”
Lina Khan, the current head of the FTC, who was appointed to this position shortly after the election of Joe Biden to the US presidency, is more interested in He has demonstrated stricter enforcement of antitrust laws, and before being elected, he spent time investigating and studying big tech companies and their unique ways of amassing power in digital markets. Therefore, according to the history of the current FTC presidency in this field, we can expect a tough and unprecedented debate on the approval or rejection of Arm’s ownership change. The Arm deal is not only a problem in America, but it has also created similar issues in other countries. Last October, the European Commission announced a detailed and scrutinizing review of this contract, and probably other involved parties, including the legislative units in the UK and China, will also announce their opinions in this regard in the future.
At the end, it is also important to mention that if this deal is disrupted, Nvidia will suffer a loss of 1.25 billion dollars, which, of course, does not seem like a very high figure considering the very high amount of 40 billion dollars of the contract. Interestingly, Nvidia shares after announcing this news reported by Reuters rose 2.2 percent and reached $321.26.