The European Commission has officially announced its commencement of a comprehensive investigation into Adobe's proposed acquisition of Figma, a digital design software rival valued at $20 billion.
In this photo taken on April 16, 2020, a general view shows the Indian office of US multinational computer software company Adobe in Bangalore. - Coronavirus is permanently shaking up the global outsourcing industry as lockdowns from Bangalore to Manila prompt firms to "reshore" jobs and, with AI, to move further away from needing humans at all.
European Commission Opens In-Depth Probe Into Adobe's Proposed Acquisition of Figma
The European Commission expressed concerns over potential competition reduction in the global markets for interactive product design software and digital asset creation tools due to the acquisition.
Initially disclosed in September, the deal was expected to draw regulatory attention globally. The US Department of Justice (DoJ) and the UK Competition and Markets Authority (CMA) were already scrutinizing the acquisition.
The CMA specifically cited concerns about a substantial decline in competition within the UK designer market. In February, the European Commission revealed that it was also investigating the acquisition on grounds of potential competition infringement.
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Preliminary Examination Raises Alarms
The European Commission noted that their preliminary examination raised alarms that the acquisition could limit competition for interactive product design and digital asset creation tools in the global markets.
Concerns were highlighted around the potential elimination of Figma's influence on Adobe's digital asset creation tools and the stifling of Figma's potential to evolve into a strong contender against Adobe's asset creation tools.
Moreover, the commission will investigate whether the acquisition might facilitate anticompetitive practices by bundling Figma with Adobe's Creative Cloud suite. The commission's in-depth investigation ultimately aims to ascertain the validity of these preliminary competition concerns.
The European Commission said it engaged in collaborative efforts with other global competition authorities during the initial phase of its inquiry and intends to continue such collaboration throughout the in-depth investigation. The transaction's formal notification to the commission was made on June 30.
The commission now has a 90-working-day window, extending until December 14 to reach a decision. It must be noted that initiating an in-depth inquiry does not predetermine the outcome of the investigation.
Adobe, a US-based multinational software company renowned for its creative design tools like Photoshop and Illustrator and interactive product design tool Adobe XD, proposed the acquisition.
Figma, on the other hand, offers web-based collaborative tools for interactive product design through Figma Design and FigJam, a whiteboarding product.
The European Commission's role encompasses the evaluation of mergers and acquisitions involving companies surpassing defined turnover thresholds to prevent concentrations that could hamper competition within the European Economic Area (EEA).
It must also be noted that most merger notifications do not lead to competition concerns and are resolved through routine reviews. Once a transaction is notified, the commission typically has 25 working days to decide on approval (Phase I) or initiate an extensive investigation (Phase II).
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