Adobe’s controversial merger with Figma may have hit another roadblock, as the UK’s Competition and Markets Authority (CMA) confirms it’s investigating the “anticipated acquisition.”
The monopoly-busting independent body has revealed plans (opens in new tab) to find out if the Adobe-Figma merger would lead to “a substantial lessening of competition within any market or markets in the United Kingdom.”
Adobe: Too powerful?
It was chiefly astonishment that greeted Adobe’s sudden $20bn interest in Figma, one of the best web development tools and one of the most well-loved. Users wondered and feared what it meant for a community built on collaboration. The markets reacted poorly. Beyond a handful of cheerleaders on both sides of the controversial deal, most still hold their breath or shrug it off. The wait-and-see approach.
Adobe’s pursuit of Figma has been dogged ever since. February 2023 brought whispers of a legal challenge from the US Department of Justice (DoJ). Washington moles suggest the developer and the DoJ have held secretive talks, as an antitrust lawsuit was being prepared. At the time, the company behind some of the best video editing software on the planet, promised “constructive and cooperative discussions with regulators in the US, UK and EU among others,” in a lifeless comment ground through the PR machine and chewed up by Legal.
Off the back of that, the CMA intervention is unsurprising. It had long been rumored that Adobe’s plan was being side-eyed in Britain and the EU. Championing competitive markets, the UK body now wants to establish whether it gives the company an unfair advantage.
Adobe should be worried.
It’s been clear for a while that the CMA, like its global counterparts, is cracking down on perceived abuse by tech firms. In a sign of the times, it has AI in its sights for “initial review of artificial intelligence models (opens in new tab).” April 2023 saw the CMA block the Microsoft-Activision merger (opens in new tab), sending shockwaves across the gaming industry. The organization concluded that “the merger would result in the most powerful operator in the fast-developing market for cloud gaming.” Imagine being in the group-chat with Adobe top brass that week, every ping a siren. The company will now be asking: does acquiring Figma make Adobe too powerful in its field?
But it’s more than a comforting tale of David and Goliath (readers can decide which is which). There are concerns from some that it’s becoming the very thing it swore to destroy. In stopping big businesses buying up smaller, more innovative companies, the department is throttling innovation and investment.
On losing its bid, the Microsoft response was sharp: “We will reassess our growth plans for the UK. Global innovators large and small will take note that – despite all its rhetoric – the UK is clearly closed for business.” Statement of a sore loser or not, it’s a dangerous signal to send at a time of global economic unease.
In responses best described as neutral, Figma told Reuters (opens in new tab) it will “continue to engage constructively with regulators in the UK.”
An Adobe representative said: “We look forward to continuing to engage with the DOJ, CMA and EC in productive discussions about the businesses, markets and positive economic impacts this deal will bring as they conduct their review.”
With Adobe’s software dominance versus the current mood at the CMA, maybe the wisest course is the wait-and-see approach. And meanwhile wonder what it all means for Adobe XD.