A mega-money $20 billion deal orchestrated on the West Coast of the United States may be blocked by the UK competitions watchdog.
An investigation by the Competition and Markets Authority has provisionally found that Silicon Valley giant Adobe鈥檚 takeover of San Francisco鈥檚 Figma could harm the UK digital design sector.
Figma is currently the world鈥檚 leading provider of product design software which is used by designers, creative agencies and businesses to help deliver leading websites and apps that are used by millions of people.
Adobe is one of Figma鈥檚 main competitors in product design software, and currently competes using its Adobe XD product. Adobe is also the largest supplier of image editing and illustration software, well known for its Photoshop and Illustrator applications.
More UK businesses than ever rely on design software to help present their products and services via websites and apps, with the CMA鈥檚 investigation finding that around 80% of the professional product design market use Figma鈥檚 software.
鈥淎pp development in the UK alone is worth 拢19.4 billion and grew faster than any other part of the tech sector last year. These apps help millions of people across the UK do everyday tasks such as ordering food to their doors, booking travel and managing their personal finances,鈥� stated the CMA.
鈥淒igital design is an important and growing industry in the UK and relies heavily on image editing and illustration software provided by Adobe鈥檚 Photoshop and Illustrator tools. The CMA鈥檚 investigation provisionally found that, without the merger, Figma would continue to take steps to develop or expand products that threatened Adobe鈥檚 position in image editing and illustration.鈥�
In the course of a detailed Phase 2 investigation, led by an independent group, the CMA provisionally found the deal will eliminate competition between these two key competitors in the following three software markets: product design; image editing; and illustration.
Margot Daly, chair of the independent group conducting this investigation, said: 鈥淭he digital design sector is worth nearly 拢60 billion to the UK 鈥� representing 2.7% of the national economy 鈥� and employs over 850,000 people in highly skilled work. The software this sector uses is pivotal to its success, so the CMA has from the outset been very focused on ensuring this merger doesn鈥檛 adversely affect such an important part of the UK economy.
鈥淎dobe 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.
鈥淭his proposed deal, therefore, has the potential to impact the UK鈥檚 digital design industry by reducing choice, innovation and the development of new competitive products.
鈥淭oday鈥檚 decision is provisional, and we will now consult on our findings and listen to any further views before reaching a final decision.鈥�
The CMA said it would now consult on the findings, alongside potential remedies to the competition concerns identified, which could include blocking the deal outright.