Adobe’s purchase of Figma could reduce innovation in the UK

CMA finds Adobe’s deal to acquire Figma could mean less choice for designers of digital apps, websites and other products.

Adobe is a global software developer and specialises in products which allow customers to create and edit images (including its industry-standard Photoshop and Illustrator applications), as well as video, motion design, and interactive content. Figma, which was founded in 2012, is a leading provider of screen design and whiteboarding tools. Screen design software is an increasingly essential tool that enables users to design digital products and services such as applications and websites. Adobe announced it would acquire Figma for $20 billion in September 2022.

The Competition and Markets Authority (CMA) has identified concerns in the supply of screen design software, where Adobe’s and Figma’s products compete. The CMA found that Figma has established a substantial share of the market for screen design software and that Adobe has been continuously investing in and competing in this segment. The CMA found that competition between Figma and Adobe has driven investment in updating and developing screen design software, and this important rivalry could be lost if the deal goes ahead.

The CMA also identified concerns in the provision of creative design software, where Adobe offers some of the leading tools for image, video, and animation content. The CMA’s investigation found that Figma is an emerging competitive threat to Adobe across these tools, and that Figma is well-placed to expand its offering and provide an increased constraint to Adobe. This rivalry and innovation is important to the sector and could be threatened by this deal.

Many start-ups and other businesses rely on the software products provided by Adobe and Figma to produce apps and websites, as well as engaging content. The UK app economy alone was worth £19.4 billion in 2022. The CMA is concerned that Adobe’s plan to acquire Figma removes a leading player from the market and reduces both firms’ incentives to invest in software development and compete against one another, which could result in higher costs as well as fewer and less innovative products.

Sorcha O’Carroll, Senior Mergers Director at the CMA, said:

Products sold by Adobe and Figma are critical for the development of digital services that people and businesses use on a daily basis – be that popular apps and websites selling anything from holidays to streaming the latest movies.

We’re worried this deal could stifle innovation and lead to higher costs for companies that rely on Figma and Adobe’s digital tools – as they cease to compete to provide customers with new and better products.

Unless Adobe can put forward viable solutions to our concerns in the coming days, we will move to a more in-depth investigation.

More information can be found on the CMA’s Adobe / Figma case page.