The Department of Justice is reportedly preparing to block Adobe’s $20 billion acquisition of Figma, a collaborative design platform for web-first product design. According to sources familiar with the matter, the antitrust lawsuit could be filed as early as next month, although the timing could slip. (Bloomberg 2023-02-23)
The acquisition, announced by Adobe in September 2022, would represent one of the largest takeovers of a private software maker in history. Adobe, a dominant software force for design professionals with tools like Photoshop and Illustrator, sees the acquisition as a bet that small businesses and everyday users on the web will do more creative work.
However, the antitrust division of the DOJ is concerned that the deal would reduce options for design software used by creative professionals. Figma has rapidly seized the market for web-based, multi-player capabilities, allowing Adobe to deliver its Creative Cloud technologies more productively and accessible to more people.
The deal also faces an antitrust review in the European Union and the UK Competition and Markets Authority. The three jurisdictions often coordinate their investigations.
If the DOJ blocks the acquisition, Adobe’s shares may benefit. They have dropped more than 5% after hours following the report from Bloomberg News, and the entire market has fallen in value since the deal was announced. The current value of Figma may be considerably less than the value Adobe is paying at the reported price.
This lawsuit represents Adobe’s most serious spat with antitrust regulators since the 1990s when it was forced to divest a program that competed with its Illustrator graphic design program as part of a merger with Aldus Corp. It saw another Justice Department investigation in 2005 over its acquisition of Macromedia’s suite of web development software, but the deal was ultimately allowed to close without a legal challenge.
- FTC scrutinized Meta’s acquisition of Within (BLOCKED)
- Google’s acquisition of Fitbit scrutinized (ALLOWED)
- DOJ is investigating Adobe’s acquisition of Figma (TBD)
Recent mergers in the technology industry have faced increased regulatory scrutiny. In 2020, the Federal Trade Commission (FTC) blocked Meta Platforms’ (formerly Facebook) acquisition of the virtual reality studio Within, citing concerns that the deal would “likely result in harm to competition.” Additionally, in 2021, the European Union delayed Google’s acquisition of fitness tracking company Fitbit by several months due to antitrust concerns. With the DOJ now preparing to block Adobe’s $20 billion acquisition of Figma, it’s clear that antitrust authorities are taking a more aggressive approach to review mergers and acquisitions in the tech industry.
Adobe’s acquisition of Figma faces regulatory hurdles, with the DOJ preparing to block the deal. The antitrust lawsuit could be filed as soon as next month. This is just the latest in the US Government’s crackdown and scrutiny of mergers and acquisitions by big tech. While this may be warranted, there are many other areas around reigning in big tech companies that the agencies could pursue. That will be explored in an upcoming blog post…