Tech giants like Google and Microsoft are no strangers to antitrust legal proceedings. Usually they’re the ones fighting against such claims, as when Microsoft announced its purchase of ZeniMax Media, but this time it seems to be the other way around.
American tech manufacturer Nvidia recently bought out the British microchip designer Arm Ltd. However, Google, Microsoft, and wireless technology firm Qualcomm claim Nvidia is attempting to stifle competition, according to Bloomberg. They call for the Federal Trade Commission (FTC) to block the transaction for violating antitrust statutes.
Bloomberg describes Arm as the Switzerland of the industry for its willingness to do business with all comers. The Cambridge-based company licenses technology to a range of corporations, including but not limited to Apple, Microsoft, Google, Amazon, Intel, and Samsung. Nvidia agreed to buy Arm for $40 billion last September, which would give Nvidia control over a critical resource in the manufacture of consumer electronics. This is at a time where manufacturers are already facing a global hardware shortage.
Before the deal becomes official, it must receive approval from the FTC and regulatory agencies in China, the UK, and the EU. The FTC has the power to block the acquisition entirely if it feels it’s necessary, and reports indicate that at least one company has requested the agency do so. According to Bloomberg, it’s rare for the FTC to intervene in what are known as vertical mergers, or the buying out of companies in other parts of the supply chain. Since Nvidia and Arm are not direct competitors, regulators may see the acquisition as less dangerous.
Opponents of the merger argue that it would allow Nvidia to deny or overcharge for access to critical technology. Nvidia denies that is its intent, claiming it will continue Arm’s open licensing policy. The company argues that the merger will help Arm’s licensees as much as it aids Nvidia.
This stance may seem hypocritical for anyone aware of Microsoft’s ongoing antitrust investigation by the European Union. However, that does not mean the corporation’s claims are baseless. For its part, the FTC will conduct a full investigation on the matter and is reportedly requesting information from several third parties. Additionally, some suggest changes in the agency’s leadership may affect the outcome. U.S. President Joe Biden will appoint two new members to the Commission to fill a vacant seat and replace an outgoing Commissioner, so Nvidia may face an uphill battle in a potentially Democrat-dominated FTC.
Still, it’s tough to say how the FTC will rule. Either way, the investigation has already impacted Nvidia, with its stock prices falling by 3.1 percent last Friday according to Bloomberg.