In a move that could significantly impact the landscape of the U.K.’s digital design sector, Britain’s Competition and Markets Authority (CMA) issued a warning on Tuesday about the potential harm posed by Adobe’s proposed $20 billion acquisition of Figma. The watchdog’s findings, though provisional, suggest that the deal might “eliminate competition,” “reduce innovation,” and strategically neutralize Figma as a formidable competitor to Adobe’s flagship products, Photoshop and Illustrator.
The CMA’s concerns extend beyond the U.K., with regulatory scrutiny from the U.S. Department of Justice and the European Union adding further complexity to the merger. The findings underscore a fear that the acquisition could stifle competition, leaving Figma as the dominant player in a market with few competitive constraints.
Adobe’s announcement of its intention to acquire Figma last September set off a series of regulatory probes. Figma, known for its collaborative platform for app and website design, has since been at the center of attention, with the CMA now considering remedies that might include blocking the deal entirely.
In response to the CMA’s findings, a representative for Figma expressed disappointment, strongly disagreeing with the notion that Figma competes with Adobe or will do so in the future. They emphasized Figma’s operation in a dynamic and highly-competitive market for product design and development, asserting that the company has not invested resources in building creative tools. The representative remained committed to the deal, confident in the facts, and convinced that the proposed combination with Adobe is beneficial for consumers.
Adobe, on the other hand, expressed its disappointment with the CMA’s perspective, maintaining that the merger with Figma would deliver significant value to customers. The company is currently reviewing the provisional findings and plans to reengage with the CMA on the merits of the case.
David Wadhwani, a key Adobe executive behind the Figma deal, voiced frustration in October over the slow pace of regulatory approval. Despite the challenges, Adobe has previously stated its expectation to close the deal within the year. The company has also agreed to pay Figma $1 billion if the merger is not completed by March 2024 or if it is rejected by regulators.
The CMA has requested responses from both Adobe and Figma by December 19, and a final decision is anticipated by February 25 next year. As the digital design giants navigate this regulatory maze, the fate of the $20 billion deal hangs in the balance, with potential implications for the competitive dynamics of the global digital design landscape.
(Source: Reuters | CNBC | Barrons | Financial)
