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> It's not hard to see how this deal will be bad for American consumers and businesses at large, and the FTC's purpose is to prevent that harm. I am having a h

by dcow 5y ago

> It's not hard to see how this deal will be bad for American consumers and businesses at large, and the FTC's purpose is to prevent that harm. I am having a hard time understanding this. Care to explain rather than sidestepping and calling out my comment as overly simplistic? It seems the FTC is acting to protect businesses (ironically other big tech), not consumers. That’s what I don’t get. > This action is well in line with keeping big tech from usurping the power of government. “It’s political” isn’t really an explanation either. There’s certainly something to discuss about at what point a company becomes too big and valuable, but that doesn't seem to be the stated motivation here. And I’d be interested in understanding what the framework is for applying those restrictions and how e.g. a company like Apple slid by without getting dismantled. EDIT: To put my confusion another way, at the end it says “The FTC acts when it has reason to believe the law has been or is being violated.” What law has allegedly been violated or would be violated should this merger succeed?

nnvvhh 5y ago
One thing the TFA says: "Because Arm’s technology is a critical input that enables competition between Nvidia and its competitors in several markets, the complaint alleges that the proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice, harming the millions of Americans who benefit from Arm-based products, the complaint alleges." When a downstream firm merges with an upstream supplier that is really important to the downstream firm and its competitors, the merged firm can competitively hobble the downstream competitors. They can refuse to sell the upstream good to competitors, or raise the cost for competitors. Plus it may force the competitors (or potential new entrants) to vertically integrate themselves and enter both the downstream and upstream markets, which chills competition in the downstream market. The government also credits business justifications for the merger, and in the end they balance those with the potential harms to competition. The article (I can't find the complaint) also says, and this is a typical vertical merger concern, that this will give Nvidia (the downstream firm) access to sensitive information of Nvidia's rivals that they had previously shared with Arm. EDIT: There is also a general antitrust push in the Biden administration, notably in the appointments of Lina Khan and Tim Wu. Interesting to see its fruits.
- varelse 5y ago
  Between Intel and AMD there are two competitors here. Strange that the government didn't raise a similar concern when AMD acquired ATI or anytime Intel acquired just about anything but you know how these things work and I guess Apple isn't happy with this. Somehow reminds me of when the SEC decided that Nvidia was the next Enron back in the 00s because a few of their employees did some piddly insider trading and they spent the next two to three years trying to destroy the company. In the end, earnings were adjusted up 10 million and they got rid of their CFO as a sacrificial lamb. All these government bureaucrats need to look busy after all.
  - nnvvhh 5y ago
    The people enforcing the laws change between administrations, so it is not unexpected that past actions look inconsistent. Biden's people were not in power then (in fact the current FTC chair was seventeen). I'm not sure if you're saying that Intel and AMD existing means that competition is doing fine, but three actors is a highly concentrated market.
    - varelse 5y ago
      We seem to be OK with only two players in mobile and on the desktop for now. Interesting the battles we choose to fight.
    - zeckalpha 5y ago
      4/5 of the FTC commissioners were appointed in 2018
  - slongfield 5y ago
    Neither Intel nor AMD supply SoC cores in the same way that ARM does--they don't really operate in the same market segment. NVidia's competition in the hardware acceleration space often includes ARM cores for management (e.g., the Xilinx Zynq https://www.xilinx.com/products/silicon-devices/soc/zynq-7000.html https://www.xilinx.com/products/silicon-devices/soc/zynq-700... ), or are extension of the ARM instruction set (e.g. AWS's Graviton https://aws.amazon.com/ec2/graviton/ https://aws.amazon.com/ec2/graviton/ ). RISC-V suppliers (e.g, SiFive) is the closest thing that ARM to has to a competitor here, and they're nowhere near the same scale.
ScottBurson 5y ago
Here's Matt Stoller's explanation: https://mattstoller.substack.com/p/ftc-sues-to-block-nvidia-arm-merger https://mattstoller.substack.com/p/ftc-sues-to-block-nvidia-... I'm guessing "the law" is probably the Sherman Antitrust Act, which is still on the books, though enforcement went out of fashion in the 1980s. Seems to be making a comeback, though.
- dcow 5y ago
  I follow Matt and often agree with his takes. This short piece just seems to be a non-opinion announcement to keep his followers appraised. > This is Lina Khan’s first major merger challenge. It is also a unanimous vote, and ironically, not all that bad for some of the key players in big tech. I think this key point is telling… Big tech has a big hold on our political-think. And even Matt seems to have conflicting thoughts.
- nnvvhh 5y ago
  Either Sherman or Clayton Act.
  - dcow 5y ago
    From the Clayton Act: * mergers and acquisitions where the effect may substantially lessen competition This is my bone. I don't understand how this merger substantially lessens competition. Let's all concede the merger is obviously bad for every single business in the US and there is nothing redeemable about Nvidia and no reason to believe it should own ARM IP. They're still not competitors and no competition in the market has been lessened by such a merger. In fact, access to other people's sensitive business details probably makes things more competitive and forces participants to innovate in other areas. Only day to day contract negotiation has become shittier because now you have deal with "shitty" Nvidia. Where's the law that says companies can't vertically integrate? Is there a precedent for blocking these type of vertical mergers solely because it might be good business for the acquirer and unfortunate news for other participants? Why couldn't other participants put a bid out on ARM? Why can't Apple and Google just throw 100 billion at SoftBank and say we're buying and freeing ARM? Idk maybe I was simply born into an age of spineless non-enforcement of anti-trust, but I'm not seeing how this scenario warrants more scrutiny than "normal".

