(Reuters) — The Federal Trade Commission Thursday sued to block U.S. chip company Nvidia Corp.'s more than $80 billion planned acquisition of British chip technology provider Arm, adding to already significant global regulatory challenges to the deal.

The FTC said the proposed deal would give one of the largest chip companies control over computing technology and designs that competitors rely on to develop their own competing chips.

The deal has been widely expected to fall apart after facing opposition in the chip industry. British regulators said last month they would launch an in-depth probe of the deal, and it is also under scrutiny in the European Union.

Arm licenses its chip architecture and blueprints to major chipmakers Apple Inc., Qualcomm Inc. and Samsung Electronics Co. Ltd., underpinning the global smartphone ecosystem. Arm was sold to Japan's SoftBank in 2016.

Nvidia said it would “work to demonstrate that this transaction will benefit the industry and promote competition.”

Arm declined to comment.

The stock-heavy deal has more than doubled in value since it was announced in September 2020 as Nvidia shares have risen on the performance of its data center business. Nvidia will owe only a $1.25 billion breakup fee if the deal does not close, and its shares closed up 2.2% at $321.26 on Thursday.

Before Nvidia's offer, Softbank had planned to file for an initial public offering for Arm. While Arm's revenue is growing briskly, rising 56.3% to $1.46 billion in the six months ended Sept. 30, it is unclear whether Arm, in an IPO, would fetch anything close to the $80 billion in value offered by Nvidia.

That would be a new blow for the Japanese conglomerate whose Vision Fund assets sank by $10 billion last month, driven by plummeting valuations for investments in Chinese e-commerce company Alibaba and ride-hailing service Didi Global Inc.

The FTC, which is made up of two Republicans and two Democrats, voted 4-0 to approve the challenge to the planned merger.

The FTC alleged “the proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice, harming the millions of Americans who benefit from Arm-based products.”

The FTC added the combined company "would have the means and incentive to stifle innovative next-generation technologies, including those used to run data centers and driver-assistance systems in cars.”