CMA says Adobe/Figma deal could harm UK digital design sector

November 28, 2023

Last week, the European Commission informed Adobe of its preliminary view that its proposed acquisition of Figma may reduce competition in the global markets for the supply of interactive product design software and of other creative design software. The CMA has now provisionally found that Adobe’s deal to buy Figma would be likely to harm innovation for software used by the vast majority of UK digital designers.

Figma is currently the world’s leading provider of product design software which is used by designers, creative agencies and businesses to help deliver leading websites and apps that are used by millions of people. Adobe is one of Figma’s main competitors in product design software, and currently competes using its Adobe XD product. Adobe is also the largest supplier of image editing and illustration software, well known for its Photoshop and Illustrator applications.

Impact on UK businesses and consumers

More UK businesses than ever rely on design software to help present their products and services via websites and apps, with the CMA’s investigation finding that around 80% of their professional product design market use Figma’s software. It says that app development in the UK alone is worth £19.4 billion and grew faster than any other part of the tech sector last year.

Digital design is an important and growing industry in the UK and relies heavily on image editing and illustration software provided by Adobe’s Photoshop and Illustrator tools.

Provisional findings

The CMA has provisionally found the deal will eliminate competition between these two key competitors in the following three software markets: product design; image editing; and illustration.

Product design software

Figma’s products play a critical part in how companies design apps and websites to appear on people’s phones and tablets. Figma’s software is used by well-known firms in sectors, which are important to the success of the UK digital economy, including short-stay holidays (Airbnb), fashion (Patagonia) and telecommunications (Vodafone).

The inquiry group has provisionally concluded that the deal would remove the constraint Adobe exerts on Figma through its existing product design software, Adobe XD. The inquiry group also provisionally concluded that Adobe abandoned development of new product design software which would have competed even more closely with Figma and, given the timing of the decision, did this as a consequence of the merger. This supports the CMA’s concern that this proposed deal would likely reduce innovation and the development of competitive new products.

Image editing and illustration software

The inquiry group has also provisionally found that Figma is a credible future competitor to Adobe in image editing and illustration software – and that the threat posed by Figma has driven product development in Adobe’s Photoshop and Illustrator applications, including new web versions. The inquiry group considers that if the deal went ahead, it would eliminate Figma as a competitor which would otherwise have continued to seek to develop its capabilities in image editing and illustration, thereby fuelling innovation and product development by Adobe. This competition would be lost because of the transaction, harming designers and creative agencies who might have used these new tools or relied on future updates.

The findings are provisional, and the CMA will now consult on them, alongside potential remedies to the competition concerns identified, which could include blocking the deal outright. The consultation ends on 19 December 2023. The final decision will be issued on 25 February 2024.