WASHINGTON (Diya TV) — Federal Trade Commission Chair Lina Khan cited the case of Nvidia and Arm as exemplary of how blocking mergers can stimulate innovation. The $40B merger between Nvidia and Arm was abandoned in 2022 due to regulatory challenges, compelling both companies to innovate and introduce new products. This action was hailed as a successful antitrust measure that didn’t impede companies from seeking financial success or embracing technologies like artificial intelligence.
Speaking at a Bloomberg and Y Combinator conference, Khan emphasized, “The trajectories of both companies in the wake of this action has illustrated how organic growth and competition can spur firms to further innovate in ways that benefit the business and public alike.” She pointed out that the evidence is seen in the stock prices of both companies, with Nvidia retaining its position as the leading AI chip maker and Arm going public with a forward earnings multiple more than double Nvidia’s.
In September 2020, Nvidia proposed acquiring Arm for $40 billion, aiming to create the premier computing company for the “age of AI.” However, regulatory resistance led to the deal’s collapse in less than three months. The FTC sued in late 2021 to block the merger, fearing it could stifle competition and innovation in next-generation technology by giving Nvidia control over computing technology and designs relied upon by rival firms.
“Our team determined that giving one of the largest chip companies control over the computing technology and designs that rival firms rely on to develop their own competing chips would be bad for competition and hamstring innovation of next-generation technology,” emphasized Khan.
Post-merger abandonment, Nvidia’s shares surged as the company solidified its position in AI chips, nearly tripling in value and becoming the third-most valuable U.S. company. Arm’s stock doubled since going public in August 2023, reflecting investors’ confidence in its future growth potential. Arm is now valued at over $143 billion, with a high earnings multiple indicating strong growth prospects.
