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."
Executive Vice-President Margrethe Vestager

Source: European Commission

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  • Alistair - Wednesday, October 27, 2021 - link

    AMD has got CPU and GPU. Intel has got both. Time for nVidia to get both. Besides I really want to use Windows ARM with nVidia+ARM. I don't really see the problem.
  • boozed - Wednesday, October 27, 2021 - link

    I'm sure the European Commission's competition regulator will find this to be a persuasive argument.
  • iphonebestgamephone - Thursday, October 28, 2021 - link

    Didnt you know? His uncle works for the european comission!
  • at_clucks - Thursday, October 28, 2021 - link

    And they'll surely ignore that ARM has 100% of the mobile space, and making serious inroads into desktops PC and servers space. Things look different when you're barely a blip on the radar compared to when you're the market.

    Given that NVIDIA is a US company and the US would very much like to have ARM I'm sure the regulators will see quite a bit of pressure to give it the green light. And it will likely happen, just like when they gave FB the green light for WhatsApp despite it being a certainty that data will be shared, against the conditions imposed. SO I don't expect any surprises for this one.
  • UltraWide - Wednesday, October 27, 2021 - link

    Good point.
  • Spunjji - Thursday, October 28, 2021 - link

    Not really. AMD buying ATi didn't change the competitive market - they didn't make ATi GPUs incompatible with Intel CPUs, for example. What they (eventually) did was integrate the GPU tech into their CPUs, which wasn't possible before. That's an improvement for the market.

    Meanwhile Intel have developed their own GPU.

    On the other hand, Nvidia can already do everything they need to do with ARM without owning it - e.g. building a CPU and GPU together. What's supposed to be the advantage to the market of Nvidia - a company famous for making things proprietary for profit - owning ARM?
  • UltraWide - Thursday, October 28, 2021 - link

    By this logic it's the same situation as AMD buying ATi. Nvidia hasn't acquired ARM yet. So you cannot assume they will change the ARM licensing model.
  • meacupla - Thursday, October 28, 2021 - link

    Your reasoning is awful.
    GPUs depend on having a CPU, and if AMD did something to make their GPUs only work with AMD CPUs, it would have been suicidal.
    Especially considering the fact that, when AMD acquired ATI, AMD CPUs were not miles ahead of intel, nor was AMD the only IP holder for x86 technology.

    Where as arm is the single dominant player in risc CPUs for low power devices. If there was no oversight, nvidiarm could and would charge more for arm licenses.

    Like, really, with all the price increases for nvidia's GPU lineup, as well as the extra nvidia tax on G-sync monitors, what exactly makes you think nvidia won't increase the prices for arm licenses?
  • at_clucks - Friday, October 29, 2021 - link

    "nor was AMD the only IP holder for x86 technology"

    This is the essential part. x86 space always had a minimum of 2 players. Same for the GPU space where the minimum has been 3 for decades.

    In the ARM space there's one ARM licensing to others. On top of that Nvidia is also the major GPU player on the market. Put them together and you'd have the biggest GPU player getting 100% control over the CPUs for mobile space, the very same that start to displace x86 from PC/server space.

    Unless we get an x86-like agreement where it's guaranteed that at least one competing manufacturer has free reign over developing the ISA with the associated divergence that would definitely follow, the only good option is to keep ARM as an independent entity. And then there's the good option for Nvidia and the US with them having 100% control over all mainstream CPU ISAs.
  • Tams80 - Saturday, November 13, 2021 - link

    ATi were just another GPU designer. They weren't anywhere near ubiquitous and there any other companies that relied on their technology that also competed with AMD.

    ARM is almost ubquitious in the mobile space and has made in-roads elsewhere. There are many, some very large, companies that rely on ARM and that compete with NVIDIA.

    This sale absolutely should not be allowed (the original to Softbank should never have been on British national security grounds, but that's another issue).

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