UK Watchdog Calls For Extra Scrutiny Into Nvidia-Arm Deal

The U.K.’s Competition and Markets Authority is calling for an in-depth investigation into the deal over concerns that Nvidia could harm rivals by ‘restricting access to Arm’s intellectual property’ — despite repeated assurances by the chipmaker that it will maintain Arm’s historic open-licensing model.

The United Kingdom government’s competition watchdog said Nvidia’s plan to acquire British chip designer Arm for $40 billion “raises serious competition concerns” and is calling for an in-depth investigation that would prolong uncertainties about the blockbuster deal.

The U.K.’s Competition and Markets Authority said the concerns, outlined in its report published Friday, surround the potential for Nvidia to harm its competitors by “restricting access to Arm’s intellectual property”—despite repeated assurances by the chipmaker that it will maintain the chip designer’s historic open-licensing model that is enjoyed by companies like Intel, AMD, Apple and others.

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“Ultimately, the CMA is concerned this loss of competition could stifle innovation across a number of markets, including data centres, gaming, the ‘internet of things’, and self-driving cars,” the CMA wrote Friday. “This could result in more expensive or lower quality products for businesses and consumers.”

The CMA said Nvidia had offered a behavioral remedy, but the regulatory body said the measure “would not alleviate its concerns.” As a result, the CMA is calling for a phase two investigation, which would have to be approved by Digital Secretary Oliver Dowden. Dowden set the U.K.’s scrutiny of the Nvidia-Arm deal into motion when he issued a public intervention notice in April.

“We look forward to the opportunity to address the CMA’s initial views and resolve any concerns the Government may have,” a spokesperson for Nvidia said in a statement to CRN. “We remain confident that this transaction will be beneficial to Arm, its licensees, competition, and the U.K.”

If Dowden calls for the CMA to begin a phase two investigation, he will be able to “take action to remedy, mitigate or prevent any effects adverse to the public interest” related to the Nvidia-Arm deal following the conclusion of the second investigation, the CMA has previously said.

When Nvidia announced its $40 billion deal to acquire Arm from Japanese telecom giant SoftBank last year, it said the deal was expected to close in early 2022.

However, that timeline had already in question prior to the CMA’s new report due to alleged delays in reviewing the deal by regulators in Europe and China. The Telegraph reported on July 24 that the European Commission had yet to receive necessary documents from Nvidia, and The Information reported on July 30 that China’s government had yet to begin a formal review.

Jensen Huang, Nvidia’s CEO, told the Financial Times on Thursday that the deal will likely take longer to approve than the initial 18-month window the company laid out.

“Our discussions with regulators are taking longer than initially thought, so it’s pushing out the timetable,” he told the newspaper. He added: “It’s not one particular regulator, but we’re confident in the deal, we’re confident regulators should recognize the benefits of the acquisition.”

Nvidia has promised it would maintain Arm’s historic open-licensing model for silicon designs, but the deal has reportedly faced concerns over that aspect from Microsoft, Google and Qualcomm. Other industry players that have recently spoken up include Intel CEO Pat Gelsinger, who expressed his concerns about the deal. Chipmakers Broadcom, MediaTek and Marvell have all voiced support.

The GPU juggernaut has also vowed that Arm’s intellectual property would remain registered in the U.K. and that it would expand the chip designer’s research and development presence there.