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November 29, 2023

UK regulator expresses misgivings about Adobe’s Figma deal

The CMA implies that its approval of Adobe's proposals to buy Figma will likely be denied unless competition concerns are resolved.

By Greg Noone

The UK’s Competition & Markets Authority (CMA) has said that Adobe’s proposal to acquire Figma would “reduce innovation” in the digital design sector unless significant alterations were made to the $20bn deal.

In a statement that summarised its provisional conclusions after a Phase 2 investigation into the deal, the antitrust regulator stated that the deal in its current form would “eliminate competition” by removing “Figma as a threat to Adobe’s flagship and Illustrator products.” The CMA’s intervention comes in the wake of a similar pronouncement from the European Commission earlier this month. 

The icons of Adobe and Figma on a mobile phone.
Having announced a deal to buy Figma in September 2022, Adobe has yet to obtain approval for the takeover from UK or EU regulators. (Photo by Koshiro K / Shutterstock)

Figma is a provider of collaborative design software that allows multiple stakeholders to create realistic website prototypes and wireframes, and has previously been described as “a blend of Photoshop and Canva for professional designers.” It quickly won a dedicated fan base among UX designers. “Figma loads quickly, is incredibly easy to use, and has character to boot – in a lot of ways the opposite of many Adobe tools,” one designer told The Verge when the Adobe acquisition was announced in September 2022. Adobe’s potential take-over was greeted with disdain by this community, who feared that the deal would reduce both competition and innovation in the sector. 

It appears that the CMA feels the same way. The regulator launched a probe into the acquisition in July and said on Tuesday that it considered the deal broadly anti-competitive. “Adobe and Figma are two of the world[‘s] leading providers of software for app and web designers, and our investigation so far has found that they are close competitors,” said Margot Daly, chair of the independent group conducting the CMA’s investigation into the proposed acquisition. “This proposed deal, therefore, has the potential to impact the UK’s digital design industry by reducing choice, innovation and the development of new competitive products.”

Daly added that the CMA’s findings were as yet provisional and that the regulator would consult more widely before making a final decision on whether or not to approve Adobe’s acquisition of Figma in the UK on 25 February 2024. Shortly after the announcement, Figma told CNBC that it “strongly disagree[d]” with the CMA’s findings. Adobe expressed similar misgivings. “Adobe and Figma will deliver significant value to customers,” a spokesperson told the network in a separate statement. “We are reviewing the provisional findings and will re-engage with the CMA on the facts and merits of the case.”

Europe: deal a Figma of Adobe’s imagination for now

The CMA is not the only regulator to voice its objections to the proposed deal. Earlier this month, the European Commission sent Adobe a statement of objections to the acquisition, claiming that it would “significantly reduce competition in the global markets” for interactive product design, vector editing and raster editing tools. It added that it would reach a final decision on whether to approve the deal in the EU by 5 February 2024. 

Delays in obtaining approval for its deal to buy Figma have not put off Adobe from acquiring other promising start-ups. Last week, the Economic Times reported that the design software giant had bought Rephrase.ai, an Indian tech firm that specialises in creating “hyper-personalised” videos for businesses using generative AI. Though the company did not confirm that its buyer was Adobe, it did forward a statement from the latter saying that it was “always on the lookout for new talent and technology that supports our strategy and creates more value for our stakeholders.”

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