The U.K.’s Competition and Markets Authority (CMA) has provisionally ruled that Adobe’s $20 billion bid for Figma might “substantially lessen competition” for designers.
The CMA is moving the matter to “phase 2” after its first conclusions, although the parties have five days to submit proposals to remedy its concerns.
The CMA invited opinions and suggestions on the merger announced over two months ago in late September. In February, the European Commission (EC) announced that it was reviewing the transaction on competition grounds, indicating a protracted inquiry. The DoJ is also apparently preparing a lawsuit to prevent the purchase.
Given that the Adobe/Figma combination would eliminate a significant competitor, many outside observers expect regulatory blockades to expand.
In its findings published today, the CMA compared Adobe’s creative design software suite for illustrations, photos, videos, and animations to Figma’s “some basic creative design functionality as part of its screen design software” but lacks “advanced or standalone creative design tools.”
The CMA stated that Figma is the “largest supplier of all-in-one screen design software” for online, app, and digital marketing, in Adobe’s markets.
Adobe’s XD vector design tool “remains one of only a limited number of close alternatives to Figma,” according to the CMA. The CMA also discovered that Adobe had been creating an all-in-one design tool, including whiteboarding, marketing, and product design functions, which it discontinued before its merger announcement with Figma.
According to the CMA’s original analysis, Adobe’s product development activities were driven by a desire to compete with Figma. “Adobe’s internal documents regularly reference competing with Figma and compare planned features to Figma’s.”
The CMA observed that Figma is not a big Adobe competitor in standalone, purpose-specific creative design software, while its screen-design package offers vector editing. Figma “has regularly explored” expanding its product range into this domain through internal development or acquisitions.
The CMA ruled that the combination would eliminate a serious competitive threat to Adobe and substantially reduce competition.
An Adobe spokeswoman said that integrating Adobe and Figma will “deliver significant value to customers by making product design more accessible and efficient, reimagining creative capabilities on the web and creating new categories of creativity and productivity.”
The spokesman claimed that Adobe had no “meaningful” plans to compete with Figma in product design and that acquiring Figma would be an “adjacency” to its core creative capabilities.
The CMA is likely moving to an in-depth phase 2 investigation, giving Adobe and Figma until July 7 to resolve the CMA’s concerns. Still, it sounds like Adobe won’t submit anything before then.
“We look forward to establishing these facts in the next phase and successfully completing the transaction,” the spokesperson said.
