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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-n

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".
  - nnvvhh 5y ago
    Take note that the FTC has not actually done anything, they have only initiated a lawsuit. A court may disagree with the FTC's assessment and permit the merger. The government loses antitrust suits. But antitrust suits are long and expensive, so a challenge like this may cause Nvidia and Arm to back off. Your intuition is right in that vertical mergers are viewed less suspiciously than mergers between competitors. But courts still assess the impact to competition in vertical mergers. As you did, assume the worst case: if Arm is really crucial to Nvidia's competitors, and the merged firm keeps Arm's designs to themselves, competition in chip-supply is harmed. Yes, Nvidia was savvy etc. and is just doing what another actor could do, but compare this method of Nvidia beating their competitors versus the "ideal" way where Nvidia makes a better product, does it cheaper, and is generally more efficient. That's what antitrust law wants. It wants the merits of the product and the org to decide the winner in a market, not things like buying Arm and keeping them to yourself.
  - nitrogen 5y ago
    I don't understand how this merger substantially lessens competition. Step 1: acquire ARM Step 2: make life more difficult for other ARM license holders and/or easier for NVidia Step 3: be the only viable supplier of ARM chips I'm not seeing how this scenario warrants more scrutiny than "normal". Speculating: maybe the old "normal" was too low, this was just the easiest first move, and other more difficult antitrust moves are in the pipeline.
    - dcow 5y ago
      Intel could do the exact same thing to any X86 vendor today, couldn't it? And AMD to X86_64 vendors, no? I'm not saying your logic is wrong, but this problem seems more pervasive than Nvidia and ARM. In reality if we stop this merger what we're saying is that it's a problem for any company to own IP that they license to competitors while at the same time producing and selling an in-house product that leverages the same IP. I'm not ignoring the conflicting interest here, but we've never said "a company can't be vertically integrated and also license technology to competitors". Maybe times are a changing, but if this becomes the new norm the only thing it seems to protect are incumbents in the space who are already vertically integrated...
fsckboy 5y ago
> enforcement went out of fashion in the 1980s the Bell System was broken up in the 1980s

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".
- nnvvhh 5y ago
  Take note that the FTC has not actually done anything, they have only initiated a lawsuit. A court may disagree with the FTC's assessment and permit the merger. The government loses antitrust suits. But antitrust suits are long and expensive, so a challenge like this may cause Nvidia and Arm to back off. Your intuition is right in that vertical mergers are viewed less suspiciously than mergers between competitors. But courts still assess the impact to competition in vertical mergers. As you did, assume the worst case: if Arm is really crucial to Nvidia's competitors, and the merged firm keeps Arm's designs to themselves, competition in chip-supply is harmed. Yes, Nvidia was savvy etc. and is just doing what another actor could do, but compare this method of Nvidia beating their competitors versus the "ideal" way where Nvidia makes a better product, does it cheaper, and is generally more efficient. That's what antitrust law wants. It wants the merits of the product and the org to decide the winner in a market, not things like buying Arm and keeping them to yourself.
- nitrogen 5y ago
  I don't understand how this merger substantially lessens competition. Step 1: acquire ARM Step 2: make life more difficult for other ARM license holders and/or easier for NVidia Step 3: be the only viable supplier of ARM chips I'm not seeing how this scenario warrants more scrutiny than "normal". Speculating: maybe the old "normal" was too low, this was just the easiest first move, and other more difficult antitrust moves are in the pipeline.
  - dcow 5y ago
    Intel could do the exact same thing to any X86 vendor today, couldn't it? And AMD to X86_64 vendors, no? I'm not saying your logic is wrong, but this problem seems more pervasive than Nvidia and ARM. In reality if we stop this merger what we're saying is that it's a problem for any company to own IP that they license to competitors while at the same time producing and selling an in-house product that leverages the same IP. I'm not ignoring the conflicting interest here, but we've never said "a company can't be vertically integrated and also license technology to competitors". Maybe times are a changing, but if this becomes the new norm the only thing it seems to protect are incumbents in the space who are already vertically integrated...

fsckboy 5y ago

> enforcement went out of fashion in the 1980s the Bell System was broken up in the 1980s