The controversial merger of Adobe with figma may have encountered another hurdle as the UK’s Competition and Markets Authority (CMA) confirms it is investigating the “probable takeover”.
That’s what the monopoly-breaking independent body revealed plans (opens in new tab) to determine whether the merger of Adobe and Figma would result in “a significant reduction in competition in one or more UK markets”.
Adobe: Too powerful?
It was particularly surprising that Adobe’s sudden $20 billion stake in Figma, one of the The best web development tools and one of the most popular. Users wondered and feared what this means for a collaborative community. The Markets reacted badly. Aside from a handful of cheerleaders on either side of the controversial deal, most still hold their breath or shrug. The wait and see approach.
Adobe has been doggedly following Figma ever since. February 2023 brought whispers from one legal challenge by the US Department of Justice (DoJ). Washington moles suspect the developer and the DoJ were holding secret talks as an antitrust lawsuit was being prepared. At the time, the company behind some of the best video editing software on the planet, pledged “constructive and cooperative discussions with regulators in the US, UK and EU, among others” in a lifeless comment ground through the PR machine and chewed up by the legal department.
That being said, the CMA intervention is not surprising. It has long been rumored that Adobe’s plan was ridiculed in the UK and EU. The UK Authority supports competitive markets and now wants to determine if it is giving the company an unfair advantage.
Adobe should be concerned.
It has been clear for some time that the CMA, like its global peers, is cracking down on alleged abuses by tech companies. In a sign of the times, she has AI in her sights for the “first review of Artificial intelligence models (opens in new tab).” In April 2023 the CMA took place block the merger of Microsoft and Activision (opens in new tab), sending shockwaves through the gaming industry. The organization concluded that “the merger would result in the most powerful operator in the rapidly evolving cloud gaming market.” Imagine you’re in group chat with Adobe top executives this week, and a siren sounds with every ping. The company will now ask itself: Does the acquisition of Figma make Adobe too powerful in its field?
But it’s more than a comforting tale of David and Goliath (readers can decide which is which). Some fear it will become the very thing it has vowed to destroy. By preventing large companies from buying up smaller, more innovative companies, the ministry is stifling innovation and investment.
When Microsoft lost its bid, Microsoft’s reaction was sharp: “We will reconsider our growth plans for the UK. Global innovators big and small will take note that for all its rhetoric, the UK is clearly closed to business.” A statement about bad loser or not, it sends a dangerous signal at a time of global economic turmoil.
In answers that can best be described as neutral, Figma said Reuters (opens in new tab) it will “continue to work constructively with regulators in the UK.”
An Adobe representative said, “We look forward to continuing to engage in productive discussions with the DOJ, CMA and EC about the businesses, markets and positive economic impact this agreement will bring as they conduct their review .”
Given Adobe’s software dominance compared to current sentiment at the CMA, it might be wisest to wait and see. And now I’m wondering what it all means AdobeXD.
