UK regulator says Adobe’s $20 billion Figma deal could harm digital design sector

In June, the UK’s Competition and Markets Authority (CMA) initiated an extensive investigation into the proposed $20 billion merger between Adobe and Figma. After releasing its findings, it becomes evident that the outlook is far from positive.

While it’s important to note that these findings are provisional, the CMA leaves a clear message: the merger would considerably reduce competition within the design industry.

The investigation specifically examined whether the merger would hinder competition and innovation in the design space. The CMA’s independent experts deduced that the merger would eliminate the competition between two major players, Figma and Adobe, which is unsurprising given their prominent positions in the industry.

The investigation also highlighted that the merger would lead to a decrease in innovation and the development of competing products. Furthermore, it would remove Figma as a potential threat to Adobe’s flagship software suites like Photoshop and Illustrator.

Figma currently holds a dominant position in the UK design market, accounting for 80% of the industry. It is a significant player in the country’s $19.4 billion app development sector. Without the merger, the CMA suggests that Figma would continue to challenge Adobe by developing or expanding products.

However, that competitive drive would cease once the merger is finalized, as there would be little incentive to challenge oneself. The investigation concludes that the merger would eliminate competition between these two major players across various fields, including product design, image editing, and illustration.

These sectors generate $60 billion in annual revenue in the UK, representing nearly 3% of the national economy and providing employment to 850,000 skilled workers.

Additionally, the investigation aimed to assess the potential harm to the UK economy and found that it is likely to be negatively impacted. While these findings are provisional, the CMA has yet to reach a final decision on whether to approve.