FTC Chair Lina Khan Cites Blocked Nvidia-Arm Merger as Catalyst for Innovation

Federal Trade Commission Chair Lina Khan highlighted the soaring stock prices of Nvidia and Arm as a testament to the power of blocking mergers in fostering innovation. Speaking at a Bloomberg and Y Combinator conference, Khan cited the collapse of the $40 billion merger in 2022 as a pivotal moment that spurred both companies to innovate and develop new products.

The aborted merger, which faced significant regulatory hurdles, would have created the largest semiconductor chip merger in history. However, Khan noted that the subsequent trajectories of Nvidia and Arm have demonstrated how organic growth and competition can drive innovation to benefit both businesses and the public.

Nvidia, retaining its position as the leading AI chipmaker, witnessed a surge in stock valuation, while Arm's decision to go public resulted in a forward earnings multiple surpassing Nvidia's. This outcome underscores the potential of antitrust actions to promote competition without stifling companies' pursuit of financial success or the adoption of new technologies like artificial intelligence.

Regulators had raised concerns that Nvidia's acquisition of Arm could grant it undue control over crucial technology used by major tech players like Apple, Google, and Qualcomm. The Federal Trade Commission's intervention, alongside other regulatory challenges, ultimately led to the collapse of the deal within three months of the lawsuit.

Khan emphasized the FTC's determination to prevent one of the largest chip companies from monopolizing computing technology and stifling innovation in next-generation technology. Nvidia's subsequent growth in the AI chip market and Arm's promising future as a public entity further validate the effectiveness of regulatory scrutiny in fostering a competitive landscape conducive to innovation.

Nvidia's meteoric rise in value, driven by the success of its AI chip sales, underscores the company's formidable position in the market, while Arm's post-IPO performance reflects investor confidence in its technology's vital role in AI software development.

As Nvidia and Arm continue their respective paths of innovation, Khan's remarks serve as a reminder of the pivotal role of regulatory oversight in safeguarding competition and promoting innovation in the tech industry. Representatives for Nvidia and Arm declined to comment on the matter.