It seems like a face-saving 11th hour deal has drawn a line under the TikTok situation in the US. Whilst this saga seems to have finished with a whimper, and not the bang we all expected, it may have set a precedent for government intervention in the tech market and it will be interesting to see if Boris Johnson reacts at all to Herman Hauser's rallying cry, made last week, for the government to put a stop to the Nvidia deal.
It feels like a long-shot, especially given the fact that the government's plate is rather full at the moment. Nonetheless, I have added my signature to the SaveArm open letter (linked in the article) because it strikes me that if we are serious about building a globally significant technology business in the UK, then government intervention is exactly what is needed. As a lifelong capitalist and advocate of free markets, I can't quite believe I'm saying this but, arguably, the mountain is just too high to climb without it.
The early success of HP, Microsoft, Oracle, Cisco, Xerox, Intel and others, seeded the fertile ground in Silicon Valley. The network of millionaires and business angels these pioneering 'academy' companies created accelerated a virtuous circle that led directly to the current dominance that this small sliver of land has over the global technology market. The sheer scale of this dominance was brought home to me when one my Partners told me that on 1st September 2020 the enterprise value of Apple exceeded the total aggregate value of the entire FTSE 100! If we continue allow our academy companies to fall into the hands of international acquirers then this balance of power will never be shifted.
This is a very knotty and controversial problem. However, the economics alone, I would have thought, warrant giving careful consideration to this. I wonder what the opportunity cost is to the UK treasury of tax dollars in future sales of our best technology companies going into the US government coffers, rather than ours. It would only take the creation of one FAANG in the UK to dramatically move the economic needle.
Arm Holdings, the U.K. semiconductor company, made history for the second time today, becoming the country’s biggest tech exit when Nvidia announced over the weekend that it would buy it from SoftBank for $40 billion in an all-stock deal. (Arm’s first appearance in the record books? When SoftBank announced in 2016 that it would acquire the company for $32 billion.) But before you can say advanced reduced instruction set computing machine, the deal has hit a minor hitch. One of Arm’s co-founders has started a campaign to get the U.K. to interfere in the deal, or else call it off and opt for a public listing backed by the government.