This week, EU antitrust investigators are gearing up to file formal complaints against Adobe over competition concerns, putting a roadblock to its $20 billion acquisition of San Francisco-based Figma. The European Commission is expected to submit a Statement of Objections alleging that the merger breaches EU competition rules, with charges possibly arriving this week, according to sources from the Financial Times.
The proposed acquisition by Adobe has been met with criticism since it was announced last September, with concerns that it could stifle competition in the digital design space. Figma's cloud-based design platform has gained popularity for streamlining communication among designers and business design teams.
EU regulators are apprehensive about the potential market dominance of Adobe and the adverse effects on Figma's competitors. The European Commission, in June, announced a thorough analysis of the merger's impact on market competition, expressing fears that it could "significantly affect competition in the market for interactive product design and whiteboarding software."
The allegations suggest that the EU believes the acquisition will hinder innovation and harm consumers, claiming that it would unlawfully consolidate Adobe's market power. This move is the latest setback for the Adobe-Figma partnership, following similar antitrust measures in the UK and the US.
UK regulators extended their investigation into next year over concerns that the acquisition might substantially reduce competition. Meanwhile, the US Department of Justice has already taken legal action to prevent the acquisition, reflecting global concerns about powerful tech companies acquiring emerging competitors.
However, the regulatory challenges underscore the growing resistance to anti-competitive tech mergers.
The tech industry is closely monitoring the situation, recognizing the potential implications for M&A activity. If regulators reject the acquisition, corporations may become more cautious about investing time and money in mergers that might face rejection, potentially chilling M&A activity.
Adobe's acquisition of Figma's innovative productivity tools aligns with its creative suite strategy, but the company may need to make significant divestitures or commitments to pass antitrust tests in both the EU and the US.
Drawing a parallel with Meta Platforms' acquisition of Kustomer, which faced objections but ultimately succeeded in the EU, highlights the uncertainty surrounding Adobe's megadeal. The outcome will be closely watched by the IT industry, as it could set a precedent for regulators cracking down on tech giants acquiring promising companies.
The potential failure of the Figma acquisition could signal a shift in the willingness of regulators to challenge established tech giants, prompting companies to rethink M&A as a growth strategy amid increasing global antitrust opposition. Adobe's ability to navigate regulatory hurdles will undoubtedly have a lasting impact on the industry's approach to such high-profile acquisitions.