Nvidia's $40 Billion Arm Acquisition Is Under Scrutiny

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Nvidia's $40 Billion Arm Acquisition Is Under Scrutiny

 

Photo: Justin Sullivan (Getty Images)

 

As expected, Nvidia’s $40 billion acquisition of Arm is nowhere near a done deal.

 

The EU and UK are ready to start investigating the merger, reports The Irish Times. Sources familiar with the matter told the publication that the deal will be thoroughly investigated, and could either be passed unconditionally or with concessions. The investigation comes in response to concerns that the deal will give Nvidia monopolistic power over current Arm licensees.

 

Sources say the investigation is just beginning, as paperwork has not been filed in Brussels yet. The UK Competition and Markets Authority is currently collecting statements from various companies about their views of the acquisition. In the past, Nvidia’s rivals have called for the deal to be blocked, so it seems likely those statements will contain the same or similar sentiments.

 

Arm co-founder Hermann Hauser wrote in a letter last year to the UK Foreign Affairs Committee that allowing Nvidia to acquire ARM would “give Nvidia a dominant position in all processor segments and create another U.S. technology monopoly.” If the acquisition were to be approved, it would only further exacerbate Britain’s worries about tech giants like Google, Facebook, Netflix and Amazon’s influence over the UK, said Hauser. Nvidia is one of 500 Arm licensees worldwide. Should Nvidia acquire Arm, it would become the licenser of those contracts. Nivida’s rivals have called for the deal to be blocked.

 

Nvidia CEO Jensen Huang had previously told the Financial Times that “Nvidia will maintain Arm’s open licensing model,” and that it has “no intention to ‘throttle’ or ‘deny’ Arm’s supply to any customer.”

 

An Nvidia spokesperson told Fortune, “The regulatory process is proceeding as we had planned,” and that the company “fully understand[s] that the relevant governments and regulators will review this transaction in detail, as they should, given the significance of the deal.” Nvidia remains confident that it will receive the necessary regulatory approvals to complete the acquisition.

 

Huang told the Financial Times that Nvidia would be happy to retain Arm’s open licensing model if that was a stipulation of the acquisition.

 

But it’s understandable if you don’t quite buy that, because tech giants have in the past agreed to conditions as part of a merger, only to disregard them later. Facebook, for instance, said it would not match WhatsApp and Facebook user accounts when it acquired the messaging platform in 2014, but it later went back on its promise.

 

The deal is also facing scrutiny in the U.S. and China, so it looks like Nvidia has a long road ahead.

 

 

Source: Nvidia's $40 Billion Arm Acquisition Is Under Scrutiny

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Nvidia's $40bn ARM acquisition could be foiled, UK Govt is looking into the matter

 

 

Back in July last year, there were rumors going around that Nvidia was considering purchasing Arm from Softbank, and later in September the same year, those rumors were finally confirmed when Nvidia itself announced that it was indeed looking to acquire Arm for $40 billion.

 

However, it seems the Government of UK, the country where Arm's based off isn't too happy about the proceedings taking place. Today, the Secretary of State for Digital, Culture, Media and Sport (UK) has issued a public interest intervention notice (PIIN) which officially confirms that it will be looking into the matter under the Enterprise Act 2002. The governing body has asked the Competition and Markets Authority (CMA) to investigate the proceedings in order to understand the long-term national consequences of such an acquisition and prepare a report by 30 July 2021.

 

On 19 April 2021, the Secretary of State issued a public interest intervention notice (PIIN), confirming that he is intervening in the sale on national security grounds. In reaching this decision, he considered advice received from officials across the investment security community.

The Competition and Markets Authority (CMA) will prepare a report on the competition and national security aspects of the proposed transaction. The CMA has until midnight on 30 July 2021 to complete and submit this report to the Secretary of State.

 

A couple of days ago at a press interview (via VentureBeat), Nvidia CEO Jensen Huang had expressed his confidence about the acquisition stating that he felt the deal would be completed by 2022. Here's a part of his statement:

 

 

I’m very confident that the regulators will see the wisdom of the transaction. It will provide a surge of innovation. It will create new options for the marketplace. It will allow ARM to be expanded into markets that otherwise are difficult for them to reach themselves. Like many of the partnerships I announced, those are all things bringing AI to the ARM ecosystem, bringing Nvidia’s accelerated computing platform to the ARM ecosystem — it’s something only we and a bunch of computing companies working together can do. The regulators will see the wisdom of it, and our discussions with them are as expected and constructive. I’m confident that we’ll still get the deal done in 2022, which is when we expected it in the first place, about 18 months.

 

From the statement, it seems like Jensen Huang is expecting some sort of regulatory hurdle but remains confident that it will go in the company's favor and that the regulators will see the good side of such a deal. However, it could simply be an upbeat attitude he presented so as to not upset the company's investors. In fact, almost immediately after the PIIN was published, Nvidia's shares took a dive.

 

 

Source: Nvidia's $40bn ARM acquisition could be foiled, UK Govt is looking into the matter