(San Francisco) The front of the regulators against the acquisition by the American Nvidia of the British specialist in microprocessors Arm has won a weighty ally: the American competition authority (FTC), which, like its European and British counterparts, is concerned that the transaction may hamper innovation in this crucial sector.
The FTC announced Thursday that it was opposed to the project, explaining that the new firm would risk “stifling all competition in next-generation technologies,” according to a statement.
A month ago, the European Commission opened an investigation into this $ 40 billion takeover project for fear of the negative effects on prices and competition in this sector, which is currently experiencing a global shortage.
The buyout operation was announced in September 2020 by the Japanese SoftBank, Arm’s parent company, which had reached an agreement with the Californian Nvidia, champion of graphics cards.
The move “would give one of the biggest microchip companies control over the technologies and computer designs that rival firms depend on to develop their own components,” argues the FTC.
The federal agency cites data centers (computer servers) and driver assistance systems as sectors that need advanced semiconductors and which it says could suffer from a lack of competition.
In mid-November, the British government also asked its competition authority to deepen its investigation into the project, citing potential obstacles to innovation, but also questions of national security.
Artificial intelligence
“We will continue to prove that this transaction will benefit the industry and promote competition,” responded a spokesperson for Nvidia, requested by AFP.
“Nvidia will invest in research and development at Arm, accelerate its projects and increase its offer in order to encourage competition […] “, He continued, assuring that the group based in Silicon Valley was committed to preserving the access of the stakeholders to the intellectual property” current and future “of the British company.
Arm’s microprocessors have an overwhelming global market share in smart phones (95%). Its chips, manufactured under license, are also found in countless sensors, connected objects and cloud services (remote computing).
Nvidia, for its part, has carved out a reputation as a leader in 3D graphics processors, particularly for the video game industry.
At the time of the announcement in 2020, its co-founder and boss Jensen Huang said he wanted to “build an IT group for the age of artificial intelligence” (AI). “The most powerful technical force of our time is artificial intelligence, it is the automation of automation, software writing software”, he was enthusiastic on the CNBC channel.
Last August, after Facebook’s first announcements on its ambitions to build the “metaverse” – a parallel universe at the crossroads of video games, virtual reality and cryptocurrencies – Nvidia put forward its platform called “Omniverse”, which facilitates collaboration via virtual 3D universes.
Authorities mobilized
But elected officials and the US government have toughened their tone against big tech companies, regularly accused of abuse of dominance. Their attacks usually focus on the giants on the country’s west coast, from Google, Apple and Meta (Facebook) in Silicon Valley to Amazon in Seattle.
Bills were approved in June by a parliamentary committee. They pave the way for dismantling and also for stricter rules on mergers and acquisitions in technology.
“The FTC lawsuits send a strong signal that we will act aggressively to protect our critical infrastructure from illegal vertical mergers that have serious and far-reaching consequences for future innovations,” commented Holly Vedova, director at the FTC’s Antenna Competition, cited in the press release.
The administrative hearing of this case should begin on May 10, 2022. The European executive, for its part, had specified that it had 90 working days, ie until March 15, 2022, to make a decision.
This mega-acquisition was initially scheduled to be completed by March 2022, subject to the approval of numerous regulatory authorities around the world.
SoftBank did not immediately respond to an AFP solicitation.