UK competition watchdogs are looking into Adobe's $20 billion acquisition of Figma, citing the potential harm within the digital design sector.
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Adobe's Deal to Possibly Eliminate Competition
According to the Competition and Markets Authority (CMA), the deal could possibly mean three things: eliminate competition, reduce innovation, and remove Figma as a threat. The company to be acquired, Figma, is currently the world's leading provider of product design software, directly fighting with Adobe.
While Adobe is known for its vast editing software tools, Figma mainly competes with the Adobe XD. Upon investigation, the CMA found out that 80% of the digital design sector in the UK are users of Figma's software.
"The CMA has provisionally found the deal will eliminate competition between these two key competitors in the following three software markets: product design; image editing; and illustration," the report stated.
Meanwhile, the CMA also clarified that the report is still provisional and they will still continue to investigate before reaching a final decision.
UK's Product Design Software Market
Figma is a popular choice for UK digital companies such as Airbnb, Patagonia, and Vodafone. Currently, the digital design sector is worth around £60 billion and employs over 850,000 workers.
With such a wide reach, the inquiry group is mainly worried that the merger will reduce the innovation and development between the two companies. Adobe has reportedly abandoned development for new product design software.
Most importantly, the provisional investigation found that Figma has a "credible future" to compete with Adobe in terms of image editing and illustration software. This type of threat can drive other companies to further invest in developing their products to compete in the market.
The CMA is open for responses until December 19, with the final decision to be issued by February 25, 2024.
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