UK flags the Nvidia-Arm merger, calling for additional investigation

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The United Kingdom’s competition authority said it found competition concerns with the proposed $40-billion acquisition of Arm by Nvidia. The proposed acquisition involved intellectual properties of the UK-based Arm after an initial investigation concerning national security.

The Competition and Markets Authority (CMA) delivered a report to the Secretary of State for Digital, Culture, Media, and Sports (DCMS), outlining that the merged business would have the resources and motive to harm the competitiveness of its rivals, through restrictions to Arm’s IP. Arm’s IP is currently used to make semiconductor chips and related products that rival Nvidia’s.

Nvidia would have a grip on everyone’s throat

The companies using Arm’s IP include Intel, Xilinx, AMD, and QUALCOMM. All these companies have expressed their misgivings about the deal.

The watchdog noted that if the merger were to go ahead, it would lead to foreclosure in the supply of CPUs, interconnected products, GPUs and SOCs, across several global markets that would include gaming consoles, automotive IoT (internet of things), and datacenter applications.

The report went on to say that while Nvidia offered some behavioural remedies to address the concerns, the watchdog discovered they were not sufficient.

Behavioral remedies

It was discovered that the suggestions given by Nvidia would lead to considerable specification, circumvention and monitoring, and enforcement risks. As such, the remedies addressed none of the concerns raised.

The CMA said that it is concerned since Nvidia’s control of Arm could create problems for Nvidia’s rivals by limiting access to crucial technologies, which would ultimately pull back innovation across many growing markets.

The cascade could lead to consumers missing out on new products or experience unfavourable price changes. The chip industry is worth billions, which is why the CMA thinks that the businesses and consumers who rely on it could benefit from another investigation.