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British watchdog says Adobe-Figma merger could harm competition

Britain's regulatory watchdog on Tuesday said a proposed merger between Adobe and Figma would harm competition. Photo courtesy Adobe
Britain's regulatory watchdog on Tuesday said a proposed merger between Adobe and Figma would harm competition. Photo courtesy Adobe

Nov. 28 (UPI) -- The British Competition and Markets Authority on Tuesday said the proposed purchase of design software company Figma by Adobe would harm competition.

The watchdog said the deal would eliminate competition between the two companies in the software markets of product design, image editing and illustration as well as "reduce innovation and the development of new competitive products" and remove Figma as a threat to Adobe's Photoshop and Illustrator products.

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"Adobe and Figma are two of the world leading providers of software for app and web designers and our investigation so far has found that they are close competitors," Margot Daly, chair of the independent group leading the CMA investigation said. "This proposed deal, therefore, has the potential to impact the U.K.'s digital design industry by reducing choice, innovation and the development of new competitive products."

Last September, Adobe announced plans to purchase Figma for $20 billion prompting scrutiny from regulatory authorities in Britain, the United States and the European Union.

Figma's software platforms are used by third-party companies like Air BnB and Zoom to build their own platforms.

The CMA found that Figma software plays a significant role in design markets and that "around 80% of the professional product design market use Figma's software."

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It added that Figma is "a credible future competitor" to Adobe in the realms of image editing and illustration software.

The CMA also found that the proposed merger was already harming the development of in-house products.

"The inquiry group also provisionally concluded that Adobe abandoned development of new product design software which could have competed even more closely with Figma and, given the timing of the decision, did this as a consequence of the merger," the CMA said.

A Figma representative told CNBC the company was "disappointed" by the finding and disputed that the two were competitors.

"The facts are Figma operates in a dynamic and highly competitive market for product design and development and Figma has not spent a single dollar or hired a single engineer to build creative tools," they said. "We remain committed to the deal, confident in the facts and convinced our proposed combination with Adobe is a win for consumers and should be approved."

Adobe also expressed disappointment and told CNBC it was "reviewing the provisional findings and will reengage with the CMA on the facts and merits of the case."

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