UK warns Adobe’s $20bn deal for Figma would harm competition

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Adobe’s proposed $20bn merger with Figma would harm competition in product design software by uniting two of the main companies in the sector, the UK’s antitrust regulator has said in the latest challenge to the deal.

The acquisition in its current form would also threaten competition in image editing and illustration, said the Competition and Markets Authority in a statement on Tuesday.

The deal, which was announced in September 2022, values Figma at roughly 50 times its annual recurring revenue, and double its last private funding round in 2021. The huge price that Adobe is willing to pay for San Francisco-based Figma has been seen by critics of the deal as an effort to quash its most promising new rival in decades.

“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,” said Margot Daly, chair of the independent group conducting the CMA’s investigation. “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.”

Adobe and Figma said they were disappointed and disagreed with the CMA’s findings, which are provisional. The companies can offer concessions to ease the authority’s concerns, ahead of a final decision on whether to block the deal at the end of February. 

This month, the European Commission published a statement of objections to the deal, following an in-depth investigation. Antitrust regulators in Brussels were concerned the merger could “significantly reduce competition in the global markets” for the supply of interactive product design tools.

The commission highlighted that Adobe XD would be discontinued in a “reverse killer acquisition”, where companies remove existing products in order to remove a competitor to a newly acquired service.