Adobe’s $20 billion acquisition of Figma is facing regulatory scrutiny, prompting questions about the lengthy approval process. David Wadhwani, President of Adobe’s digital media business, expressed concerns about the time-consuming nature of regulatory reviews during the WSJ Tech live event. The acquisition, announced 13 months ago, has been under investigation by the U.S. Department of Justice and regulatory bodies in the U.K. and E.U.
Microsoft recently faced a similar situation with its $69 billion purchase of Activision Blizzard, taking almost 21 months to secure approval. Adobe expects to hear back from regulators in the next few months, aiming to close the Figma deal in 2023. Wadhwani emphasized the importance of a more efficient regulatory process to enable quick innovation. The U.K.’s Competition and Markets Authority has set a statutory deadline for the inquiry stage by December 31, 2023.
Adobe has agreed to pay Figma $1 billion if regulators reject the deal or if it isn’t completed by mid-March 2024. Wadhwani highlighted the growth opportunities in creative expression, documents, and marketing for Adobe, positioning Figma as the fourth pillar. Since the announcement, Adobe has focused on generative artificial intelligence tools that respond to human input, indicating potential for Figma in AI-driven design creation.
However, Wadhwani clarified that they are not a combined company yet. The Competition and Markets Authority is assessing whether the deal would substantially reduce competition. Despite Adobe’s X.D. screen-design tool competing with Figma, Adobe contends that X.D., even in “maintenance mode,” cannot be considered a “material” competitor to Figma in the innovative and dynamic market. The prolonged regulatory process raises questions about its impact on companies’ ability to swiftly execute strategic acquisitions and innovations.
