FTC sues to block $40 billion Nvidia acquisition of Arm

In another blow to Nvidia's planned $40 billion acquisition of Arm, the U.S. Federal Trade Commission said Thursday it had launched a lawsuit to block the deal.

The commission voted unanimously in favor of the administrative complaint, which is set to go to trial May 10, 2022. During its investigation of the deal, the FTC noted that it cooperated closely with regulators in the European Union, U.K., Japan, and South Korea.

The FTC said it takes issue with the deal because a combined Nvidia-Arm would grant a single company control over the technology that dozens of rivals rely on to design competing products. Choking off access to Arm’s designs would hurt innovation, and make it more difficult to develop new technologies found in data centers and assisted driving technology used in cars, the FTC said.

“Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets,” FTC Competition Bureau director Holly Vedova said in a statement. "This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals."

An Nvidia spokesperson said that the company will continue to work to demonstrate the deal will benefit the industry and promote competition. Nvidia plans to invest further in Arm’s research and development, and is committed to preserving Arm’s open licensing model, which ensures its designs are available to all interested customers now and in the future.

The FTC’s complaint alleges that the deal would hurt competition in advanced driver assistance systems, data center networking products and Arm-based cloud computing. The deal would also theoretically give Nvidia access to information about its rivals, and lessen Arm’s incentives to pursue innovation that may conflict with Nvidia’s businesses.

The proposed deal has also run into headwinds in the U.K., where competition regulators are conducting a six-month investigation into the potential impact of the transaction.

Nvidia stock has advanced more than 3% in Thursday trading.