Adobe’s $20 billion bid for cloud-based design platform Figma is now under scrutiny by the UK’s competition watchdog, the Competition and Markets Authority (CMA). The CMA has announced that it will conduct an in-depth investigation, known as a “phase two” investigation, to determine whether the merger should be approved or blocked.
The referral for the phase two investigation comes after Adobe and Figma informed the regulator that they would not provide resolutions to address concerns about the merger’s potential to reduce competition for designers in the UK. The CMA has a statutory deadline of December 27th to conclude its investigation.
In its initial phase one investigation, the CMA found that the acquisition of Figma by Adobe would eliminate a significant competitive threat to Adobe. The CMA gave the companies a deadline of July 7th to offer “acceptable undertakings” that would allow the merger to proceed without further scrutiny. However, since no undertakings were provided, the phase two investigation was initiated.
Dana Rao, Adobe’s general counsel and chief trust officer, responded to the CMA’s decision by expressing confidence in the merits of the case. Rao stated that Figma’s product design is an adjacency to Adobe’s core creative products, and Adobe has no meaningful plans to compete in the product design space. Adobe aims to establish these facts during the next phase of the process and complete the transaction successfully. Rao emphasized Adobe’s strong performance in the second quarter and its commitment to delivering groundbreaking innovations and industry-leading AI capabilities across its products.
The scrutiny of Adobe’s bid for Figma extends beyond the UK. Regulators in the US and the EU are also assessing the merger. The US Department of Justice is reportedly preparing to file a lawsuit to block the deal, while the European Commission has set a provisional deadline of August 7th to decide whether to clear the merger or launch its own in-depth investigation.
The outcome of these investigations will have significant implications for Adobe and Figma. If the merger is approved, it could strengthen Adobe’s position in the design software market and expand its offerings to include Figma’s cloud-based platform. On the other hand, if the deal is blocked, it would prevent Adobe from acquiring Figma and potentially disrupt its growth plans.
For designers in the UK and beyond, the outcome of the investigations will also be important. If the merger is approved, it could lead to increased competition and potentially better design tools and services. However, if the deal is blocked, it may limit choice and competition in the design software market.
Overall, the decision by the UK’s competition watchdog to conduct an in-depth investigation into Adobe’s bid for Figma reflects the regulator’s commitment to maintaining competition in the design software industry. The outcome of the investigation, along with the decisions of regulators in the US and the EU, will shape the future landscape of the design software market and impact the options available to designers worldwide.
