Adobe plus Figma could saddle UK design firms with higher prices and worse product, says regulator
The regulator is uneasy about the deal but has twice extended its decision deadline
The UK competition watchdog has warned it might block design software giant Adobe's takeover of upstart rival Figma because the deal would quash competition and give Adobe free reign to make easy money from designers, with high prices and lazy product innovations.
The deal could saddle UK design firms with lower quality products than they might otherwise have got if Figma carried on putting pressure on Abobe with its competing software, the UK Competition and Markets Authority (CMA) said in a provisional decision on the takeover yesterday.
"It would likely bring higher prices, less choice and fewer innovations in the software tools that almost a million designers used to make £60bn last year - nearly three per cent of the British economy," said inquiry chair Margot Daly.
Adobe and Figma have two weeks to placate the regulator with a legal statement of remedies they will take to prevent their combined forces producing a design software behemoth so powerful that it puts UK design firms in "a one-vendor choke-hold" as one commentator described it of inflated software fees and sluggish innovation. As the CMA said, their software is used by the "vast majority of UK designers".
Adobe had already been acting as if to prove the point, the CMA noted in its statement on the merger yesterday. because it had "abandoned development" of a product design tool intended to put more competitive pressure on Figma.
"Given the timing of the decision", the CMA believed Adobe did this as a consequence of the merger. "This supports the CMA's concern that this proposed deal would likely reduce innovation and the development of competitive new products," it said.
Figma, who dominates the market for app interface design software with a tool that CMA investigators reckoned was used by 80% of digital product designers, gets its main competition from Adobe's XD software. Adobe has frozen development of XD. Figma has meanwhile stood down as self-declared Adobe killer.
The $400m Figma had a real chance of becoming a credible competitor to the $18bn Adobe, the CMA reckoned, perhaps having a chance to use capitalize on the place it has grabbed in design studios to slip in tools to compete with Adobe's dominant image editing and illustration software, PhotoShop and Illustrator.
"If the deal went ahead, it would eliminate Figma, [which] would otherwise have continued to seek to develop its capabilities in image editing and illustration, thereby fuelling innovation and product development by Adobe.
"Competition would be lost as a result of the transaction, harming designers and creative agencies who might have used these new tools or relied on future updates," said the CMA.
Meanwhile, the CMA has had such trouble deciding on the merger that it extended its inquiry, putting the decision off two months to the end of February. Figma had withheld evidence the regulator requested under the Enterprise Act in the Summer. It supplied it after the CMA called it out and extended the inquiry. So the CMA cancelled the extension. Then in October, CMA extended the inquiry again because it now had so much evidence from both Figma and Adobe that it needed more time to get through it all.