UK set to probe Adobe’s $20B Figma acquisition

UK set to probe Adobe’s $20B Figma acquisition

The British competition authority is looking into the US tech giant Adobe’s plans to buy Figma. It is one of its biggest rivals in the creative software industry.

On Friday the UK’s Competition and Markets Authority (CMA) announced that it was preparing to put Adobe’s planned acquisition of digital design rival Figma under the microscope. After an initial review, the regulator found cause for concern. It said it found reason to believe that the deal could lead to “less innovation”. In addition, it could allegedly result in a “substantial lessening of competition” in the software tools market.

“The CMA found that competition between Figma and Adobe has driven investment in updating and developing screen design software, and this important rivalry could be lost if the deal goes ahead”, the agency explained.

CMA is concerned that Adobe’s plan to acquire Figma “removes a leading player from the market”. In addition, it said it “reduces both firms’ incentives to invest in software development and compete against one another”. They say this could result in higher costs and fewer and less innovative products on the market.

As a consequence, the CMA has given Adobe five working days to submit proposals to address the CMA’s concerns. If the proposals are unconvincing, the regulator plans to launch a “phase 2” review – a deep dive that would likely result in the UK government blocking the acquisition.

Antitrust watchdogs worldwide are on the alert

Adobe announced its intention to buy Figma for $20 billion (€18.4 billion) in cash and stock last September. Since then, regulators on both sides of the Atlantic have sprung into action. In the US, the Department of Justice is preparing an antitrust lawsuit against the deal. In Europe, 16 EU member states have asked the European Commission to investigate.

The UK is just the latest competition regulator to pile on.

Sorcha O’Carroll, Senior Mergers Director at the CMA, said: “We’re worried this deal could stifle innovation and lead to higher costs for companies that rely on Figma and Adobe’s digital tools – as they cease to compete to provide customers with new and better products”.