by dcow 5y ago

nnvvhh 5y ago

One thing the TFA says: "Because Arm’s technology is a critical input that enables competition between Nvidia and its competitors in several markets, the complaint alleges that the proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice, harming the millions of Americans who benefit from Arm-based products, the complaint alleges." When a downstream firm merges with an upstream supplier that is really important to the downstream firm and its competitors, the merged firm can competitively hobble the downstream competitors. They can refuse to sell the upstream good to competitors, or raise the cost for competitors. Plus it may force the competitors (or potential new entrants) to vertically integrate themselves and enter both the downstream and upstream markets, which chills competition in the downstream market. The government also credits business justifications for the merger, and in the end they balance those with the potential harms to competition. The article (I can't find the complaint) also says, and this is a typical vertical merger concern, that this will give Nvidia (the downstream firm) access to sensitive information of Nvidia's rivals that they had previously shared with Arm. EDIT: There is also a general antitrust push in the Biden administration, notably in the appointments of Lina Khan and Tim Wu. Interesting to see its fruits.

varelse 5y ago
Between Intel and AMD there are two competitors here. Strange that the government didn't raise a similar concern when AMD acquired ATI or anytime Intel acquired just about anything but you know how these things work and I guess Apple isn't happy with this. Somehow reminds me of when the SEC decided that Nvidia was the next Enron back in the 00s because a few of their employees did some piddly insider trading and they spent the next two to three years trying to destroy the company. In the end, earnings were adjusted up 10 million and they got rid of their CFO as a sacrificial lamb. All these government bureaucrats need to look busy after all.
- nnvvhh 5y ago
  The people enforcing the laws change between administrations, so it is not unexpected that past actions look inconsistent. Biden's people were not in power then (in fact the current FTC chair was seventeen). I'm not sure if you're saying that Intel and AMD existing means that competition is doing fine, but three actors is a highly concentrated market.
  - varelse 5y ago
    We seem to be OK with only two players in mobile and on the desktop for now. Interesting the battles we choose to fight.
  - zeckalpha 5y ago
    4/5 of the FTC commissioners were appointed in 2018
- slongfield 5y ago
  Neither Intel nor AMD supply SoC cores in the same way that ARM does--they don't really operate in the same market segment. NVidia's competition in the hardware acceleration space often includes ARM cores for management (e.g., the Xilinx Zynq https://www.xilinx.com/products/silicon-devices/soc/zynq-7000.html https://www.xilinx.com/products/silicon-devices/soc/zynq-700... ), or are extension of the ARM instruction set (e.g. AWS's Graviton https://aws.amazon.com/ec2/graviton/ https://aws.amazon.com/ec2/graviton/ ). RISC-V suppliers (e.g, SiFive) is the closest thing that ARM to has to a competitor here, and they're nowhere near the same scale.

ScottBurson 5y ago

Here's Matt Stoller's explanation: https://mattstoller.substack.com/p/ftc-sues-to-block-nvidia-arm-merger https://mattstoller.substack.com/p/ftc-sues-to-block-nvidia-... I'm guessing "the law" is probably the Sherman Antitrust Act, which is still on the books, though enforcement went out of fashion in the 1980s. Seems to be making a comeback, though.

dcow 5y ago
I follow Matt and often agree with his takes. This short piece just seems to be a non-opinion announcement to keep his followers appraised. > This is Lina Khan’s first major merger challenge. It is also a unanimous vote, and ironically, not all that bad for some of the key players in big tech. I think this key point is telling… Big tech has a big hold on our political-think. And even Matt seems to have conflicting thoughts.
nnvvhh 5y ago
Either Sherman or Clayton Act.
- dcow 5y ago
  From the Clayton Act: * mergers and acquisitions where the effect may substantially lessen competition This is my bone. I don't understand how this merger substantially lessens competition. Let's all concede the merger is obviously bad for every single business in the US and there is nothing redeemable about Nvidia and no reason to believe it should own ARM IP. They're still not competitors and no competition in the market has been lessened by such a merger. In fact, access to other people's sensitive business details probably makes things more competitive and forces participants to innovate in other areas. Only day to day contract negotiation has become shittier because now you have deal with "shitty" Nvidia. Where's the law that says companies can't vertically integrate? Is there a precedent for blocking these type of vertical mergers solely because it might be good business for the acquirer and unfortunate news for other participants? Why couldn't other participants put a bid out on ARM? Why can't Apple and Google just throw 100 billion at SoftBank and say we're buying and freeing ARM? Idk maybe I was simply born into an age of spineless non-enforcement of anti-trust, but I'm not seeing how this scenario warrants more scrutiny than "normal".