[dcow]

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".

[nitrogen]

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]

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...

[Dylan16807]

> Intel could do the exact same thing to any X86 vendor today, couldn't it? And AMD to X86_64 vendors, no?

They already have killed off any effective competition, and that's a bad thing. If x86 was more diverse and was moving toward the current set of two, blocking it would also be good.

At least the important parts are falling out of patent...

> 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.

Well it is. How much of a problem depends on how much competition the different parts of the market have.

[ScottBurson]

I think there's a difference between a company licensing IP it has developed itself vs. acquiring another company's IP that is already being used by competitors. Not saying the latter is never allowable, but it weighs against allowing the acquisition.

Still, you raise a good point. Maybe along with blocking more mergers, we should be looking at breaking some companies up.

[nnvvhh]

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.

[eganist]

It looks like your question was answered in another reply to you more than a half hour before this comment of yours.

https://news.ycombinator.com/item?id=29423870

I'm by no means an attorney but the argument made seems sound.

[dcow]

Well if the original creator of this thread had replied in-thread to my other comment, then I wouldn't have felt the need to engage in two different spots. I agree it's annoying.

Anyway I can't help but feel the argument is pretty loose on demonstrating that Nvidia would be in a position to harm the market in a substantial way. Usually the law is enforced reactively to punish bad/unwanted behavior. We preemptively prevent mergers that would result in no real competition existing in a market, in other words: a monopoly. We do that because it's bad for consumers. You can echo the FTC's statements about how having leverage over other market participants might be harmful all you want, but the reality is that they don't explain how Nvidia owning ARM creates a monopoly (is akin to something like Intel owning ARM) and then how that is inherently bad for fundamentally bad for consumers. Nvidia owning arm looks like savvy business at best and at worst annoying and disruptive to some people who put most of their eggs in the ARM basket. I see how it could in theory have an effect on some competition to have this type of vertical integration happen, but is that substantial to the point of Nvidia being a monopoly on microprocessors and consumers left abused and holding the bag? That's quite the claim.

AMD competes with Intel and Intel is similarly vertically integrated. AMD even makes graphics cards after merging with ATI and that didn't kill any markets or harm consumers, if anything AMD graphics has become more competitive. Intel is entering the graphics card space. Personally I'd love to see another player in the processor space. Right now it's Intel and AMD and now Apple. Why wouldn't an Nvidia N2 ARM SOC that competes with the Apple M1 be a good thing? IDK I see potential consumer benefits to Nvidia being able to run with ARM. I can't help but feel like we're straining here under the guise of "big tech is big and bad let's punish them all".

Anyway probably at the end of the utility of going back an forth on wether the merger substantially lessens competition to the point of causing consumer harm. We'll see what the courts decide.

[eganist]

I mean, ARM is basically the only game in town when it comes to mobile chips. Combine that with nvidia's graphics technologies and now you've got basically the entire market for XR devices (I reject the use of 'metaverse' in this context) cornered.

It's one case out of many where suddenly a defacto market leader emerges with almost no room for other entrants, whereas at least without the merger device makers can source silicon from arm licensors as well as from AMD, NVDA, and INTC (soon-ish) for solid graphics components.