Adobe, the multinational software company, is facing increased scrutiny over its $20 billion acquisition of Figma. The United Kingdom’s Competition and Markets Authority (CMA) has launched an in-depth investigation into the deal after Adobe refused to make concessions that would address antitrust concerns. This “phase 2” probe will involve a panel of independent experts assessing whether the merger will result in a reduction in competition within the design software industry. The CMA has until December 27th to complete its review.
When plans for the investigation were announced in June, Adobe dismissed the CMA’s claims and remained confident in its ability to proceed with the acquisition. The company previously stated that it would treat Figma as a separate entity and had no intentions of raising prices.
The CMA’s preliminary inquiry found that Figma’s web collaboration platform held a significant market share and that competition would be diminished if Adobe acquired the company. This potential reduction in rivalry could lead to higher prices and less innovation, according to the Authority. On the other hand, Adobe argues that the acquisition of Figma would enhance the products of both companies. Adobe’s Creative Cloud apps would benefit from Figma’s collaborative features, while Figma’s platform would gain access to Adobe’s functionality.
While Adobe still hopes to complete the Figma merger by the end of the year, it still faces an investigation by the United States and a decision from the European Union by August 7th. The outcome of these inquiries is uncertain, and if any of these regulatory bodies block the merger or conduct prolonged reviews, Adobe will need to reconsider its plans.
The CMA’s deep dive into the potential impact of the Adobe-Figma merger reflects the growing concern over consolidation in the tech industry. Mega-acquisitions, such as Facebook’s acquisition of Instagram and WhatsApp, have raised questions about competition and the stifling of innovation. Regulators are increasingly scrutinizing large deals to ensure that they do not harm competition or negatively impact consumers.
If the acquisition is approved, Adobe, known for its suite of creative software such as Photoshop and Illustrator, will gain access to Figma’s collaborative design tools. This would allow Adobe to further enhance its offerings and better cater to the needs of design professionals. Additionally, the acquisition could potentially strengthen Adobe’s position in the design software market by eliminating a significant competitor.
On the other hand, critics argue that the merger would create a potential monopoly in the design software industry, giving Adobe an unfair advantage and limiting choice for consumers. They argue that the removal of Figma as an independent competitor could result in higher prices and less innovation in the market. Furthermore, concerns are raised about the potential access to user data that Adobe would have as a result of the merger, leading to privacy and security implications.
The outcome of the CMA’s investigation will have significant implications for the future of the Adobe-Figma merger. If the CMA determines that the deal would indeed reduce competition, it could impose certain conditions or even block the acquisition altogether. This would force both companies to reconsider their plans and potentially seek alternative strategies to achieve their desired outcomes.
It is clear that the regulatory landscape for mergers and acquisitions in the technology industry is evolving. Governments around the world are becoming more proactive in scrutinizing major deals to protect competition and ensure a level playing field for all market participants. As the CMA’s investigation progresses and other regulatory bodies conduct their own reviews, the fate of the Adobe-Figma merger hangs in the balance. Both companies will need to carefully navigate this process and address any concerns raised by the authorities to secure the desired outcome.
