Adobe’s $20 billion acquisition of Figma is in jeopardy as antitrust lawsuit looms

gist

• Adobe’s largest acquisition to date. Experts agree that the $20 billion deal to acquire Figma will have a big impact on the design software market.
• DOJ litigation. The US Department of Justice (DOJ) is said to be preparing an antitrust lawsuit against Adobe to block its $20 billion acquisition of Figma.
• Adobe is confident. Adobe’s CEO is well prepared to take on the challenge and optimistic that his company will win.

The creative community was stunned when Adobe announced last September that it had acquired Figma for $20 billion. Six months later, rumors of an imminent antitrust lawsuit have cast doubt on whether the deal is closed.

The Justice Department is said to be preparing an antitrust lawsuit that could be filed as early as this week to block Adobe’s acquisition of the digital design startup, according to insiders cited by Bloomberg. I’m here. The DOJ is reportedly concerned that Adobe’s acquisition of Figma could lead to less competition in the design software market, especially for small businesses and start-ups.

However, Adobe officials say the discovery phase of the DOJ’s second request has already been completed and is ready for the next step – approval or challenge.

Adobe CEO stresses support for Figma acquisition in antitrust report

In a recent earnings call, Shantanu Narayen, CEO of Adobe, said in a recent report that the potential combination of Figma and Adobe continues to be well-supported by clients, industry experts, and partners. emphasized that The company is “excited by the opportunity to evolve product design, accelerate collaborative creativity on the web, and redefine the future of creativity and productivity,” he added.

As for the current regulatory process, Narayan said, “We are preparing for the consolidation.”

“From the beginning, we have been well prepared for all potential scenarios while remaining realistic about the regulatory environment,” says Narayen. “Adobe is confident in the underlying facts of the lawsuit and believes the transaction is expected to close by the end of 2023 based on the timing of the current process.”

The creative community predicts the impact of the Figma acquisition

If the sale goes according to plan, it will be Adobe’s largest acquisition to date, and most experts agree the collaboration will have a significant impact on the design software market. While Adobe awaits his DOJ decision with confidence, the creative community ponders what this outcome means for the future of design.

A potential antitrust lawsuit against Adobe is a sign of the times, according to Khamani Harrison, CEO of The Key Bookstore.

“As the technology industry continues to grow, the DOJ is taking a more active role in regulating the industry,” Harrison said. It is important to remember that DOJ is not necessarily against acquisitions per se, but to ensure that acquisitions do not create a monopoly or anti-competitive environment. “

From a customer perspective, Adobe’s acquisition of Figma could be beneficial, he added. “Adobe is the leader in digital experience software and Figma is the leader in design collaboration,” Harrison said. “By combining the two, we are creating a powerful platform for customers such as UX designers, web designers, marketers, CX and DX professionals. less, potentially creating a more seamless experience for customers.”

Luke Lee, designer and founder of London-based Ever Wallpaper, has mixed feelings.

“On the one hand, as a business owner who uses both Adobe and Figma, I can see the potential benefits of integrating Figma’s design capabilities with Adobe’s suite of creative tools. It streamlines it and makes it easier to collaborate with teams and clients,” says Lee. “However, we are also concerned about antitrust lawsuits and their potential impact on the market. It is important to have competition and choice in the industry to ensure innovation and fair pricing. Ultimately, I think the success of the acquisition will hinge on how well Adobe integrates Figma’s capabilities and whether it benefits customers in the long term.”

Related article: What impact will Adobe’s $20 billion acquisition of Figma have on UX designers?

How does figma work under Adobe?

Chinmay Daflapurkar, digital marketing professional at Arista Systems Pvt Ltd, said the DOJ’s potential Adobe litigation could be influenced by the recent wave of antitrust investigations and enforcements against major technology companies in the US and abroad. said to be sexual.

“We look forward to seeing how the acquisition plays out in the coming months. I’m curious to see how it handles,” he said. “I am also excited to see the new features and capabilities they bring to their users and how they shape the future of design.”

He is also interested in how the acquisition will affect Figma’s culture and autonomy.

