Adobe Welcomes Long-awaited Deal To Acquire Figma - Along With Regulatory Challenges!

Adobe - you’ve certainly heard the name. You must definitely be familiar with their products like Acrobat PDF Reader, Photoshop, Illustrator, InDesign, After Effects and Premiere Pro, right?

Essentially, Adobe is an abode for all kinds of artists with its superior, ever-advancing technology and massive customer base that seems indifferent to competitors. In fact, the company recently reported a net income of $1.3 billion in Q2 Fiscal 2023 ($2.82 a share), with a revenue of $4.82 billion (a 10% increase from the previous year).

Money isn’t a problem for the giant who’s been integrating generative AI technologies like Firefly across its products, with Shantanu Narayen, Chair and CEO of Adobe, saying, “Since its launch in March, Firefly has captured the imagination of the world with over half a billion generations, and we’re just getting started.”

Despite such dominance, Adobe has been trying to acquire its competitor, Figma Inc, for years, while Figma’s co-founder Dylan Field was only looking for strategic partnerships, pushing off merger talks saying, “our goal is to be Figma not Adobe.”

After all, Figma’s main offering is a virtual canvas for designers to make visuals in real-time. With a customer base of 6+ million users, a valuation of $10 billion and relied on by brands such as Google, Microsoft, Netflix, AirBNB, Zoom etc., they wanted to preserve their identity.

This was until recently, when after years of perseverance, Adobe finally struck a deal with Figma for $20 billion, putting an end to a rocky road of negotiations! Or did it?

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Adobe faces challenges in the lengthy pursuit of purchasing Figma with regulators such as the US Justice Department and authorities in the UK and EU preparing a lawsuit to block the transaction.

(Read about Microsoft’s Activision acquisition being similarly blocked here.)

Essentially, the $20 billion deal to acquire Figma will see Adobe face antitrust investigations as European regulators are preparing to launch formal and detailed investigations as they raise concerns about the implications the takeover will have on users.

The investigation could take quite a few months and poses risks of derailing the deal.

Reportedly, a person with knowledge of what the EU regulators are thinking said, “Adobe is trying to buy a credible competitor ... It’s bad.”

Either way, Adobe is yet to present a deal for EU regulators to scrutinize, with the European Commission saying, “This transaction has not been formally notified to the Commission. If a transaction constitutes a concentration and has an EU dimension, it is always up to the companies to notify it.”

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Adobe though has said it was in initial discussions with the EU, UK and US regulators and it is “confident in the merits of the case and looks forward to successfully completing the transaction”.

Do you think the regulators are right in thinking the deal could lead to higher prices for consumers? Will the deal fall through with antitrust investigations? Let us know in the comments below!

First published on Fri, Jun 23, 2023

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Adobe Figma Acquisition Regulators Antitrust Investigation Rivals Competition US DoJ UK EU

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