Nvidia’s effort to buy Arm could be a bad deal for the rest of the tech industry and consumers, according to a UK regulator.
On Friday, the UK’s Competition and Markets Authority recommended the country’s government open a larger investigation into the proposed acquisition, citing anti-competition concerns.
“Ultimately, the CMA is concerned this loss of competition could stifle innovation across a number of markets, including data centers, gaming, the ‘internet of things’, and self-driving cars. This could result in more expensive or lower quality products for businesses and consumers," it said in the announcement.
The CMA’s main concern is how Arm’s licensed chip designs are widely used across the tech industry. As a result, the deal could give Nvidia immense influence across numerous companies.
“We’re concerned that Nvidia controlling Arm could create real problems for Nvidia rivals by limiting their access to key technologies, and ultimately stifling innovation across a number of important and growing markets,” Andrea Coscelli, CMA chief executive, said in a statement.
In response, Nvidia said: "We look forward to the opportunity to address the CMA’s initial views and resolve any concerns the government may have. We remain confident that this transaction will be beneficial to Arm, its licensees, competition, and the UK.”
According to Nvidia, the potential merger is good for the industry because the company plans on pouring more resources into Arm, enabling it to pump out more technologies. Nevertheless, earlier this week, the company's CFO acknowledged in an earnings call the "discussions with regulators are taking longer than initially thought."
To appease regulators, Nvidia says it’s committed to keeping Arm’s licensing model for chip designs open to the tech industry. However, the CMA found Nvidia’s “behavioral remedy” failed to fully resolve the anti-competition concerns. “The CMA found the offer to present considerable specification, circumvention, and monitoring and enforcement risks,” the regulator said in a report.
Determining whether the UK will conduct a prolonged investigation into the merger will be up to the country's Secretary of State (SOS) for the Department for Digital, Culture, Media and Sport. “The timing of this decision will be decided by the SoS,” the CMA added.