Nvidia's acquisition of Arm has been dealt a fresh blow as the US Federal Trade Commission (FTC) has sued to block the merger over anti-competition concerns.
The FTC said the deal would "stifle" competition for multiple technologies because Arm is a "critical input" that fosters competition between Nvidia and its rivals.
Such an acquisition, it said, would give Nvidia a way to "undermine" other companies.
An administrative trial is due to start 9 August 2022, but Nvidia appears unconcerned by the lawsuit, calling it the "next step" in the FTC's process in a statement to Techcrunch. The firm remains confident that its proposed acquisition will actually "accelerate" Arm's business model and foster more competition.
However, an FTC lawsuit is a significant step as the commission often takes legal action when it believes a company is breaking the law. Unlike regulators in the UK and Europe, which have powers to block certain deals, the FTC operates under the 'Hart-Scott-Rodino Act', which only allows it to review cases that affect commerce in the US. It has to go through the court to block deals that it believes would "substantially lessen competition".
"Tomorrow's technologies depend on preserving today's competitive, cutting-edge chip markets," said FTC bureau of competition director Holly Vedova. "This proposed deal would distort Arm's incentives in chip markets and allow the combined firm to unfairly undermine Nvidia's rivals.
RELATED RESOURCE
How virtual desktop infrastructure enables digital transformation
Challenges and benefits of VDI
"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."
Nvidia's plans to take over Arm, which is currently owned by the Japanese investment group SoftBank, has been heavily scrutinised from the get-go. Regulators and MPs in the UK have expressed concerns over the proposals, with the Competition and Markets Authority currently investigating the merger.
The European Commission has also launched its own investigation into the purchase.
-
AMD to cut around 1,000 staff to focus on "growth opportunities"News The AMD layoffs come after rival Intel cut staff on the back of flagging AI returns
-
Microsoft and Nvidia are teaming up to support UK AI startups – and they want to attract firms outside of London and the South EastNews Microsoft and Nvidia have teamed up to launch a generative AI accelerator for UK startups.
-
Nvidia promises to give Californians free AI training with new initiativeNews A new partnership between Nvidia and the state of California promises to help train 100,000 residents in AI skills and give academic institutions better access to hardware
-
Jensen Huang has taken Nvidia to the top – but he says the 'suffering' wasn't really worth itNews Nvidia’s Jensen Huang waxed lyrical about the trials and tribulations of turning a startup into a trillion-dollar company
-
Everything you need to know about NvidiaIn-depth A brief guide to Nvidia, a driving force behind technological innovation and one of the most valuable companies operating today
-
HP infuses Amplify Partner Program with new AI-based training and benefitsNews Additions include an AI MasterClass training and certification program, and a new growth opportunity in AI Data Science
-
Lovers not fighters: Nvidia and Snowflake take their relationship to the next level with focus on generative AINews NVIDIA NeMo will integrate with Snowflake Data Cloud to enable custom large language models using proprietary data to be built quickly and easily
-
Arm appoints new CFO as it gears up for IPONews The company has hired Jason Child, former Splunk CFO, who has experience in helping companies go public
