The European Commission, an executive institution within the European Union, has opened an in-depth investigation to assess Adobe’s proposed acquisition of the interface design application Figma. According to the commission, this acquisition will reduce competition in the global markets for the supply of interactive product design software and for digital asset creation tools.
This isn’t the first roadblock that the duo has had to face. The acquisition deal, which cost Adobe $20 billion in cash and stock, was first announced last September and was first hit with an antitrust lawsuit by the US Department of Justice (DOJ) in February 2023, according to a Bloomberg report. While the lawsuit seems to have not been filed yet, DOJ has begun the discovery process (collecting information about the deal), according to Adobe’s earnings call for the first quarter of the year.
Why is this deal getting blocked?
According to the European Commission’s preliminary investigation, if this deal goes through it could allow Adobe to restrict the supply of interactive product design and digital asset creation tools. They believe that given that Adobe is a clear leader in the product design tool market and Figma is its direct competitor, the deal would, “remove an important competitive force.” The commission further says that it will investigate whether this acquisition will, “foreclose rival providers of interactive product design tools by bundling Figma with Adobe’s Creative Cloud suite.”
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Adobe’s stance on the situation:
Adobe has been firmly denying that the two companies are competitors and arguing that they have very different markets. “Figma is a leader in interactive product design, focused on building a collaborative web platform. Adobe is a leader in the creative tools space, helping millions of users create amazing visual content. Together, our vision will help enable millions of consumers to transform their productivity with creativity,” Adobe said in a statement about the DOJ’s investigation (acc. to a report by TechCrunch).
As per the company’s latest earnings call, it still seems to be positive about the acquisition going through. “We continue to engage in conversations with the Competition and Markets Authority in the UK, the European Commission and the U.S. Department of Justice as they conduct their regulatory reviews and given the merits of the case, we believe the transaction should close by the end of 2023,” David Wadhwani, Adobe’s executive vice president said.
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