The European Commission opens a full-scale investigation into Adobe's $20B Figma acquisition, after a preliminary review found the deal may reduce competition
> concerns that it may reduce competition — This kind of statement always takes me aback. I mean, it couldn't be more obvious that whenever a big dominant company buys an up-and-coming competitor operating in the same space that it's going to reduce competition. … X: @eu_competition : #EUMergerControl 🇪🇺 Commission opens in-depth investigation into the proposed acquisition of Figma by Adobe 🔍 More information 👇 https://europa.eu/!3VMwFJ [image] Lina Rusch / @linarusch : Judging by the illustration, @EU_Competition doesn't have any idea what #Figma is. (Or that it's 2023.) #closeenough
Context & Ripple Effects
The Commission had already taken the unusual step of reviewing the transaction despite its revenue threshold after regulators requested scrutiny. The formal probe follows reports that Adobe would not offer remedies and a parallel UK review raising concerns about innovation and costs.
First-order effects
- Adobe and Figma face a longer, more demanding EU merger review, with the transaction's competitive impact now subject to a full investigation.
- The Commission can test whether combining Adobe's established design tools with Figma would weaken competition; the deal is no longer moving through a preliminary review alone.
Second-order effects
- Adobe's decision not to offer remedies, reported ahead of the probe, leaves the companies with fewer obvious routes to resolve regulators' concerns quickly.
- The EU action reinforces the pressure created by the UK's parallel competition review, requiring Adobe and Figma to manage overlapping scrutiny of the same proposed combination.
Third-order effects
- If enforcers sustain their concerns, acquisitions of fast-growing design-software challengers by incumbent platforms may face a higher burden to demonstrate that competition and innovation will remain intact.
- The case points to more coordinated cross-border scrutiny of digital-tool consolidation, though the eventual remedies or outcome will determine how durable that constraint becomes.
The trend: Regulators are applying deeper merger scrutiny to incumbent software companies' purchases of emerging category competitors.