CMA Begins Phase Two Probe Of Adobe’s Figma Acquisition

The UK competition regulator has added to the woes already facing Abobe’s $20 billion (£17.5bn) deal to acquire design collaboration firm Figma.

Adobe’s proposed acquisition of Figma, which it described as a “transformative” moment that will take the company into a new era, was first announced last September.

The acquisition immediately triggered competition concerns, and now the UK’s Competition and Market Authority (CMA) has confirmed it will conduct an indepth Phase Two investigation of the deal.

Competitor buyout

The Figma deal had raised concerns that Adobe would gain “a real stranglehold on design software”.

Prior to the Figma acquisition, Adobe’s biggest-ever deal had been its $4.75bn acquisition of Marketo in 2018.

However the Figma acquisition will result in Abode acquiring one of its biggest potential rivals, a competitor to its Adobe XD vector design tool and a pioneer in building sophisticated design apps that run directly in a web browser.

Figma was founded in 2012 after its co-founders Dylan Field and Evan Wallace dropped out of Brown University at age 19 to accept a $100,000 grant from libertarian financier Peter Thiel.

The offering allows online collaboration on interface and user experience design and in addition to the web app offers offline tools for macOS, Windows, Android and iOS, with a feature set that includes vector graphics editing and prototyping tools.

Along with Australian start-up Canva, Figma is a leader in a new generation of browser-based design tools that have changed the game in an industry that has long been dominated by Adobe.

Phase Two investigation

Earlier this month it was reported that European antitrust regulators were preparing to launch a detailed investigation into Adobe’s $20 billion purchase of Figma over anti-competition concerns.

Adobe was in the preliminary phase of the regulatory process and having constructive discussions with British, EU, and US regulators about the deal.

However in May the UK’s CMA said it was looking into the Adobe-Figma deal, as part of Phase One investigation.

But now in an update on 30 June, the CMA said it has “decided, on the information currently available to it, that it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.”

“This merger will be referred for a phase 2 investigation unless the parties offer acceptable undertakings to address these competition concerns,” said the CMA.

It comes as many regulators around the world become increasingly concerned that large tech firms acquiring smaller innovative rivals could potentially throttle competition going forward.