Together Figma and Adobe currently control 72% of the market for collaborative design and prototyping software.
Adobe’s $ 20 billion bid for cloud-based product design platform Figma is being hit with an antitrust complaint by E.U. regulators. An in-depth investigation by the European Commission came to the preliminary conclusion the deal could significantly reduce competition for interactive product design tools, vector editing tools and raster editing tools.
Figma is the “clear market leader” in interactive product design tools, the report found, and Adobe is “one of its largest” rivals. As a result, the “transaction is likely to create a dominant player by combining these market positions. … Furthermore, it will result in the discontinuation of Adobe’s own interactive product design tool, Adobe XD, as well as any potential successor product and thus constitute a so-called ‘reverse killer acquisition’.”
Impact already being seen. Adobe already started to phase out the availability of Adobe XD — a UX/ UI product design app similar to Figma — earlier this year, after announcing the deal. Investigators described Figma as a significant constraining influence over Adobe’s Illustrator and Photoshop editing tools, one that is likely to grow into a competitive force within the market.
Why we care. Monopolies are bad for everyone — even the company that has the monopoly. Competition fuels innovation and helps keep prices low. Businesses with monopolies have a high risk of being disrupted into near extinction when someone comes along with a better, faster and/or cheaper version.
Market share. Figma is the best-selling program in the collaborative design and prototyping category, according to 6Sense, with 33,185 customers and a 36.36% market share. The next two biggest sellers — Adobe Premiere Pro CC and Adobe XD — have a combined 32,900 users and 36% market share.
Possible response. Adobe and Figma can now respond to the objections in writing to offer concessions that address the Commission’s precise regulatory concerns and request a hearing. Both Adobe and Figma have reportedly not provided any remedies to address antitrust concerns raised by the investigation.
Other governments looking at the deal. The transaction would represent the most expensive sale of a privately owned software company in history and was flagged as a concern by 16 member states of the European Union in February. The proposed merger is also being inspected by the U.K.’s Competition and Markets Authority and the Department of Justice’s antitrust team.
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