UK has Nvidia in an Arm-lock

Shares in graphics chipmaker Nvidia have more than doubled so far this year and analysts expect it to report another strong quarter, in an earnings call after the market close on Wednesday.

However, its longer term ambitions are hanging by a processing thread today, with chief executive Jensen Huang’s bold bid to buy Arm, the bespoke chip designer to the world, subject of new regulatory concerns in the UK.

Digital and culture secretary Nadine Dorries has ordered a phase 2 investigation into the $54bn deal with SoftBank on public interest grounds, meaning it will now be subject to a full-blown probe into antitrust and security issues.

In a letter to the parties published on Tuesday, the government said: “The secretary of state believes that the ubiquity of Arm technology makes the accessibility and reliability of Arm IP necessary for national security.” It added that the National Cyber Security Centre had also identified “a number of potential risks to national security” as a result of the deal.

In a statement, Dorries said Arm had a “unique place in the global technology supply chain and we must make sure the implications of this transaction are fully considered”.

The UK’s Competition and Markets Authority had already found “serious competition concerns” with the deal in the summer, claiming Nvidia could harm competitors by cutting off access to Arm’s technology, or raising prices. The CMA will now have more than six months to conduct an investigation.

Nvidia announced the deal last year and said it could take around 18 months to complete, but that seems impossible now. China and the US also have to approve it and the EU launched its own probe last month. Margrethe Vestager, the EU’s executive vice-president in charge of competition and digital policy, said the acquisition of Arm by Nvidia “could lead to restricted or degraded access to Arm’s IP, with distortive effects in many markets where semiconductors are used”.

“The parties appear to have a mountain to climb to keep the deal alive,” says Matt Evans, partner at law firm DLA Piper, while tech analyst Richard Windsor maintains the simplest solution to SoftBank’s ownership of Arm is “to put it back where it found it on the London Stock Exchange, with a secondary listing in New York”.

The Internet of (Five) Things

1. “We are all in the gutter . . . 
While SoftBank ponders what to do about Arm, Jeff Housenbold, a former top executive at its Vision Fund, is pursuing a tech angle in keeping leaves out of gutters. Leaf Home says Housenbold has joined the gutter-filtering company as president and chief executive.

2. Indian start-ups benefit from China’s tech travails
Investors are pivoting to India for high-growth companies as Chinese regulators crack down on the tech industry. But is the subcontinent’s start-up sector overheating? asks The Big Read.

3. Epic attacks Google task force
Google created a task force to deter Android users from downloading the popular game Fortnite outside of its Play Store, Epic Games alleged in an unredacted court filing made public on Monday as part of its war against app stores. In other Google legal news, Martin Sandbu analyses last week’s victory for the European Commission.

4. Diller denies fleecing Tinder founders
In a lesser legal fracas, Barry Diller has denied accusations that his media empire had a pattern of cheating entrepreneurs, as he took to the stand to defend claims that IAC fleeced the founders of dating app Tinder out of $2bn.

5. Here’s the vegan beef
An Israeli start-up has launched a 3D printed plant-based meat, making whole “cuts” of the vegan product available for the first time in restaurants in Europe and Israel. Redefine Meat, which produced its first 3D printed plant-based steak in 2018, can “print” 10kg of plant-based meat an hour.

Tech tools — Xbox at 20

It seems a lifetime ago, but Bill Gates first unveiled Microsoft’s Xbox games console at the Las Vegas Consumer Electronics Show in January 2001. It went on sale 20 years ago this week, cue a special edition wireless controller to celebrate, along with access to the multiplayer beta of Halo Infinite — Halo was an Xbox launch game in 2001 and became its biggest franchise. Axios has an interview with Xbox chief Phil Spencer on the console’s history (don’t mention the Red Ring of Death!).