UK regulator cites IP licensing in Nvidia-Arm acquisition probe

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UK regulator cites IP licensing in Nvidia-Arm acquisition probe

The UK’s Competition and Markets Authority (CMA) announced that it is launching an investigation into Nvidia’s planned USD40 billion acquisition of the UK-based Arm Limited from Softbank Group.  

The CMA will review the effect of the acquisition on competition in the UK, particularly on intellectual property (IP) licensing, as Arm and Nvidia supply products and services that support applications used by businesses and consumers in the country, including computers, game consoles, mobile devices, and vehicle computer systems. Tech giants like Apple, Samsung, and Sony to name a few use Arm’s processors. 

The CMA is also looking to explore if the planned takeover will result in an incentive for Arm to “withdraw, raise prices or reduce the quality of its IP licensing services to Nvidia’s rivals”. 

CMA’s chief executive further noted that it will ensure that the deal doesn’t result in consumers facing lower quality or more expensive products. 

As of January 6, the regulator has yet to launch its formal Phase 1 investigation but has invited third parties to provide their views concerning the planned takeover.

Nvidia stated in a press release that the deal will expand Arm’s IP licensing portfolio with Nvidia’s technology, which may raise concerns on Arm’s position as a neutral supplier. Arm, which develops and licenses IP and software tools, is known for its open-licensing model and customer neutrality which Nvidia said it plans to continue.

A top Arm executive told Reuters that it plans to install firewalls to prevent access to confidential information from Arm’s customers, which include companies such as Apple and Qualcomm, or to receive early access to products. On the other hand, Nvidia responded to the media company stating that it won’t provide further comments as the regulatory process is confidential. 

While the CMA’s regulatory investigation is still underway, any finding or decision by the government authority can potentially have wider IP licensing implications for the technology industry in the UK beyond the Nvidia-Arm deal.

The Arm acquisition, which was announced September 2020 aims to combine NVIDIA’s AI computing platform to create a “premier computing company for the Age of AI”.

“In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people,” said Jensen Huang, founder and CEO of NVIDIA. “Our combination will create a company fabulously positioned for the age of AI.”

Authors:

Parola Analytics
Parola Analytics
jsaulon@parolaanalytics.com