UK regulators have concerns about Adobe’s Figma acquisition

The UK’s competition watchdog has concluded its initial investigation into Adobe’s $20 billion acquisition of cloud-based product design platform Figma, warning that the merger could cause a “substantial lessening of competition” for UK designers by removing a “significant competitive threat to Adobe” from the market. The Competition and Markets Authority announced on Friday that unless Adobe or Figma can offer “acceptable undertakings” to address its concerns by July 7th, the acquisition will be subject to a deeper investigation that risks derailing the deal entirely.

“We’re worried this deal could stifle innovation and lead to higher costs for companies that rely on Figma and Adobe’s digital tools — as they cease to compete to provide customers with new and better products,” said Sorcha O’Carroll, senior mergers director at the CMA. “Unless Adobe can put forward viable solutions to our concerns in the coming days, we will move to a more in-depth investigation.”

Both companies have argued that Adobe isn’t a significant competitor to Figma

According to the summary of the CMA’s decision, both parties of the merger argued that Adobe isn’t a significant competitor to Figma in the all-in-one product design software market. The CMA acknowledged within its findings that Adobe had “significantly reduced investment” into the company’s own dedicated product design application, Adobe XD, prior to the merger but expressed concern that the software remains “one of only a limited number of close alternatives to Figma” alongside services like Sketch. 

Moreover, while Adobe XD is no longer generally available as a standalone product, the CMA found that Adobe had significantly invested in developing a new tool for whiteboarding, marketing design, and product design, only to cancel the project shortly before announcing the Figma acquisition. Adobe said that the decision to cancel the unnamed project was unrelated to the merger. However, the CMA claims that internal documents comparing planned features for the tool to those Figma already provides indicate Adobe’s prior intent to directly compete with the company.

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