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The UK’s antitrust regulator, the Competition and Markets Authority, is set to launch a full investigation into Adobe’s $20bn acquisition of Figma. Concerns have been raised about the potential reduction of innovation and increase in costs resulting from the merger. This follows scrutiny from antitrust authorities in the US and Europe.
Both Adobe and Figma compete in the market for software used in designing digital apps and websites. Figma, in particular, has been challenging Adobe’s suite of image, video, and animation tools. The Competition and Markets Authority’s initial investigation revealed that this competition has fostered investment and innovation in design software, which could be lost if the two companies merge.
Senior mergers director at the CMA, Sorcha O’Carroll, expressed concerns about the deal stifling innovation and increasing costs for customers. The CMA intends to proceed with a full “phase 2” investigation unless the companies offer acceptable solutions within the next five days.
Adobe has indicated that it has no plans to provide acceptable undertakings and is prepared to argue its case in the next stage of the investigation. Similar investigations are expected in the EU and the US Department of Justice is reportedly planning to block the transaction.
This latest move by the CMA adds another tech deal to its caseload, following investigations into Microsoft’s $75bn Activision Blizzard takeover and Broadcom’s $69bn purchase of VMware. However, it recently cleared Amazon’s $1.7bn deal with iRobot after a quick investigation.
CEO of Adobe, Shantanu Narayen, expressed concerns about the impact of stringent regulations on acquiring smaller companies, stating it could discourage investment in startups. Microsoft and Activision Blizzard have also criticized the CMA’s approach and are appealing against its decision to block their deal.
Adobe reaffirmed its belief that the combination with Figma would enhance product design accessibility and efficiency. Both companies have received positive feedback from customers worldwide. Adobe clarified that Figma’s product design is an adjacency to its core creative products and it does not plan to compete in the product design space. Figma also emphasized the potential value they can deliver together for designers, creators, and knowledge workers, asserting that the proposed combination will not result in a reduction of competition.
Figma expressed their eagerness to continue discussions with the CMA regarding the benefits of a combined Adobe-Figma entity.
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