CMA Set To Probe Proposed Adobe/Figma Merger

As a result of its initial findings, the CMA is moving forward with an in-depth “phase 2” investigation of Adobe’s proposed $20B b

The U.K.’s Competition and Markets Authority (CMA) has provisionally concluded that Adobe’s proposed $20 billion bid for digital design rival Figma could lead to a “substantial lessening of competition” in the U.K for designers.

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Although the concerned parties have five days to submit proposals that address the CMA’s concerns.

Today’s announcement comes nearly two months after the CMA first disclosed its examination of the merger, which was initially announced last September.

It also solicited comments and submissions from relevant parties.

In February, the European Commission (EC) also stated that it was evaluating the acquisition on competition grounds, with early indications suggesting that a lengthy investigation is likely.

Additionally, the U.S. Department of Justice (DoJ) is reportedly preparing a lawsuit to block the deal.

To many observers, the increasing regulatory obstacles to the Adobe/Figma merger are not surprising, considering that the deal would remove a significant competitor for Adobe.

In its published findings today, the CMA highlighted Adobe’s creative design software suite, encompassing illustrations, photos, videos, and animations, and compared it to Figma.

It described the latter as offering “some basic creative design functionality as part of its screen design software,” but lacking “advanced or standalone creative design tools.”

However, the CMA noted that Figma is the “largest supplier of all-in-one screen design software,” applicable to web and app design as well as digital marketing—markets in which Adobe operates.

Although Adobe and Figma’s products are not directly identical, the CMA provisionally determined that Adobe’s XD vector design tool “remains one of only a limited number of close alternatives to Figma.”

Additionally, the CMA found that Adobe had been developing a new all-in-one design tool with various features, including whiteboarding, marketing, and product design, which it canceled prior to announcing the merger with Figma.

“The evidence suggests that Adobe’s efforts in product development were motivated, at least in part, by a desire to compete with Figma,” notes the CMA’s initial report.

“Adobe’s internal documents regularly reference competing with Figma and compare planned features to those offered by Figma.”

Regarding standalone, purpose-specific creative design software, the CMA recognized that Figma is currently not a major competitor to Adobe in this area.

Still, it does offer some of this functionality in its screen-design product, such as vector editing.

However, the CMA also acknowledged that Figma has “regularly explored” expanding its product suite into this realm through internal development or acquisitions.

“As a result, the CMA found that the merger would remove a significant competitive threat to Adobe from the market and lead to a substantial lessening of competition,” it stated.

An Adobe spokesperson stated that combining Adobe and Figma will “provide significant value to customers by making product design more accessible and efficient, reimagining creative capabilities on the web, and creating new categories of creativity and productivity.”

The spokesperson also added that Adobe has no “meaningful” plans to compete with Figma in the broader product design realm.

He also noted that incorporating Figma would be an “adjacency” to Adobe’s core creative tools.

In summary, the CMA is now likely moving forward with an in-depth phase 2 investigation, with Adobe and Figma given until July 7 to address the CMA’s concerns.

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They are also expected to propose a satisfactory resolution. However, it appears that Adobe does not plan to submit anything before this deadline.

“We look forward to establishing these facts in the next phase of the process and successfully completing the transaction,” the spokesperson added.