Adobe and Figma Abandon Proposed $20BN Merger After It Threatens UK Digital Design Sector

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Has anyone been keeping track of Competition and Markets Authority’s (CMA) report into...

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Has anyone been keeping track of Competition and Markets Authority’s (CMA) report into the potential Acquisition of Figma by Adobe? 💭

In Adobe and Figma both being two of the world leading providers of software for app and web designers, CMA had provisionally found that the proposed $20bn merger risked creating a monopoly in the market for Adobe that was counter intuitive to innovation, competition and fairness.

In response to this, it appears that, rather than offer to appease regulators through concessions and remedies, Adobe has instead decided to back out of the proposed acquisition with “no clear path to receive necessary regulatory approvals”

With both company’s respective tech used by most professionals in the field (80% use figma), Its rather surprising to see the deal fall through and follows other high profile tech acquisitions made recently such as Activision Blizzard by Microsoft and 21st Century Fox by Disney respectively which, in contrast have been successful (albeit after some deliberations).

“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it in our respective best interests to move forward independently," - Shantanu Narayen, Adobe's chair and chief executive

With App development in the UK alone being worth £19.4 billion in 2022 and the fastest growing of any other part of the tech sector last year, it wasn’t altogether too surprising to see the CMA originally make the ruling, and, to some extent, it was par for the course for huge mergers such as this.

In contributing so much to the economy (digital design sector is worth nearly £60 billion to the UK – representing 2.7% of the national economy), taking a cautionary stance like this made sense and showed the benefits in having impartial oversight that can preserve a level playing field across the tech sector.

“The document evidence shows that Adobe perceived Figma to threaten its core markets for vector and raster editing software, and its flagship apps Illustrator and Photoshop in particular. We note particularly that Adobe undertook detailed analysis of the threat posed by Figma and concluded that Figma posed a risk. In our view, other internal documents consistently show concerns by Adobe management over the threat from Figma in relation to professional users until August 2022, a few weeks before the Merger was announced (on 15 September 2022)”  - Quote from findings

To a certain extent, CMA’s rulings was just a natural part of the acquisition process in which the ownness lay on Adobe to prove innovation wouldn’t be stifled. Both the Disney and Microsoft mergers as mentioned earlier faced similar setbacks and after battling their corners ultimately secured approval and proceeded after concessions where made.

Its interesting to see Adobe concede defeat in this realm after so many other Tech conglomerates have succeeded.


The Trend of Acquisitions continues

 

Regardless of the outcome though, it serves as yet another illustration of the ongoing pattern we’re seeing across the tech sector and beyond of acquiring companies as a means of swiping preestablished tech IPs, resources and gaining internal components/teams that a business maybe lacking in.

Whether it’s Spotify acquiring Chartable and Podsights as a means to invest in podcasting or Apple buying the Dark Sky weather app, mergers and acquisitions seem to remain a solid move we’re seeing more and more big named companies partake in.

 

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