EU to Investigate Adobe’s $20 Billion Figma Acquisition

European antitrust regulators are getting ready to initiate an official inquiry into the proposed acquisition of cloud-based designer platform Figma by software giant Adobe which is valued at $20 billion. The investigation is expected to commence later in the year, according to the Financial Times.

According to the report, the investigation over anti-competition concerns could go on for months which might possibly stop the deal.

This comes after the UK launched an initial probe into the deal last month, after blocking a tech deal between Microsoft and Activision Blizzard. In February, Brussels regulators said that even though the market in Europe is very less, it still needs to be regulated according to EU’s justification, to which the EU agreed saying that it might threaten competition significantly.

The US Department of Justice is also preparing to file a lawsuit against the deal citing the same reasons. It blocked the NVIDIA-Arm deal in February.

“Adobe is trying to buy a credible competitor,” a person with direct knowledge of the matter told FT. The deal represents that Adobe is simply trying to eliminate a smaller rival.

Earlier this year, Adobe expressed its anticipation for extended evaluations of the acquisition as global scrutiny on technology transactions intensified. CEO Shantanu Narayen cautioned against impeding the merger, emphasizing that regulatory intervention would result in reduced investment in start-ups.

Adobe is ready to put up the claim that both the companies operate in a different market. Internal research found that only there is a 10 percent overlap between Photoshop and Figma users. This means that the company still has a chance to avoid an in-depth probe if it provides a compelling argument.

According to the European Commission, the acquisition has not yet been officially reported to them. They clarified that if the transaction qualifies as a concentration and has relevance to the European Union, it is the responsibility of the companies involved to notify the Commission. 

Adobe stated that it is currently engaged in initial dialogues with regulators in the EU, UK, and US, while expressing confidence in the validity of the case and expressing eagerness to successfully finalise the transaction.