UK Antitrust Concerns Over Adobe Figma Deal

UK's CMA raises antitrust concerns over Adobe's $20 billion Figma acquisition, fearing reduced competition in software.

What are the antitrust implications of Adobe's acquisition of Figma?

The UK's Competition and Markets Authority (CMA) has raised concerns over Adobe's planned $20 billion acquisition of Figma, a move which could significantly impact competition in the product design software sector. The CMA's provisional findings suggest that merging these two leading entities could stifle competition, not only in product design but also in image editing and illustration.

Potential Market Impact Of Adobe-Figma Merger

Announced in September 2022, the deal values Figma at approximately 50 times its annual recurring revenue. Critics view Adobe's willingness to invest such a significant amount in Figma as an attempt to eliminate a rising competitor. Margot Daly, chair of the CMA's investigative group, emphasized that Adobe and Figma are direct rivals in software for app and web design. The merger could potentially hinder choice, innovation, and the emergence of new competitive products in the UK's digital design industry.

Adobe and Figma may propose concessions to address these concerns before the CMA's final decision, expected by the end of February.

European Commission's Stance On The Deal

Similar objections have been raised by the European Commission, expressing worries that the merger could considerably reduce competition in the global market for interactive product design tools. A key concern is the potential discontinuation of Adobe XD in a "reverse killer acquisition", deliberately eliminating a competitor to a newly acquired service.

The CMA also recognized Adobe XD as a significant competitor to Figma, concluding that Adobe had ceased developing new product design software in light of the proposed merger.

Xd logo and art
Is Adobe XD a competitor to FIGMA? No, say both.

Broader Industry Implications

Figma, lauded as the world's foremost provider of product design software, is utilized by major companies like Airbnb, Patagonia, and Vodafone. Both UK and EU regulators perceive Figma as a possible future challenger to Adobe in the realms of image editing and illustration, potentially developing alternatives to Adobe's Photoshop and Illustrator.

The CMA suggested that without the merger, Figma could continue to evolve or expand products that pose a threat to Adobe's dominance in these areas.

Responses From Adobe And Figma

Figma has contested the CMA's views, stating it has not invested in developing creative tools to compete with Adobe. The company expressed disappointment with the CMA's provisional findings and refuted the notion that it competes with Adobe currently or plans to do so in the future.

Adobe, on the other hand, believes the deal will be beneficial for customers and is re-engaging with the CMA to discuss the case's facts and merits. The CMA's approach in the tech sector is under close watch, especially following the initial block and subsequent approval of Microsoft's $75 billion acquisition of Activision Blizzard.

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