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.
> 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.
the Bell System was broken up in the 1980s
* 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".
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.
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.
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.
Still, you raise a good point. Maybe along with blocking more mergers, we should be looking at breaking some companies up.
https://news.ycombinator.com/item?id=29423870
I'm by no means an attorney but the argument made seems sound.
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.
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.