Adobe’s Plans to Acquire Figma Could Harm UK’s Digital Design Sector

Competition and Markets Authority (CMA), the UK’s regulator, has expressed concern over a potential $20 billion deal by Adobe to acquire Figma, the world’s leading provider of product design software, saying that it was likely to harm innovation for software used by the vast majority of UK digital designers.

The CMA said that the latest findings were provisional, and it will now consult on them, alongside potential remedies to the competition concerns identified, which could include blocking the deal outright. The CMA welcomes responses from interested parties by 19 December 2023. These will be considered ahead of the inquiry group issuing its final decision by 25 February 2024.

In the course of its detailed phase 2 investigation, the CMA “provisionally” found that the deal will eliminate competition between two main competitors in product design software, reduce innovation and the development of new competitive products and remove Figma as a threat to Adobe’s flagship Photoshop and Illustrator products.

Figma’s software is used by designers, creative agencies and businesses to help deliver leading websites and apps that are used by millions of people.

Adobe is one of Figma’s main competitors in product design software, and currently competes using its Adobe XD product. Adobe is also the largest supplier of image editing and illustration software, well known for its Photoshop and Illustrator applications.

Impact on UK Businesses

More UK businesses than ever rely on design software to help present their products and services via websites and apps, with the CMA’s investigation finding that around 80% of the professional product design market use Figma’s software.

App development in the UK alone is worth $24.66 billion and grew faster than any other part of the tech sector last year. These apps help millions of people across the UK do everyday tasks such as ordering food to their doors, booking travel and managing their personal finances.

“Digital design is an important and growing industry in the UK and relies heavily on image editing and illustration software provided by Adobe’s Photoshop and Illustrator tools,” the UK regulator said.

The CMA’s investigation provisionally found that, without the merger, Figma would continue to take steps to develop or expand products that threatened Adobe’s position in image editing and illustration.

Provisional Findings

During the investigation, led by an independent group, the CMA has provisionally found that the deal will eliminate competition between these two key competitors in the following three software markets: product design; image editing; and illustration.

Margot Daly, who chaired the independent group conducting this investigation, said that the digital design sector was worth nearly $76.26 billion to the UK – representing 2.7% of the national economy – and employs over 850,000 people in highly skilled work.

The software this sector uses is pivotal to its success, so the CMA has from the outset been very focused on ensuring this merger doesn’t adversely affect such an important part of the UK economy, Daly said.

“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. The proposed deal, therefore, has the potential to impact the UK’s digital design industry by reducing choice, innovation and the development of new competitive products,” Daly explained.