A deal too far for Britain

THE boss of softbank, Masayoshi son, will have to do some rapid rethinking if he was counting on a cheque for almost £30bn from gaming chip maker nvidia for Cambridge-based arm Holdings.

Having been entertained on Downing street as a conquering hero in 2016, when softbank swept up arm in record speed, the Japanese tycoon is now in danger of seeing the door slammed in his face as he seeks a retreat.

son has been exposed as anything but the long-term investor in technology he purported to be.

It is to the credit of the current, often disparaged government that ministers have kept a weather eye on the fate of arm, which is the nearest thing the UK has to a tech champion. as a first step, it is terrific that the Competition & Markets authority (CMA) is to probe whether the deal threatens competition in chip design.

The arm model of licensing software for chips rests on open access. nvidia has a narrower distribution model, which gives exclusive access to its chips and technology to a chosen cluster of customers.

The CMA will be looking at whether the transaction would lead arm to withdraw from some markets, raise prices or damage the intellectual property.

The enterprise’s co-founder Hermann Hauser argues the nvidia deal ‘would destroy arm’s business model as the switzerland of the semiconductor industry’.

By definition it cannot be good for an innovator such as arm, spawned by engineers at Cambridge, to be passed around among financially driven companies like an oil painting in a flea market.

softbank already has betrayed arm by selling its valuable Chinese offshoot to a local entity, provoking a row as Beijing-nominated directors have sought control.

The proposed sale also is under scrutiny by the Department for Culture, Media and sport which has responsibility for tech deals. Culture secretary Oliver Dowden is being encouraged to refer it to the CMA on public interest grounds, invoking the national security test in the enterprise act. The nvidia-arm merger predates the Government’s new criteria for assessing overseas takeovers, which covers 17 sectors including computer chips.

loss of arm’s technology edge to silicon Valley would pose a serious challenge to the UK’s economic security and to the firm’s Cambridge HQ as a source of r&D and intellectual property.

The CMA has put down a marker. Dowden needs to pick up the ball and run with it.

Channel hopping

BY HAPPENSTANCE both sky, owned by Us giant Comcast, and the BBC are getting new leadership on the same day.

Over the last 13 years, Jeremy Darroch drove technological change at sky, revolutionising the way european viewers access entertainment, sport and news. It has pioneered streaming, been a source of great shows, such as Chernobyl, and is a gold standard for independent 24-hour news.

any fear that Comcast would cut investment was dissipated in 2019 when it unveiled plans to spend £3bn on facilities, including 14 film stages, at elstree studios. new boss Dana strong inherits a flourishing enterprise which offers the products consumers want, including content from rival netflix and sports competitor BT.

In contrast the BBC is plagued by controversy over its output, the cost of a recent redundancy programme, sexism and its harsh decision to axe the free licences for the over-75s. The choice of former Goldman sachs banker richard sharp as chairman points to a more commercial approach and puts a question mark over the licence fee.

The last Goldman chairman, economist Gavyn Davies, proposed raising funds by a partial float of commercial services such as BBC Worldwide.

That might be a good place to start.

Audit disgrace

DELOITTE likes to portray itself as a cut above the other Big Four audit firms and often has been called in to clear up the detritus left by its rivals.

It was Tesco’s choice in 2015 after PWC was sacked following a scandal.

an excoriating report by the Financial reporting Council into Deloitte’s audit of tech group autonomy, hugely damages its reputation. It shows how easily even the most senior auditors become captives of their clients and fees.

The desperate need for industry reform is exposed again.