The UK will ramp up its investigation into Adobe's $20 billion Figma acquisition

The UK’s Competition and Markets Authority (CMA) plans to perform an in-depth probe into Adobe’s acquisition of Figma, the agency announced today (via The Wall Street Journal). Citing concerns about “a substantial lessening of competition” for screen design software, it plans to move into a “phase two” investigation. However, it’s giving the companies five business days to “offer legally binding proposals” to address the concerns; if their response doesn’t satisfy the CMA, the probe will begin. Adobe announced its plans last year to buy its smaller rival for $20 billion.

“The CMA found that Figma has established a substantial share of the market for screen design software and that Adobe has been continuously investing in and competing in this segment,” the UK agency, which recently rejected Microsoft’s proposed $75 billion purchase of Activision, wrote today. “The CMA found that competition between Figma and Adobe has driven investment in updating and developing screen design software, and this important rivalry could be lost if the deal goes ahead.” It described Figma as “an emerging competitive threat” to the Photoshop maker, expressing concerns about the reduced innovation that could come from Adobe scooping up an upstart competitor. The agency said it’s concerned the acquisition could lead to higher costs and fewer / less innovative products.

Adobe’s purchase of San Francisco-based Figma, founded in 2012, would be the largest-ever acquisition for the 41-year-old design behemoth. In Sigma’s 11 years on the market, it has established itself as a popular tool for vector-based design. The cloud-based software specializes in remote collaboration and is a direct competitor to Adobe’s XD and Illustrator products. At the time of the acquisition, Adobe said it wanted to bring features from its Creative Cloud suite into the collaborative software while incorporating more of Figma’s team-focused features into its core products — predictably framing it as a win-win for customers. The company added it was “deeply committed” to keeping Figma an independent company while insisting there was “no plan” to change its pricing — including its free tier.

“We’re worried this deal could stifle innovation and lead to higher costs for companies that rely on Figma and Adobe’s digital tools — as they cease to compete to provide customers with new and better products,” said Sorcha O’Carroll, the CMA’s Senior Mergers Director. “Unless Adobe can put forward viable solutions to our concerns in the coming days, we will move to a more in-depth investigation.”