Adobe / Figma Merger Raises Antitrust Concerns

Would the deal usher in a new era of collaborative creativity or just a more powerful monopoly?

Tech industry observers disagree on the potential impact of Adobe’s proposed acquisition of Figma given Adobe’s dominance in the creative design space. Any purchase, let alone one worth $20 billion, was going to at least raise some antitrust concerns. Time will tell just how far it will be investigated, but generally speaking, the Federal Trade Commission and the Department of Justice Antitrust Division are aggressively pursuing anything that that might reduce competition, particularly in tech.

Adobe announced its $20-billion-dollar agreement to acquire collaborative design platform Figma on Sept. 15, 2022, just seven years after the company launched the initially free version of its service. If consummated, the deal would represent one of the biggest of a relative startup ever at a figure well over its valuation. Figma generates about $200 million a year, so Adobe’s price is 100 times that. Figma makes the collaborative web design process much easier than anything competitor Adobe has been able to offer, according to observers, and has accumulated more than 50,000 users. Adobe pledges to keep Figma autonomous and retain their CEO. Aside from the payout, Figma noted that this deal was attractive to them because it will now allow them to leverage Adobe’s product capabilities more fully in their platform and reach new customer segments. Adobe hopes to close the deal by the end of 2023.
While the FTC and DOJ have not made any public comments, critics have expressed a number of antitrust concerns.

What happens to consumer choice? Figma currently has a webpage dedicated to why their product is better than the competing Adobe product, called Adobe XD. We do not expect this page to be up for much longer, nor do we expect a quality choice for consumers outside of Adobe’s giant product suite to be available much longer, either. The choices for solutions of comparable quality are already slim. This deal will make the list even slimmer.
What happens to innovation? Some critics say Adobe is trying to execute a “killer acquisition,” buying a direct competitor with a superior product so it doesn’t have to innovate to compete.
How big is too big? Critics also wonder whether Adobe will simply be too dominant, undermining competition, fair pricing, and innovation.
This deal, like any major tech transaction, will certainly be reviewed by the DOJ and/or FTC. Not surprisingly, both Figma and Adobe have come forward specifically noting how this merger will be a great benefit to consumers, so they are aware of the scrutiny ahead.

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