UK regulator Warns of Potential Harm to Digital Design Sector in Adobe’s Bid to Acquire Figma

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In a significant development for the UK’s burgeoning digital design sector, the Competition and Markets Authority (CMA) has provisionally found that Adobe’s proposed acquisition of Figma, the world’s leading provider of product design software, could jeopardize innovation and competition in the industry. 

The CMA highlights concerns that the deal may harm the interests of the vast majority of UK digital designers who heavily rely on Figma’s software.

Impact on UK Businesses and Consumers

The CMA’s investigation reveals that “Approximately 80% of the professional product design market in the UK currently uses Figma’s software.” 

With app development alone contributing £19.4 billion to the UK economy and experiencing rapid growth, the potential impact on businesses and consumers is substantial. 

Apps developed in the UK are integral to everyday tasks such as food delivery, travel booking, and personal finance management.

Digital design, constituting 2.7% of the national economy and employing over 850,000 people, is a vital industry. The CMA’s provisional findings emphasize that the software used in this sector is crucial to its success, and the merger could adversely affect the UK’s digital design economy.

Provisional Findings and Concerns

During a detailed Phase 2 investigation, the independent group led by Margot Daly, chair of the CMA’s investigation, provisionally found that the deal would eliminate competition in key software markets: product design, image editing, and illustration. 

The CMA expresses concerns that the merger could lead to reduced choice, innovation, and the development of new competitive products.

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

The CMA’s provisional findings point to the elimination of competition between Adobe and Figma in crucial software markets.

Product Design Software: Figma’s Critical Role

Figma’s product design software is integral to how companies design apps and websites for millions of users. 

Used by well-known firms in sectors crucial to the UK digital economy, including Airbnb, Patagonia, and Vodafone, Figma plays a pivotal role in the success of digital enterprises. 

The CMA’s inquiry group provisionally concluded that the deal would remove the constraint Adobe exerts on Figma through its existing product design software, Adobe XD.

Image Editing and Illustration Software: Threat to Innovation

The inquiry group also found that Figma is a credible future competitor to Adobe in image editing and illustration software. 

Figma’s potential threat has driven product development in Adobe’s Photoshop and Illustrator applications. 

The CMA expresses concern that if the deal proceeds, it would eliminate Figma as a competitor, hampering innovation and product development by Adobe.

Next Steps and Timeline

The CMA’s findings are provisional, and the authority will now consult on them, including potential remedies to the identified competition concerns. 

The deadline for responses from interested parties is Tuesday, December 19, 2023. 

The inquiry group is expected to issue its final decision by February 25, 2024.

The potential remedies could include blocking the deal outright, and the CMA urges stakeholders to provide their views on the matter. 

The digital design sector, worth nearly £60 billion and employing over 866,000 people, has grown significantly in the UK, becoming the largest and fastest-growing area of design between 2010 and 2019. 

According to IBISWorld, the app development industry in the UK was worth £19.4 billion in 2022, growing faster than the wider technology sector overall. 

Product design, image editing, and illustration are crucial components of the digital design process.