UK Regulators Effectively Block Adobe’s $20 Billion Figma Acquisition Over Competition Concerns

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Adobe’s proposed $20 billion purchase of fast-growing design platform Figma faces intense scrutiny in the UK, with regulators effectively blocking the deal after a months-long investigation into impacts on creative software market competition.

According to findings issued on November 29th, 2023, the UK’s Competition and Markets Authority (CMA) provisionally concluded the merger threatens reduced customer choice by consolidating too much power within Adobe’s creative empire.

The CMA report constitutes a major roadblock that could sink the acquisition entirely without significant concessions from Adobe around purported anti-competitive effects in multiple software categories.

As owner of leading applications like Photoshop, Illustrator and Adobe XD, creative giant Adobe already boasts strong positions across design, photography, digital art and prototyping verticals.

Regulators fear absorbing rising star Figma, which directly rivaled Adobe XD in rapidly-growing user experience design, would entrench Adobe’s stranglehold on creative professionals through reduced choices and diminished innovation absent competition.

The CMA highlighted Adobe halting sales and upgrades for Adobe XD immediately after announcing its Figma intentions as apparent evidence of preemptively quashing competition.

Underscoring regulators’ worries around limited alternatives if the deal proceeds, the CMA report noted the UK creative sector’s enormous economic footprint.

Valued at nearly £60 billion contributing 2.7% of British GDP, the industry employing over 850,000 skilled professionals depends heavily on software availability meeting diverse customer needs.

With Adobe already so dominant, the watchdog aims to prevent an even more commanding position that limits customer power or access to the best-suited platforms as creative demands evolve.

With findings categorizing the merger as substantially harming competition across Adobe and Figma’s design, photo editing and illustration functionality overlap, few remedies seem plausible appeasing the CMA.

Potentially, Adobe could propose divesting certain software assets in spheres deemed too consolidated post-merger. But relinquishing crown jewels like Illustrator or Photoshop seems untenable given their importance for go-to Creative Cloud subscriptions.

More likely, regulators simply cannot approve the deal unless structural changes restore the pre-merger competitive dynamics nurturing customer choice.

Next Steps: Adobe and Figma Response Ahead of Final Ruling Adobe and Figma now have until December 19th to formally respond to the CMA’s competition findings before regulators issue their final decision regarding remedies on February 25th, 2024.

The provisional verdict adds another layer of antitrust scrutiny piled onto the deal after EU regulators lodged their own complaint over diminished innovation from the same consolidation concerns.

With global authorities aligned on skepticism around harmful impacts on customer choice, Adobe probably must reluctantly surrender its Figma ambitions unless unexpected concessions miraculously satisfy regulators worldwide.

But the software giant seems locked into an uphill battle asking watchdogs to approve further subscription empire expansion at the expense of a fiercely independent rising app clearly resonating through its user-centric and transparent pricing.

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