The UK’s competition regulator has indicated that it may subject Adobe Inc’s $20 billion acquisition of cloud-based designer platform Figma to a more extensive investigation due to concerns about potential negative impacts on innovation. The Competition and Markets Authority (CMA) stated that unless satisfactory measures are proposed to address competition issues, the deal will proceed to a Phase 2 investigation. The CMA had initially announced its examination of the acquisition in May after the deal was announced in September of the previous year.
Regulators in both the UK and the US are cautious about large technology companies acquiring smaller competitors, particularly those with access to significant amounts of user data, and typically require remedies before approving such transactions. The CMA expressed apprehension that the acquisition could result in limited choices for designers of digital applications, websites, and other products. The regulator specifically identified concerns regarding the supply of screen design software, where Adobe and Figma are competitors.
Sorcha O’Carroll, Senior Mergers Director at the CMA, stated, “We’re concerned that this deal could impede innovation and increase costs for companies relying on Figma and Adobe’s digital tools.” Adobe has been given a deadline of five working days to present proposals addressing the regulator’s concerns. In response, Adobe argued that it has no substantial intentions to compete in the product design field, asserting that Figma’s product design is merely an adjacent area to Adobe’s core creative products.
Adobe’s shares on the US stock market experienced a decline of approximately 1% in premarket trading following the news. The CMA’s recent decision to block Microsoft’s acquisition of videogame maker Activision Blizzard, citing potential harm to competition in the emerging cloud gaming market, has generated controversy. In light of this, the spokesperson for Figma expressed confidence that their merger with Adobe would not result in any reduction of competition in their respective markets.