Adobe has axed its $20bn proposal to acquire the design software company Figma after facing extensive regulatory intervention in the UK and EU.
The deal was heavily scrutinised by the Competition and Markets Authority (CMA) in the UK, which launched an in-depth probe into the merger in July.
The CMA said last month that following an investigation it intended to block the deal. The regulator cited concerns that Figma and Adobe’s dominance in the product design market meant a merger would be harmful to competition and consumer service.
After being offered the chance to present evidence to assure the CMA’s concerns would be addressed, Adobe concluded that there was “no clear path to receive necessary regulatory approvals”.
Adobe and Figma on Monday published a joint statement announcing the deal was off.
“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” said Adobe CEO Shantanu Narayen.
Adobe will pay Figma $1bn as a termination fee.
An executive from the software giant told The Times last week that the process of competition regulation was unreasonably slow.
“The process should not take 15 months to get to this stage,” said David Wadhwani, president of Adobe’s Digital Media business.
“I think we can all agree that expediting these kinds of decisions is important for innovation and for doing the right thing by consumers and customers to make these decisions faster and move more quickly.”
The role of UK regulators in monitoring Big Tech deals overseas has been the subject of significant debate this year.
The CMA has intervened on major deals involving the likes of Microsoft, Amazon, Google and Meta, leading some – including Microsoft president Brad Smith – to argue that the UK is hostile to international business.
However, Alex Haffner, competition partner at UK law firm Fladgate, said today’s announcement shouldn’t be seen as an “anti-Big Tech stance from the CMA”.
Haffner added that “on this occasion, it is clear that it was both the CMA and the European Commission who were expecting significant concessions in the form of a structural divestment in order to clear the deal and that was not a price Adobe could pay”.
The Digital Markets Bill, a piece of legislation defining the process of competition intervention of tech deals from regulators, is on its way to becoming law and has fuelled debate over how strict the UK should be on keeping Big Tech in check.