What just happened? Nvidia’s $40 billion acquisition of Arm was always going to come under scrutiny from regulators, given its size and effects on the industry. Now, the UK’s competition watchdog has launched an investigation into the takeover, which is set to become the second-largest tech deal in history.
In September, Arm owner Softbank confirmed it had reached an agreement with Nvidia to sell off Arm Limited for $40 billion.
Softbank paid $31 billion for Arm in 2016. Four years later, with the Japanese conglomerate offloading assets to help lessen the impact of the Coronavirus-related economic downturn, it began looking for buyers interested in Arm. Nvidia stepped up, agreeing to purchase the company's lucrative IP assets and business.
Largest tech deals in history:
|Avago Technologies||Broadcom||$37 billion||2015|
|IBM||Red Hat||$34 billion||2018|
|Softbank||ARM Holdings||$31.4 billion||2016|
The acquisition has drawn the Competition and Markets Authority’s (CMA) attention. It has requested interested third parties submit their views on the deal before a formal investigation is launched later this year.
The CMA says it will work with other competition authorities worldwide to consider the impact of the deal. The agency said its primary concern is to ensure the takeover doesn’t result in consumers facing inferior or lower-quality products.
“The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives,” said CMA chief executive Andrea Coscelli in a statement.
If the investigation reveals that the deal breaks UK competition rules, the CMA can block it.
Last August, before Nvidia had made a formal bid, Arm co-founder Hermann Hauser warned that such a move would be a disaster. “If it becomes part of Nvidia, most of the licensees are competitors of Nvidia, and will of course then look for an alternative to Arm,” he said at the time, adding that the company’s decisions would no longer be made in Cambridge, UK, but at Nvidia’s California headquarters.
Hauser believes Nvidia's takeover would likely cost some of Arm’s 3,000 UK employees their jobs while creating a monopolistic behemoth on the same scale as Facebook and Google.