FTC: End of Nvidia-Arm merger ‘safeguards future innovation’

The U.S. Federal Trade Commission (FTC) says the breakup of the merger proposed between Nvidia and Arm “keeps future innovations” in the technology industry.

On February 14, FTC Competition Bureau Director Holly Vedova said that stopping “the largest semiconductor chip merger will keep competition for key technologies and preserve future innovation.”

“This result is particularly significant because it represents the first waiver of a judicial vertical merger in many years,” Vedava commented.

Nvidia has announced the purchase of Arm at SoftBank in 2020 for $ 12 billion in cash and $ 21.5 billion in stocks, as well as $ 5 billion blocked under a salary condition.

The potential merger of Nvidia and Arm, given their combined market share and technology expertise, has raised concerns around regulations around the world. The European Commission (EC) launched an investigation, which was quickly followed by the UK Competition and Markets Authority (CMA) and the FTC.

On December 2, 2021, the FTC voted to file a complaint and attempt to stop the acquisition. In particular, the watchman argued that the merger of Nvidia and Arm would damage competition in the CPU markets, including SmartNIC, driver assistants and cloud computing.

At the time, the FTC said:

“The proposed merger will give Nvidia the opportunity and incentive to use its control over this technology to undermine its competitors, reducing competition and ultimately leading to lower product quality, lower innovation, higher prices and less choice.”

Faced with such a turnaround and delays caused by regulators, on February 8, Nvidia and SoftBank jointly announced the termination of the merger.

“I am grateful to the FTC team for their excellent work in the investigation and trial,” the FTC director added. “I would also like to express my gratitude for the cooperation between FTC staff and competing agencies in the European Union, the United Kingdom, Japan and South Korea.”

Rene Haas has now been appointed the new CEO of Arm. At a briefing, the executive said that while “disappointed” that the deal did not take place, Arm will be public and the IPO date is set for the fiscal year ending March 31, 2023.

According to Haas, the “version” of Arm’s public release will be closer to what the technology giant was before its acquisition of SoftBank. The new CEO also said that with emerging business opportunities in areas such as the IoT and the metapopulation, “opportunities for Arm have never been brighter”.

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