Samuel Stolton
Mon, July 24, 2023
(Bloomberg) -- Adobe Inc.’s $20 billion takeover of design startup Figma Inc. is on course for an in-depth investigation from European Union merger regulators, adding to growing global scrutiny of the deal dubbed by Adobe’s boss as “transformational.”
Adobe won’t propose remedies to fix potential competition concerns, meaning an in-depth investigation from the EU’s competition branch is forthcoming, according to two people familiar with the matter.
So-called phase 2 probes add about 90 working days to deal reviews. Regulators typically demand remedies to solve competition concerns but sometimes also decide to give their unconditional approval if initial concerns are shown to be unfounded.
The purchase is a massive bet that more creative work will be done by small businesses and everyday users on the web, a market that Figma has rapidly seized. While Adobe has introduced less-expensive, streamlined products for that audience, most of its offerings are still heavyweight programs aimed at specialists.
A spokesperson for Adobe said that the company continues “to have productive conversations with regulatory bodies worldwide.” Figma didn’t immediately respond to a request for comment.
Adobe, the longtime top seller of software for creative professionals, also faces scrutiny further afield, with the US Justice Department preparing an antitrust lawsuit seeking to block the merger, according to people familiar with the matter.
The UK antitrust watchdog already announced on July 13 that it will kick-off a longer review after Adobe didn’t offer remedies to address antitrust issues. The UK’s Competition and Markets Authority will issue its findings by Dec. 27.
The deal comes as Adobe adds generative AI features throughout its products. The company last month unveiled enterprise-level subscriptions for the new tools, which include legal assurance against copyright claims. As part of the forecast, Adobe raised the revenue projection for its Digital Media unit, which includes Photoshop and other creative software.
--With assistance from Katharine Gemmell.
Bloomberg Businessweek
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