Nvidia’s planned $40 billion takeover of Arm, the chip architecture behemoth, was always likely to find regulatory hurdles in its way. Those are now coming into view—but Nvidia insists all is going to plan.

On Thursday, the Financial Times reported that the European Union is going to join the U.K. in investigating the takeover, following complaints from Nvidia’s “rivals.” The rivals are not named, but there are plenty of them out there; after the deal was announced, half the tech industry bemoaned it. The U.S. Federal Trade Commission appears to be gearing up for an antitrust investigation, and Chinese regulators also need to give their approval if the deal is to go ahead.

The U.K. Competition and Markets Authority (CMA) said a month ago that it was investigating the takeover. The watchdog ran a consultation in January, to see “whether, following the takeover, Arm has an incentive to withdraw, raise prices or reduce the quality of its [intellectual property] licensing services to Nvidia’s rivals.”

Per the FT, officials in Brussels have similar concerns. Their probe hasn’t started yet, though, as Nvidia has not yet formally notified the European Commission of the takeover. (The U.K.’s CMA does not require formal notification of this kind, and may or may not be investigating the Nvidia/Arm case on its own initiative—it won’t say.)

“The regulatory process is proceeding as we had planned,” an Nvidia spokesperson said Thursday. “Every European Commission merger filing has a pre-notification period, which can last several months for a major transaction. We are confident that we will obtain the necessary regulatory approvals.

“We fully understand that the relevant governments and regulators will review this transaction in detail, as they should, given the significance of the deal,” Nvidia said.

Squeezed in Arm’s embrace

The takeover is highly significant for the many big tech players who rely on Arm’s technology.

Arm’s venerable chip architecture underpins almost all smartphones and is ubiquitous in “embedded systems”—the low-powered computers that lurk inside cars, connected refrigerators, and so on. On top of that, the firm’s straightforward licensing terms and its widespread familiarity among developers make its tech practically a de facto standard; it’s not impossible to avoid, but doing so is extremely tricky.

It’s not surprising then that some Arm licensees—a chip-making category that includes companies from Qualcomm and Samsung to Apple and Tesla—are concerned about the implications of the Nvidia takeover. After all, some of them are direct competitors to Nvidia itself, and none want to be overly beholden to the company.

Nvidia has sworn repeatedly that it won’t change how Arm operates. “We will maintain our neutral business model and will keep a level of independence,” Arm CEO Simon Segars said in September. “I can unequivocally state that Nvidia will maintain Arm’s open licensing model,” Nvidia CEO Jensen Huang promised a month later. “We have no intention to ‘throttle’ or ‘deny’ Arm’s supply to any customer.”

According to veteran semiconductor industry analyst Malcolm Penn, founder of the British research house Future Horizons, there is every reason to believe Nvidia on this count. “The thing that Arm’s got is a cash flow revenue stream which took them 10 years to build up,” Penn said Thursday. “Squeeze your customers, and it would turn off.”

One big question is the extent to which Nvidia might seek to influence Arm’s evolving technology road map, and whether it might do so in a way that gives it an advantage over other licensees. Here, Penn also suggested the U.S. firm would probably stay fairly hands-off.

“Obviously, if I was the owner, I’d want to have input into [the road map], but if I was a sensible owner I’d only want input,” Penn said. “It can all be done in an open and honest way where the intellectual property is protected.

“Would you spend $40 billion to pour down the drain? Even Nvidia can’t afford that,” Penn continued. Besides, alternatives to Arm do exist, he pointed out, citing the buzzy (and royalty-free) RISC-V architecture.

Promises, promises

Thursday’s FT report said Nvidia’s foes were looking for the deal to be outright blocked. Between that outcome and an unconditional green light lies the possibility that regulators will force Nvidia to retain Arm’s licensing model, if the transaction is to go ahead.

Nvidia CEO Huang has said his company would be happy to enter into such agreements.

On the other hand, companies have promised to abide by such conditions before, only to change their mind. Facebook’s acquisition of WhatsApp is one example. When Facebook bought the messaging platform in 2014, it promised the EU antitrust regulator that it would not match WhatsApp and Facebook user accounts. Two years later, Facebook did just that, incurring a $122 million fine for misleading the watchdog during the merger process.

In any case, there are plenty of other stated drivers for Nvidia’s Arm acquisition that do not entail springing a surprise on Arm’s many licensees. The deal will help Nvidia extend its A.I. dominance down to phones and low-powered embedded devices—with automated driving being a particular potential gold mine. Nvidia also says it will offer licenses for its own graphical processing unit (GPU) designs to Arm’s customers.

But the backlash to the deal was predictable, as is the scrutiny that is now underway. It is not hard to see why Nvidia said from the start that the regulatory process for this takeover would take an unusually lengthy 18 months.