UK regulator halts Adobe’s $20 billion acquisition of online design startup Figma
In September 2022, Adobe made headlines with its $20 billion agreement to acquire the online design startup Figma. However, more than a year later, the deal is facing uncertainty due to a significant setback triggered by concerns raised by the UK competition regulator.
On Tuesday, Britain’s competition regulator said Adobe’s proposed $20 billion acquisition of the cloud-based designer platform Figma could potentially hinder innovation for software widely used by digital designers in the UK.
The regulator, known as the Competition and Markets Authority (CMA), conducted an in-depth investigation that commenced in July. The probe concluded that the deal might stifle competition and eliminate Figma as a competitive force against Adobe’s flagship products like Photoshop and Illustrator. Adobe’s refusal to provide concessions to address these concerns led to a regulatory setback, Reuters reported.
Adobe responded to the findings, stating, “We are reviewing the provisional findings and will reengage with the CMA on the facts and merits of the case.” The CMA, in turn, expressed its openness to consulting with interested parties before making a final decision.
The digital design sector holds significant economic value for the UK, contributing nearly £60 billion to the economy and employing over 850,000 people in highly skilled roles, according to the CMA.
This antitrust investigation aligns with the broader global trend of increased regulatory scrutiny on Big Tech acquisitions, especially those that could strengthen the market power of dominant companies or involve startups viewed as potential rivals. The European Union’s competition watchdog had also raised concerns about the Adobe-Figma deal when it was announced in September 2022.
Adobe’s chief counsel, Dana Rao, had previously mentioned the company’s willingness to propose remedies to address regulatory concerns. Despite the setback, Figma expressed confidence in the deal, with a spokesperson stating, “We remain committed to the deal, confident in the facts, and convinced our proposed combination with Adobe is a win for consumers and should be approved.”
Adobe has been actively acquiring smaller startups in recent years. In 2021, it acquired video-collaboration tech startup Frame.io for $1.275 billion. Frame.io is a provider of cloud-based software that facilitates collaborative input on videos.
Founded in 2012 by Dylan Field and Evan Wallace, San Francisco-based Figma serves as a design platform for teams collaborating on product development. Figma, born in the browser, enables the entire product team to create, test, and expedite design processes. Its clientele includes notable companies like Zoom Video Communications, Airbnb, and Coinbase. Over the past decade, Figma has raised a total of $332.9 million across six funding rounds, with its latest funding coming from a Series E round on June 24, 2021.