The UK competition regulator has opened a probe into Adobe’s $20bn proposed acquisition of design software company Figma, marking its latest review of a tech deal after blocking Microsoft’s takeover of Activision Blizzard, the Call of Duty developer.
The Competition and Markets Authority is the first regulator to officially launch an inquiry into the deal, but similar action is expected by the US and Brussels.
The probe was launched on Wednesday, almost nine months after Adobe announced it was buying San Francisco-based Figma, a creative tool which helps designers collaborate remotely.
On Wednesday, Adobe said it expected “lengthy reviews of transactions” in the “current robust regulatory environment” and was in discussions with regulators in Brussels and the US as well as the UK.
Adobe said it looked forward to “continuing to engage with the Department of Justice, CMA and European Commission in productive discussions about the businesses, markets and positive economic impacts this deal will bring as they conduct their reviews”.
Announcing the deal, Adobe chair and chief executive Shantanu Narayen said the combination would be “transformational”. The almost $20bn purchase price was double the amount at which Figma was valued in its most recent private funding round in 2021 and 10 times its valuation in 2019. The bid valued the company at 50 times its annual recurring revenue.
At the time, the acquisition was the most expensive bid for a private company, beating Facebook’s $19bn takeover of WhatsApp in 2014.
Brussels has yet to formally launch an investigation into the tie-up, but regulators are understood to be worried the transaction will remove a competitor from the market and lead to higher barriers to entry for rivals and less innovation, according to people familiar with the deal.
Adobe and Figma have presented information to the US Department of Justice as the government deliberates on whether to open formal antitrust proceedings, according to people close to the matter.
The CMA’s announcement comes a week after it blocked Microsoft’s $75bn acquisition of Activision Blizzard, demonstrating its tough stance on tech deals that it sees as posing a risk to competition.
In the wake of the decision, both companies involved, as well as others in the tech sector, said a heavy hand by the CMA could stifle tech investment and innovation in the UK.
“The concern Adobe has, if you decide to take a policy position against this . . . as a government that we should have fewer mergers, I think the natural consequence of that is you’re going to see less investment in start-ups because [investors] are currently getting their return through acquisitions, not through public offerings,” a person close to Adobe said.
Adobe’s defence is expected to be that this is a vibrant market where others can still thrive, and will stress that Figma and Adobe are complementary to each other.
The company will argue that the two businesses do not compete in the same market, as internal research found only 10 per cent of Photoshop users also used Figma, according to two people familiar with their preparations.
The CMA said on Wednesday it would decide whether to launch an in-depth investigation into the deal by June 30.
Additional reporting by Richard Waters in San Francisco.
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