Adobe's $20 Billion Figma Acquisition Likely to Face EU Investigation - 4 minutes read




Adobe’s pending purchase of Figma, the popular online graphics editing and interface design application, is facing yet another challenge. The European Union Commission plans to begin an in-depth investigation into the acquisition, according to a report from The Financial Times, attributed to four sources familiar with the matter.

Back in February, the EU Commission noted that it had received numerous requests to review the business deal. The international watchdog announced that it would need to clear the proposed merger, under the justification that it “threatens to significantly affect competition in the market for interactive product design and whiteboarding software.”

Now, the FT says the Brussels-based Commission will open a phase II investigation. Generally, anti-competition probes are handled at the phase I level, which accounts for 90% of all cases, according to EU internal data. In comparison, a phase II analysis takes more time and goes deeper. By the Commission’s description, a phase II investigation “typically involves more extensive information gathering, including companies’ internal documents, extensive economic data, more detailed questionnaires to market participants, and/or site visits.” From the start of such a probe, the regulatory body has 90 days to make a decision.

The EU Commission would not directly confirm its plans to investigate the Adobe/Figma merger. In an email, spokesperson Marta Perez-Cejuela told Gizmodo, “this transaction has not been formally notified to the Commission.” Such notification is a requirement before any investigation can move forward. Commission officials requested that Adobe submit an official notification in February.

Despite the Commission’s lack of formal announcement, an EU probe into the acquisition is expected. Already the U.S. Department of Justice and the United Kingdom’s Competition and Markets Authority are looking into the digital design tool deal. The DOJ is reportedly preparing to file an antitrust suit blocking the merger, while the UK CMA is actively investigating the acquisition, with a first decision due by the end of June.

Adobe—the design giant behind Photoshop, Illustrator, and XD—first announced it would be purchasing Figma in September 2022. The Creative Suite maker’s massive $20 billion offer drew some raised eyebrows, as the figure is twice what Figma was valued at during its most recent 2021 funding round.

Figma emerged on the scene at the tail end of 2015, billing itself as an independent antidote to Adobe’s dominance. “Our goal is to be Figma, not Adobe,” CEO and co-founder Dylan Field once tweeted. The online application, which includes a free tier, has been much more affordable to use than Adobe’s offerings from the start. Many user interface developers came to prefer Figma in recent years. Yet now the company is vying to literally be part of Adobe.

The acquisition is “an incredible opportunity and honor to help Adobe build the next generation of creative tools,” Field wrote in his blog post announcing the business deal.

When reached by email for comment, an Adobe spokesperson told Gizmodo:

We are confident that the combination of Adobe and Figma will deliver 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. We have been delighted to hear overwhelmingly positive feedback from customers worldwide. We are still in preliminary phases of the regulatory process and are having constructive discussions with the CMA, EC and DOJ about the businesses, markets and positive economic impacts this deal will bring to support their reviews. We remain confident in the merits of the case and look forward to successfully completing the transaction. As demonstrated in our recent strong Q2 earnings, Adobe continues to execute against a massive $200B-plus market opportunity and deliver groundbreaking innovations and industry-leading AI capabilities across our products.


Source: Gizmodo.com

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