The UK's top competition watchdog, the Competition and Markets Authority, says that Adobe’s proposed USD$20 billion acquisition of Figma Inc. could harm the nation's digital design sector, findings that could mean a major setback for the merger first announced a year ago.
A case of "It's graphic design, Jim, but not as we know it?" Figma-Adobe merger hits regulatory roadblocks
The British anti-competition 'policeman' the CMA, has joined the EU and USA authorities, and says the proposed deal could eliminate competition, reduce innovation and remove Figma as a threat to Adobe’s flagship Photoshop, Illustrator and Firefly products, according to a news release. While findings are provisional, the regulator said it will investigate potential remedies, which it says: "could include blocking the deal outright.”
Such major takeovers take a while to pass due dilligence and, since Adobe announced plans to buy, Figma Inc. in September 2022 the deal has also been under scrutiny from the U.S. Department of Justice and the European Union. Figma is a collaborative interface design tool on a cloud platform, allowing users to collaborate on application and website design.
According the the CMA: “Our provisional conclusion is therefore that the Merger would remove competition between close competitors and an important competitive constraint on Figma, in a market in which Figma is already the strongest player by far and there are few other competitive constraints.”
Figma exexutives are reportedly and understandaby disappointed by the CMA’s findings, disagreeing with the assertion that Figma competes with Adobe. now or going forward.
A spokesperson said: “The facts are Figma operates in a dynamic and highly-competitive market for product design and development, and Figma has not spent a single dollar or hired a single engineer to build creative tools. We remain committed to the deal, confident in the facts, and convinced our proposed combination with Adobe is a win for consumers and should be approved.”
The semantics of this statement tends to be at odds with Figma's opening claim on its own website that states: "How you design, align and build matters. Do it together with Figma." However, as with some other cloud-based platforms, it could be argued that it is a carriage platform, bringing several collaborating parties together to do what they endeavour to avhieve as an end result.
Walks like a duck?
Under 'Co-create in one space,' Figma says: "Work together in real time and empower designers to create in new ways. Keep workflows efficient with tools that give every team visibility throughout the process." Designs thus created can be exported to JPG, PNG, SVG ... or PDF, the latter being Adobe's portable document format and the world's most used end-design format. This tends to indicate that Figma, as clever and popular as it is, walks and waddles like a duck and quacks like one too. Or, to use another zoological analogy - it might be another way to skin a cat.
In its original announcement of the proposed merger, Adobe said:
"Adobe (Nasdaq:ADBE) announced it has entered into a definitive merger agreement to acquire Figma, a leading web-first collaborative design platform, for approximately $20 billion in cash and stock. The combination of Adobe and Figma will usher in a new era of collaborative creativity.
Adobe’s mission is to change the world through digital experiences. Today, the digital economy runs on Adobe’s tools and platforms, and throughout its history, the company’s innovations have touched billions of lives across the globe. From revolutionizing imaging and creative expression with Photoshop; to pioneering electronic documents through PDF; to creating the digital marketing category with Adobe Experience Cloud, Adobe continues to invent and transform categories.
Figma’s mission is to help teams collaborate visually and make design accessible to all. Founded by Dylan Field and Evan Wallace in 2012, the company pioneered product design on the web. Today, it is making it possible for everyone who designs interactive mobile and web applications to collaborate through multi-player workflows, sophisticated design systems and a rich, extensible developer ecosystem. Figma has attracted a new generation of millions of designers and developers and a loyal student following.
Together, Adobe and Figma will reimagine the future of creativity and productivity, accelerate creativity on the web, advance product design and inspire global communities of creators, designers and developers. The combined company will have a massive, fast-growing market opportunity and capabilities to drive significant value for customers, shareholders and the industry."
February 25th is judgement day
Adobe reportedly said it is also disappointed and disagrees with the British CMA’s findings. The slow pace of regulatory approval has stymied both parties. The takeover was hoped for completion before the end of 2023, with a penalty clause that would see Adobe pay Figma USD$1 billion if the merger is not completed by March 2024 ( or gets rejected regulators.)
Could this be a case of the digital economy-meets-traditional 20th Century-regulations? Or should it be viewed as an attempt by Adobe to snaffle additional billions from the global design market, that already uses its tools, almost exclusively? You be the judge.
The CMA has asked for responses from Adobe and Figma by December 19th 2023, advising that a final decision will be issued by by February 25th 2024.
( additional commentary is by Andy McCourt )
