“Nvidia controlling arm could cause real problems,” concludes the UK regulator

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    Remember when Nvidia’s CEO warned yesterday that the Arm purchase could take “longer than originally anticipated” but that it wasn’t a big deal and “no particular delay”? That certainly sounds like a big deal today: The British Competition and Market Authority (CMA) recommended a phase 2 investigation on Friday because it fears that Nvidia would receive incentives to suppress innovations.

    “We fear that the NVIDIA control arm could create real problems for NVIDIA’s competitors by restricting their access to key technologies and ultimately stifling innovation in a number of important and growing markets. This could lead to consumers missing out on new products or prices rising, ”writes CMA boss Andrea Cocelli in a press release.

    While the full report from the CMA is not yet available, it provides a summary that explains some of the reasons for concern:

    1.7 The CMA identified significant competition concerns due to the impact of such foreclosure on the supply of CPUs, interconnect products, GPUs and SoCs in several global markets including the data center, Internet of Things, automotive and game console applications.

    1.8. The CMA noted that the foreclosure strategies identified would be mutually reinforcing and individually and cumulatively would lead to a realistic prospect of a significant reduction in competition (SLC) and consequently an inhibition of innovation and more expensive or inferior products.

    “The CMA believes that the merger could create incentives to change Arm’s business model in favor of NVIDIA,” said a passage.

    While the CMA notes that Nvidia has offered to “ensure an open licensing regime based on equal access and interoperability,” the regulator said it felt that this would not be enough. Even if Nvidia agreed to sell some of Arm’s intellectual property, it wouldn’t be enough without deeper investigation, the CMA says, since the licensing agreements can be complex.

    National security was also a potential problem

    The UK government announced in April that it was also concerned about the national security implications and ordered the CMA to investigate these as well, but the executive summary does not offer any conclusions on this. If there had been any, they might have pushed the CMA to move on to a phase two investigation – but it sounds like it is happening anyway. The investigation is now being referred back to the UK Foreign Secretary to decide “whether the merger should be subject to an in-depth phase 2 investigation for both competitive and national security reasons, or whether it should be returned to the CMA for investigation”. only competition area. ”

    As my colleague James Vincent wrote yesterday, the UK isn’t the only regulator interested in this deal and Nvidia currently has until 2022 to complete the purchase with these regulators.

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