UK to Increase Scrutiny of Adobe’s $20 Billion Figma Purchase

The UK’s Competition and Markets Authority (CMA) has announced its intention to conduct a thorough investigation into Adobe’s acquisition of Figma, according to The Wall Street Journal. The CMA has expressed worries about the potential negative impact on competition in the screen design software market and has decided to proceed with a “phase two” investigation. However, the CMA has given both companies a five-day window to propose legally binding solutions to address these concerns. If the CMA finds the response unsatisfactory, the investigation will commence. Adobe had previously announced its intention to purchase Figma, a smaller competitor, for $20 billion last year.

“The CMA found that Figma has established a significant share of the display design software market and that Adobe has continued to invest and compete in this segment,” the British agency, which recently rejected Microsoft’s proposal to buy Activision for $75 billion, wrote today. . “The CMA found that competition between Figma and Adobe has led to investment in updating and developing display design software, and this important competition could be lost if the deal goes ahead.” It described Figma as an “emerging competitive threat” to the Photoshop maker and expressed concern that Adobe might have a new competitor. The agency said it was concerned that the acquisition could lead to higher costs and fewer/less innovative products.

Adobe’s purchase of San Francisco-based Figma, founded in 2012, would be the biggest acquisition ever for the 41-year-old design behemoth. During Sigma’s 11 years on the market, it has established itself as a popular tool in vector-based design. The cloud-based software specializes in remote collaboration and is a direct competitor to Adobe’s XD and Illustrator products. At the time of the acquisition, Adobe said it wanted to bring features from its Creative Cloud software to collaboration software and incorporate more of Figma’s team-focused features into its core products — predictably framing it for all customers. The company added that it was “deeply committed” to keeping Figma as an independent company, but insisted there was “no plan” to change its pricing — including its free tier.

“We’re concerned that this deal could stifle innovation and lead to higher costs for businesses that rely on Figma and Adobe’s digital tools — because they’ll stop competing to offer customers new and better products,” said Sorcha O’Carroll, senior at CMA. Head of Mergers. “Unless Adobe is able to present viable solutions to our concerns in the coming days, we will proceed with a more thorough investigation.”