Adobe is currently facing serious regulatory troubles in the European Union due to its $20 billion bid to acquire the cloud-based product design platform, Figma. The European Commission has initiated an in-depth investigation into this proposed merger, citing concerns that it could significantly reduce competition in the global markets for interactive product design tools, vector editing tools, and raster editing tools. This preliminary conclusion was reached after a thorough review of the potential impact of the deal on competition within these markets.
According to a recent statement issued by the European Commission, they believe that Figma already has a “significant constraining influence” over Adobe’s Illustrator and Photoshop editing tools. Furthermore, the Commission believes that Figma is “significantly likely” to grow into a competitive force within the market for vector and raster editing tools without the merger. These concerns have led to the issuance of a formal antitrust complaint against Adobe by EU regulators.
The European Commission has also issued a statement of objections, outlining its competition concerns regarding the merger. This comes with a deadline of February 5th for the final decision. This means that Adobe and Figma will have the opportunity to respond to the objections and offer concessions in writing to address the Commission’s precise regulatory concerns. They may also request a hearing to present their case before the Commission, which will ultimately decide whether the acquisition infringes on antitrust law.
Despite the regulatory hurdles, both Adobe and Figma remain confident in their ability to navigate through them. An Adobe spokesperson expressed confidence in the merits of their case, arguing that Figma’s product design is an adjacency to Adobe’s core creative products and that Adobe has no meaningful plans to compete in the product design space. A Figma spokesperson echoed this confidence, stating that they are committed to resolving regulators’ concerns and remain focused on the benefits that the deal will create for consumers and Europe’s innovation economy.
However, to date, neither Adobe nor Figma have reportedly provided any remedies to address the antitrust concerns raised by the investigation. In fact, Adobe has already begun phasing out the availability of Adobe XD, a UX/UI product design app that bears similarities with Figma. This move came after the announcement of the proposed deal with Figma. The European Commission has expressed concerns that the discontinuation of Adobe XD, as well as any potential successor product, would constitute a “reverse killer acquisition,” a situation in which companies eliminate in-house products to remove potential competitive risks to newly acquired products or services.
The EU’s scrutiny of this proposed merger highlights the increasingly complex landscape of antitrust regulation, particularly in the technology sector, where companies are constantly seeking to expand their market reach through acquisitions. It also underscores the importance of competition in fostering innovation and ensuring that consumers have access to a variety of products and services at fair prices.
This case is a clear example of the growing role of regulatory bodies in monitoring and addressing potential anti-competitive behavior in the digital economy. The outcome of the EU’s investigation into the Adobe-Figma merger will not only have implications for the future of these two companies but will also set a precedent for how similar deals will be evaluated and regulated in the future. As technology continues to shape our world, it is crucial for regulatory authorities to ensure that competition is preserved and that consumers are ultimately the beneficiaries of market dynamics.