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European Commission’s investigation suggests Adobe’s acquisition of Figma may stifle competition in global markets, raising regulatory challenges in the EU, UK, and the US.
The European Commission has filed a formal antitrust complaint against Adobe following an extensive investigation into its proposed $20 billion acquisition of Figma, the cloud-based product design platform. The Commission’s preliminary conclusion, reached on Friday, raises concerns that the deal could “significantly reduce competition in the global markets” for interactive product design tools, vector editing tools, and raster editing tools.
In a detailed statement of objections, EU officials expressed the view that Figma already wields a “significant constraining influence” over Adobe’s Illustrator and Photoshop editing tools. The Commission believes that Figma is “significantly likely” to become a competitive force in the market for vector and raster editing tools independently, without the proposed merger.
The investigation, initiated on August 7th, is ongoing, with a deadline set for February 5th for a final decision. Adobe and Figma now have the opportunity to respond in writing, addressing the Commission’s regulatory concerns and proposing concessions. A hearing may follow, after which the Commission will make a determination on whether the acquisition violates antitrust law.
Adobe’s $20 billion buyout of Figma, a smaller maker of cloud-based design software, risks being derailed by EU merger watchdogs unless the firms fix a list of competition concerns highlighted by the bloc’s antitrust arm https://t.co/MCWalg4LLj
— Bloomberg (@business) November 17, 2023
Adobe remains confident in the merits of its case, emphasizing that Figma’s product design is an adjacency to Adobe’s core creative products, with no substantial plans for Adobe to enter the product design space. A spokesperson for Adobe stated, “We remain confident in the merits of our case, as 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,” in a statement to Bloomberg.
Figma also expressed confidence in resolving regulators’ concerns, pledging to engage in constructive conversations focused on the benefits the deal would bring to consumers and Europe’s innovation economy. To date, neither Adobe nor Figma has proposed remedies to address the antitrust concerns raised by the investigation.
Notably, the Commission alleges that Adobe’s decision to phase out Adobe XD, a UX/UI product design app similar to Figma, could constitute a “reverse killer acquisition.” This term refers to companies discontinuing in-house products to eliminate potential competitive risks to newly acquired products or services.
As this unfolds in Europe, Adobe faces similar regulatory scrutiny globally. The UK’s Competition and Markets Authority is conducting its own in-depth investigation, and there are rumors of the US Justice Department preparing an antitrust lawsuit to block the deal.
