Adobe's $20bn Figma purchase faces potential setback from EU
EU officials see by as a 'killer acquisition' to see off rivals
Regulators in Brussels are preparing to file competition charges against Adobe’s $20 billion deal to buy Figma. These may come as early as this week.
The charges will signal the EU's concerns that the merger could lead to less innovation and higher prices, as reported by The Financial Times.
The EU believes that the acquisition would harm rivals in the digital design market.
The deal, which was announced in September 2022, has been facing a long EU antitrust investigation over competition concerns.
The European Commission, the EU's executive arm, said the deal needed to be scrutinised in Brussels even if the companies' sales in Europe were too low to officially require a probe.
Brussels stated that the scrutiny was required as the deal threatens to have a significant impact in the market for interactive product design and whiteboard software.
EU officials are increasingly worried that the merger represents what they view as a "killer acquisition", where a large company acquires a smaller competitor to eliminate rivals.
The bloc's move represents the latest legal challenge to the deal, where authorities are looking to determine whether the transaction will lead to a market with lesser products, improvements in the existing ones and less competition.
A preliminary assessment of the deal already foresees a considerable decrease in the competition within the UK. Moreover, in the US, the Department of Justice is reportedly preparing a lawsuit in an attempt to block the transaction.
Adobe has signalled that it is prepared to deal with the probes as regulators around the world intensify their inspection of large tech transitions.
Figma and Australia-based Canva are both significant developers of cloud-based design tools. These tools threaten the dominance of Adobe's offerings including Photoshop - the market leader in editing images for many years.
The billion dollar deal values Figma at 50 times its annual recurring revenue. The price is double the amount the maker of cloud-based design tools was valued in a private funding round in 2021, and represents a tenfold jump in Figma's value as compared to 2019.