“Figma has a loyal and passionate fan base that respects its vision, mission and values,” said Daflapurkar. We hope that Figma can maintain its identity and spirit and continue to innovate and grow within the Adobe family. “

ParcelPanel co-founder Liam Liu is concerned that Figma will be dismantled for parts.

“I’m not looking forward to this acquisition, so I hope the DOJ will take this case and win,” Liu said. “Like Macromedia, I fear that Adobe will scrap Figma piece by piece and eliminate the rest. Additionally, if the deal includes the integration of Figma and Adobe Creative Cloud, the price will be significantly higher.” , negatively impacting the free subscription tier.”

However, he admits that his fears may be unfounded.

“Adobe promised not to interfere with Figma’s free plan or undermine its simplicity,” says Liu. Also, it would be unwise for Adobe to exploit the goodwill of his Figma users. Because its direct competitor, Adobe XD, offers little competition. “

In September, when news of the acquisition first surfaced, Figma CEO Dylan Field assured Figma would continue to operate independently.

“Adobe is deeply committed to maintaining Figma’s autonomous operations, and I will continue to serve as CEO and report to[Adobe’s]David Wadhwani, who I have known for several years. We have a strong relationship of mutual respect and I am very much looking forward to working with him on how we can continue to grow Figma’s business,” Field said in a statement. The entire team reports to me that we plan to continue operating Figma as we have always done, doing what we believe is best for our community, our culture and our business.”

Related article: Adobe announces generative AI technology and key partnerships at 2023 Summit

DOJ Takes on Big Tech: A Pile of Antitrust Violations

Adobe is not alone in this type of potential government intervention in business. The Biden administration has taken significant steps to strengthen antitrust enforcement. In January, the Department of Justice and the Attorneys General of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia accused Google of monopolizing digital advertising technology, accusing Google of illegally controlling competitors’ platforms. It maintained its dominance in the market by using anticompetitive tactics that eliminated access to ad exchanges and manipulating the ad auction process to prioritize its own ad buying tools.

“Today’s complaint alleges that Google used anticompetitive, exclusionary, and unlawful conduct to eliminate or substantially mitigate threats to its control over digital advertising technology,” said Attorney General Merrick B. Garland said in a statement. “Regardless of industry or business, the DOJ will vigorously enforce antitrust laws to protect consumers, protect competition, and ensure economic fairness and opportunity for all.”

The lawsuit is the latest in a series of antitrust actions taken by the US government against large tech companies, following similar lawsuits filed against Facebook and Amazon. In March, DOJ filed a civil antitrust lawsuit to block JetBlue’s proposed $3.8 billion takeover of rival Spirit Airlines. Also this month, the Federal Trade Commission filed an antitrust complaint against the proposed merger between Microsoft Corp. and Activision Blizzard.

Earlier this month, Deputy Attorney General for the Department of Justice’s Antitrust Division, Jonathan Cantor, spoke about how the Justice Department determined there was an antitrust issue at a conference in Belgium.

“The question we have to answer is whether the company engages in discriminatory trading policies that improperly exclude competitors from the market,” Kanter said. “Such exclusionary discrimination can take many harmful forms in platform industries that share the common consequence of distortions in competitive processes.”

Adobe plans Figma integration in 2023

Despite the distractions, Adobe’s CEO is going full steam ahead with plans to integrate Figma later this year.

“Adobe is confident in the underlying facts of this lawsuit,” Narayan said. “And based on the timing of the current process, we believe this transaction is on track to close by the end of 2023.”

As a business owner providing web design and complex user interface (UI) design to clients using both Figma and Adobe, Eddie Deva, Founder and Creative Director of PixelBull LLC, is excited about the acquisition. But I am excited and believe it will have a positive impact. about the industry and the clients he serves.

Adobe has a strong reputation for providing cutting-edge design and editing software, and Figma is the leading collaborative design platform used by many designers and creatives around the world, so it combines the strengths of these two companies. Together, they enable further innovation and creativity in the digital sphere. We design the space,” Deva said. “If you want to design a very complex and creative project to take it a step further, you need to use Adobe alongside Figma.It’s great to see them working together. becomes easier.”