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Federal Trade Commission Probes NVIDIA's Acquisition of Chipmaker Arm Holding

By Danny Vena - Feb 16, 2021 at 3:06PM

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The move comes after backlash from other big tech companies.

Reports emerged over the weekend that the U.S. Federal Trade Commission (FTC) is launching an investigation into the proposed acquisition of Arm Holdings by chipmaker NVIDIA (NVDA -4.40%)

The antitrust regulator has launched an in-depth inquiry into the acquisition after complaints by a number of rivals alleging that the deal would harm competition, according to a report by Bloomberg. Those opposed to the merger reportedly include Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT), and Qualcomm (QCOM -2.72%), among others.

The ARM and NVIDIA logos side by side.

Image source: NVIDIA.

The companies complained to antitrust regulators that the technology they license from Arm is vital to their respective businesses. They fear NVIDIA might limit access to the technology. Reports also suggest the companies have filed similar objections with the European Commission, UK Competition and Markets Authority (CMA), and China State Administration for Market Regulation. Arm licenses its technology to a vast array of companies, including Apple (AAPL -1.92%), Intel (NASDAQ:: INTC), and Amazon (AMZN -3.21%).

According to the deal struck in September, NVIDIA would purchase Arm Holdings from SoftBank (SFTB.Y -2.76%) in a cash-and-stock deal valued at $40 billion. If the deal comes to fruition, it would mark the largest ever acquisition by NVIDIA, easily surpassing the $6.9 billion it spent to bring high-performance computing specialist Mellanox into the fold last year.

NVIDIA has pushed back against the allegations, saying the reason it is paying such a robust premium for the company is the generous stream of revenue it will derive from Arm's licensing, something it has no intention of interrupting.

"As we proceed through the review process, we're confident that both regulators and customers will see the benefits of our plan to continue Arm's open licensing model and ensure a transparent, collaborative relationship with Arm's licensees," Nvidia said in a statement.

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Stocks Mentioned

NVIDIA Corporation Stock Quote
NVIDIA Corporation
$161.54 (-4.40%) $-7.44
Apple Inc. Stock Quote
Apple Inc.
$140.36 (-1.92%) $-2.75
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
$128.53 (-2.72%) $-3.59, Inc. Stock Quote, Inc.
$2,082.00 (-3.21%) $-69.14
SoftBank Group Corp. Stock Quote
SoftBank Group Corp.
$20.05 (-2.76%) $0.57

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