DoJ to block Adobe purchase of Figma on competition concerns
- Reference: 1677242114
- News link: https://www.theregister.co.uk/2023/02/24/doj_to_block_adobe_purchase/
- Source link:
According to loquacious sources that spoke to [1]Bloomberg on the condition of anonymity, the federal executive department of the US government is planning to block the proposed $20 billion sale – which would be the biggest ever buy of a private software biz.
The Creative Cloud maker met with the Justice Department this week, as is "common practice" before a suit is filed. The antitrust division is understood to be worried that should it proceed, folding Figma into Adobe would mean one less option for arty professionals.
[2]
The cash and stock acquisition was announced by Adobe in September, and a short [3]few months later the DoJ made a second request for information after contacting customers, competitors and Figma's private equity backers, who were presumably delighted at the $20 billion payday.
[4]
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For clarity, Figma absorbed more than $330 million in investment over seven funding rounds since it was founded in 2016.
Now the DoJ may demand concessions and Adobe may acquiesce to get the deal over the line rather than see it blocked. The software-maker's bid for Figma is also being [6]scrutinized by the European Union antitrust team to "examine the potential cross-border effects of the transaction." The deeper probe began mid-February.
[7]
Not to be left out, the UK's Competition and Markets Authority, which [8]blocked Meta's buy of Giphy last year , is also more [9]closely inspecting the agreement .
Adobe told us it expects the sale to stand up. A spokesperson said:
"The combination of Adobe and Figma will deliver significant value to consumers, advance new product categories and technologies and create new market opportunities, and we've been delighted to hear from customers across the design space who tell us they are excited about the benefits the transaction will unlock.
[10]
"Adobe and Figma focus on very different product areas today. Figma is a leader in interactive product design, focused on building a collaborative web platform. Adobe is a leader in the creative tools space, helping millions of users create amazing visual content. Together, our vision will help enable millions of consumers to transform their productivity with creativity."
[11]This app could block text-to-image AI models from ripping off artists
[12]Microsoft switches Edge's PDF reader to pay-to-play Adobe Acrobat
[13]Adobe will use your work to train its AI algorithms unless you opt out
[14]David Holz, founder of AI art generator Midjourney, on the future of imaging
It added: "We are engaged in constructive and cooperative discussions with regulators in the US, UK and EU among others. We continue to expect to close the transaction in 2023, in line with previously stated guidance."
We have asked the DoJ to comment.
The $20 billion purchase price for Figma equated to 50 times its forecast $400 million annualized recurring revenues in 2022. Even seen through the lens of a pandemic-led bonanza for tech business, this was an eye-wateringly expensive agreement. Some on Wall Street felt this was too high a price to pay for a relative upstart.
Figma is a collaboration design biz that built a browser-based app to manage file organization by showing projects and their files in a dedicated format. It's a vector-based graphic editor and prototyping tool with no installation, patching or updates required. It has four million users, yet only a small fraction are paying customers.
Users [15]feared Adobe would merge Figma with its XD software and hike prices. Figma co-founder Dylan Field said this wouldn't happen. Users made their upset obvious on the [16]community forum in the month after the sale was announced. ®
Get our [17]Tech Resources
[1] https://www.bloomberg.com/news/articles/2023-02-23/doj-preparing-suit-to-block-adobe-s-20-billion-deal-for-figma
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/applications&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y-jtLDMY5QaPabjWwD4fiAAAAM4&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://www.theregister.com/2022/11/18/adobe_figma_antitrust/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/applications&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y-jtLDMY5QaPabjWwD4fiAAAAM4&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/applications&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y-jtLDMY5QaPabjWwD4fiAAAAM4&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2023/02/15/adobes_20bn_buy_of_figma/
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/applications&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y-jtLDMY5QaPabjWwD4fiAAAAM4&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2022/10/18/meta_facebook_giphy_cma_/
[9] https://www.theregister.com/2022/12/16/adobe_fy_2022/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/applications&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y-jtLDMY5QaPabjWwD4fiAAAAM4&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2023/02/16/computer_scientists_develop_new_technique/
[12] https://www.theregister.com/2023/02/10/microsoft_edge_pdf_acrobat/
[13] https://www.theregister.com/2023/01/07/adobe_ai_training/
[14] https://www.theregister.com/2022/08/01/david_holz_midjourney/
[15] https://www.reddit.com/r/FigmaDesign/comments/xgwws2/just_a_reminder_of_what_the_founder_of_figma_once/
[16] https://forum.figma.com/t/adobe-near-deal-to-buy-online-design-startup-figma-please-no/29662/117
[17] https://whitepapers.theregister.com/
"The combination of Adobe and Figma will deliver significant value to consumers shareholders , advance new product categories and technologies captive audiences who we can squeeze for every last cent and create new market opportunities, and we've been delighted to hear from customers shareholders across the design space hedge funds who tell us they are excited about the benefits profits the transaction will unlock.
"Adobe and Figma focus on very different product areas today. Figma is a leader in interactive product design, focused on building a collaborative web platform. Adobe is a leader in the creative tools space holding users captive , helping millions of users create amazing visual content pay us eye-watering sums of money . Together, our vision will help enable millions of consumers dollars to transform their productivity with creativity buy our CEO a new yacht."
FTFY
"the federal executive department of the US government is planning to block the proposed $20 billion sale"
As Nelson Muntz of The Simpsons would say, "Ha Ha!".
Seriously though, the takeover of Figma by the huge Adobe Corporation was a highly anti-competitive act and, despite any claims to the contrary, Figma would have been completely subsumed into Adobe's perma-rental extortionware way of doing things to the detriment of existing Figma customers and wider consumer choice.
It is also good to actually see some government intervention at last to really promote competition and prevent a vast and ever increasing monopoly. It is also a very welcome F U to Adobe Corporation and not before time.
"Figma co-founder Dylan Field said this wouldn't happen"
Of course he would say that.
Now tell me just who is supposed to believe that the guy in charge of being bought out is going to say anything that will go contrary to him being bought out.
If it has been the Adobe CEO who said that it might have had a bit more clout . . . if anyone believes what that clown says about price hikes any more.