UK's Competition Regulator Says Adobe-Figma Deal Could Harm UK Digital Design Sector

(RTTNews) - The UK's Competition and Markets Authority or CMA, which was investigating Adobe Inc.'s $20 billion deal to buy Figma Inc., announced Tuesday that it has provisionally found the proposed acquisition would likely harm the digital design sector in the U.K.

According to the agency, the deal could harm innovation for software used by the vast majority of UK digital designers.

It was on September 15, 2022 that Adobe announced a definitive merger deal to acquire Figma for around $20 billion in cash and stock.

CMA in late June this year had refered the proposed acquisition for a phase 2 probe after its phase 1 investigation found that the merger may result in a substantial lessening of competition in the UK.

Figma is currently a major provider of product design software which is used by designers, creative agencies and businesses. Adobe is one of Figma's main competitors in product design software. It currently competes using its Adobe XD product. Adobe is also the largest supplier of image editing and illustration software, well known for its Photoshop and Illustrator applications.

In a statement, the agency now noted that its investigation found that around 80% of the professional product design market use Figma's software.

The CMA said it provisionally found that the deal would eliminate competition between two main competitors in the software markets of product design, image editing, and illustration. It would also reduce innovation and the development of new competitive products.

The deal, if successful, would also remove Figma as a threat to Adobe's flagship Photoshop and Illustrator products.

The investigation also provisionally found that, without the merger, Figma would continue to take steps to develop or expand products that threatened Adobe's position in image editing and illustration.

Margot Daly, chair of the independent group conducting this investigation, said, "The digital design sector is worth nearly £60 billion to the UK - representing 2.7% of the national economy - and employs over 850,000 people in highly skilled work. ...Adobe and Figma are two of the world leading providers of software for app and web designers and our investigation so far has found that they are close competitors. This proposed deal, therefore, has the potential to impact the UK's digital design industry by reducing choice, innovation and the development of new competitive products."

The CMA said the decision is provisional, and that it will now consult on its findings and listen to any further views before reaching a final decision.