Following an extended period of regulatory uncertainly regarding NVIDIA’s planned acquisition of Arm, the European Union executive branch, the European Commission, has announced that they have opened up a formal probe into the deal. Citing concerns about competition and the importance of Arm’s IP, the Commission has kicked off a 90 day review process for the merger to determine if those concerns are warranted, and thus whether the merger should be modified or blocked entirely. Given the 90 day window, the Commission has until March 15th of 2022 to publish a decision.

At a high level, the EC’s concerns hinge around the fact that Arm is an IP supplier for both NVIDIA and its competitors. Which has led the EC to be concerned about whether NVIDIA would use its ownership of Arm to limit or otherwise degrade competitors’ access to Arm’s IP. This is seen as an especially concerning scenario given the breadth of device categories that Arm chips are in – everything from toasters to datacenters. As well, the EC will also be examining whether the merger could lead to NVIDIA prioritizing the R&D of IP that NVIDIA makes heavy use of (e.g. datacenter CPUs) to the detriment of other types of IP that are used by other customers.

It is worth noting that this is going to be a slightly different kind of review than usual for the EC. Since NVIDIA and Arm aren’t competitors – something even the EC notes – this isn’t a typical competitive merger. Instead, the investigation is going to be all about the downstream effects of a major supplier also becoming a competitor.

Overall, the need for a review is not terribly surprising. Given the scope of the $40 billion deal, the number of Arm customers (pretty much everyone), and the number of countries involved (pretty much everyone again), there was always a good chance that the deal could be investigated by one or more nations. Still, the EC’s investigation means that, even if approved, the deal will almost certainly not close by March as previously planned.

"Semiconductors are everywhere in products and devices that we use everyday as well as in infrastructure such as datacentres. Whilst Arm and NVIDIA do not directly compete, Arm's IP is an important input in products competing with those of NVIDIA, for example in datacentres, automotive and in Internet of Things. Our analysis shows that the acquisition of Arm by NVIDIA could lead to restricted or degraded access to Arm's IP, with distortive effects in many markets where semiconductors are used. Our investigation aims to ensure that companies active in Europe continue having effective access to the technology that is necessary to produce state-of-the-art semiconductor products at competitive prices."
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Executive Vice-President Margrethe Vestager

Source: European Commission

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  • meacupla - Wednesday, October 27, 2021 - link

    Good. Companies should be taxed, fined, and robbed at every opportunity. Reply
  • Hul8 - Thursday, October 28, 2021 - link

    Companies effectively fall under jurisdictions of all the countries they operate in. If ARM and Nvidia wish to do business in the EU, they can't engage in anti-competitive practices there. Reply
  • Mikewind Dale - Thursday, October 28, 2021 - link

    What would happen if Nvidia said, "Screw the EU" and merged with ARM? That is, if the EU prevents ARM from doing business in the EU, what does that mean, practically? Would the EU void the copyright/trademark and tell companies that they are free to infringe the ARM IP without paying Nvidia the licensing fee? Reply
  • Murloc - Sunday, November 7, 2021 - link

    idk what would happen in this case, but normally if a company is just engaging in anti-competitive practices, they can be fined up to 30% of relevant products sales, up to 10% of total company turn-over. But this fine is assuming that you stop when you get caught. Reply
  • Tams80 - Saturday, November 13, 2021 - link

    After fines, if they didn't stop then first bans on sales of their technologies in the EU would be implemented and they would be forced to split into two or more companies (all while taking on more fines).

    And yes, if they couldn't operate in the EU, they wouldn't be able to protect their IP there.
    Reply
  • Wereweeb - Thursday, October 28, 2021 - link

    What's with all the corporate bootlickers, y'all own Nvidia stock or something? Reply
  • Spunjji - Thursday, October 28, 2021 - link

    Some of them just like the taste of leather and dirt. Reply
  • Spunjji - Thursday, October 28, 2021 - link

    Not remotely confused about their jurisdiction. They're stepping up where other governments cower and scrape to the large corporations. As meaculpa said, what you hysterically call "robbing" companies is a social good. Reply
  • Alistair - Thursday, October 28, 2021 - link

    People always say things like "nothing is stopping them from making their own ARM chips now" but we don't really see that as true. Every ARM chip except Apple is all the same as the base ARM designs, honestly. Nothing much better.

    You can't ask NVidia to invest 10s of billions of dollars in to ARM design if they can't then sell those designs to others to make back their money, without risk that they just rip it off and don't pay nVidia for the work. If they don't own ARM they will be accidentally giving away that R&D and it won't benefit themselves enough to put that investment in action.

    If they can invest in the power of ARM CPU cores, not only benefit themselves, but also license those new ARM cores to other companies without risk that they just run with it and don't pay nVidia anything, they will invest a lot more money into ARM CPU development.

    I'm not saying NVidia is an angel, they want to make money. I'm saying we need a lot more R&D into basic ARM designs, they are 3 years behind Apple and Intel and AMD will beat ARM at this rate.
    Reply
  • Wereweeb - Thursday, October 28, 2021 - link

    What in the world are you talking about? No one "steals" ARM's or Apple's or Samsung's custom designs, because there's this little thing called "IP law".

    Even worse than that, your whole argument rests on the basis of a hipotethical business model (That of licensing IP) that Nvidia has had, historically speaking, no interest in. Nvidia makes money selling hardware. They don't license their IP because that would be creating competition in their own ecossystem, hurting their sales.

    As for "ARM is 3 years behind Apple, Intel, AMD": CPU design is a balance between cost, power draw, and performance. ARM's designs perform "worse" (In a contextless comparison) because their designs focus on delivering solid performance without excessive cost, while keeping the power draw of consumer SoC's in the 5-30W range.

    In contrast, AMD and especially Intel's designs can draw over an order of magnitude more power than an ARM SoC. So of course they're "better", if you're willing to carry a Noctua tower cooler attached to your smartphone.

    And Apple makes their money mainly off their ecosystem monop- sorry, control, and not out of selling hardware. That's why they can afford to use large, bleeding-edge silicon dies, and to create a whole bunch of accelerators. They're just investing a lot of money into winning the benchmarks, as that's essentially another form of marketing for them.

    A Nvidia acquisition won't suddenly change any of these dynamics.
    Reply

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