UK watchdog puts the brakes on the Adobe – Figma deal

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The Competition and Markets Authority (CMA) has preliminarily concluded that Adobe’s proposed $20 billion acquisition of the cloud-based product design platform Figma would have a negative impact on the product design software market. Consequently, the authority has effectively halted the deal until concerns related to competition are addressed.

The CMA said that the proposed deal, if finalized in its current configuration, would eradicate competition in the software sectors for product design, image editing, and illustration. Figma is recognized as one of Adobe’s major rivals in the design software market. The CMA further noted that a merger between the two companies would eliminate Figma as a competitive force against Adobe’s flagship Photoshop and Illustrator products.

Figma, along FigJam, has a distinct focus on UX, prototyping, and product design, as opposed to digital illustration, photo editing, and graphic design. However, it was a direct competitor to Adobe in the UX and product design market until recently. Earlier this year, Adobe ceased the standalone purchase option for its product design software, Adobe XD, and abandoned the development of a new product design service. The inquiry group spearheading the CMA’s investigation says that Adobe’s actions were a direct result of the merger.

The CMA is exploring potential solutions, either a complete prohibition of the merger or divestiture of “overlapping operations” in markets where the deal could significantly reduce competition. In simpler terms, this refers to situations where Adobe’s acquisition would result in fewer choices for consumers. The CMA is particularly interested in areas such as all-in-one product design software, vector editing software, and raster editing software. While the watchdog is open to suggestions from both parties, it essentially communicates to Adobe that acquiring Figma while already owning apps like Illustrator and Photoshop is not permissible. The challenging task of potentially separating two of Adobe’s most popular apps from the Creative Cloud service, which had nearly 30 million paid subscribers last year, adds complexity to the situation.

The scrutiny of Adobe’s attempt to acquire Figma extends beyond the UK’s CMA, as other regulatory bodies are also examining the deal. The European Union issued a formal antitrust complaint earlier this month, citing comparable competition concerns. Additionally, in February, Bloomberg reported that the Department of Justice (DOJ) was gearing up to file a lawsuit against Adobe to prevent the completion of the deal.

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