Why It Matters: This week, the U.S. Federal Trade Commission (FTC) filed a lawsuit to block Nvidia’s $ 40 billion acquisition of Arm. The FTC says the deal would give Nvidia too much leverage over companies that depend on Arm for their technology, including Nvidia’s competitors. The merger is already the subject of an EU antitrust investigation.

The FTC announced the lawsuit Thursday, citing concerns about innovation and competition as the main reason. The Commission is concerned that Nvidia’s control could distort Arm’s incentives to its licensees and stifle innovation, particularly in areas such as driver assistance systems, data center technology and cloud computing processors. Arm licenses its chip designs to technology companies that use them for technology in devices such as smartphones, tablets, and automotive systems. They include companies like Samsung and Apple.

Another potential problem is that licensees share critical information about their products with Arm, which could be passed on to Nvidia if it acquires Arm. In addition to affecting competition and innovation, it could also affect other companies’ confidence in Arm’s neutrality when sharing information on chip designs.

The FTC voted unanimously to proceed with the lawsuit, with the administrative lawsuit set for August 9, 2022. It works closely with other competition agencies in the UK (where Arm is based), Japan (where Arm is based). its headquarters the company that currently owns Arm). ), South Korea and the European Union.

The EU is already investigating the deal. Nvidia has indicated that it will make concessions to ensure competition if the Arm merger goes ahead.