DOJ targets $20 billion deal from Adobe

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In mid-September, Adobe announced its deal for Figma, a collaboration tool with fierce loyalty among designers, who were quick to voice their concerns. Chief among these issues is that Adobe will raise prices for upstart competitor Figma while innovation slows. For its part, Adobe has indicated that it does not plan to increase prices and will continue to offer a so-called freemium version of Figma.

The exact timing of the probe is unclear. The companies announced their deal on Sept. 15 and are still within the legally mandated review period, according to three of the people. The DOJ has the discretion to open a longer optional review period if it is concerned that an agreement harms competition.

Although Figma doesn’t compete with major Adobe products like Photoshop and Indesign, it quickly overtook Adobe’s own collaboration software, Adobe XD, after the company launched in 2012.

Figma has far surpassed Adobe in collaboration tools for designers, said Tadhg McCarthy, design director at digital product consultancy Elsewhen. “It seems pretty clear to me that [Adobe] tries to remove a player from the board. I expect less competition and less innovation. That’s why everyone is worried,” he said.

Along with the merger review, the DOJ should also investigate past acquisitions of Adobe, said two of the people, who are not authorized to speak publicly about a confidential matter.

Adobe, 40, is a Silicon Valley stalwart and big buyer, having bought most of its flagship products such as Photoshop. The DOJ’s antitrust division and its sister agency, the Federal Trade Commission, have taken an aggressive stance against the deals, scrutinizing both current and past acquisitions by the tech giants. Facebook’s purchases of Instagram and WhatsApp in 2012 and 2014, as well as Google’s myriad deals in the digital advertising industry, are at the heart of ongoing corporate litigation and investigations.

Other well-known Adobe acquisitions include the 1994 purchase of Aldus, which it used to develop its widely used InDesign software, its 2005 purchase of Macromedia, developer of the now defunct Flash design software , and a deal in 2018 for marketing software company Marketo.

For Pablo Ruiz-Múzquiz, who runs Figma’s open-source competitor PenPot, the deal came as a shock to the design community, since Figma had long touted itself as “the anti-Adobe.”

While the market is still in its infancy, if the Figma deal goes through, Adobe will face little competition over the next few years, Múzquiz said. “It’s a tough market to break into. These tools are very expensive and time-consuming to develop,” he said. Múzquiz pointed to recent layoffs at fellow competitor Sketch as further evidence of a lack of competition.

And while PenPot saw a “massive increase” in signups in the days after the deal was announced, the company’s tens of thousands of users pale in comparison to Figma, Múzquiz said. “I am on [the companies] will show us the competition,” but the huge differences in scale don’t fully support that argument, he said. Still, he expects the return of the deal to continue to drive PenPot’s growth.

“Adobe and Figma today are not meaningful competitors,” said Adobe General Counsel Dana Rao. “Figma is a market leader in product design, focused on building a collaborative web platform. Adobe is a leader in creative tools,” Rao said. “[W]We were delighted to hear from clients in the design space telling us that they were excited about the benefits the deal will unlock. We are engaged in productive discussions with regulators to ensure they have a full understanding of the combination and we expect to close the transaction in 2023.”

A Figma spokesperson pointed to CEO and Founder Dylan Field’s statement when announcing the deal, highlighting the company’s ability to grow under Adobe. The Justice Department declined to comment.

The thorough review of the acquisition was widely expected, and Field sought to stifle opposition to the deal in public statements, saying he did not view the two companies as competitors and that the scale and scope Adobe sales offered the perfect place to grow his business.

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