Adobe / Figma Deal Could Harm UK Digital Design Sector, Competition and Markets Authority (CMA) Finds

Dear Lion Herald Reader,

The Competition and Markets Authority (CMA) has undertaken a comprehensive Phase 2 investigation into Adobe's proposed $20 billion acquisition of Figma, a leading player in the global product design software market. In a press release made public this Tuesday, the Competition and Markets Authority Provisionally Concludes that Deal Would Stifle Innovation

Adobe and Figma are major contenders in the realm of software for app and web designers. The proposed acquisition has raised concerns about potential anti-competitive effects on the digital design sector, where both companies play pivotal roles.

Margot Daly, chair of the independent group leading the investigation, stressed the significance of the digital design sector, stating, "The software this sector uses is pivotal to its success." She expressed concern that the proposed deal could diminish choice, innovation, and the development of new competitive products in the UK's digital design industry.

The investigation highlights concerns about potential repercussions on innovation and the development of new competitive products. Figma, currently a leader in the field, may lose its innovative edge, impacting the broader digital design sector.

The proposed deal could remove Figma as a credible threat to Adobe's flagship products, Photoshop and Illustrator. This, in turn, might reduce the incentive for Adobe to continue improving its offerings, potentially limiting choices and innovation for designers.

The UK digital design sector heavily relies on Figma's software, with approximately 80% of the professional product design market using their tools. Given the sector's contribution of nearly £60 billion to the national economy and its employment of over 850,000 highly skilled individuals, any disruption in the market could have profound economic and employment repercussions.

Within this expansive digital design ecosystem, the app development industry takes center stage. Market research specialists IBISWorld's statistics for 2022 reveal that the app development sector alone is valued at an impressive £19.4 billion. What's even more noteworthy is that this industry is outpacing the broader technology sector in growth, underlining its significance as a key driver of technological advancement in the UK.

As our lives become increasingly intertwined with technology and digital design, the growth of the app development industry reflects the evolving demands of consumers who rely on apps for everyday tasks, from ordering food to managing personal finances. This trend is not only reshaping the way we live but is also contributing significantly to the economic fabric of the nation

Today's findings are provisional. The CMA will initiate a consultation period on the findings and potential remedies. Interested parties are invited to submit responses by December 19, 2023. The final decision is expected by February 25, 2024. Remedies could include blocking the deal outright to mitigate identified competition concerns.

Fabrice Iranzi, Editor in Chief / Lion Herald

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