Adobe dropped its $20 billion deal to buy Figma, and now we know why. In an interview Decoder Along with the podcast on the edge Editor-in-Chief Nilai Patel, Adobe General Counsel Dana Rao said the company could not prove to European regulators that the acquisition would not harm competition in the future — that is, neither Adobe nor Figma would ultimately do more than this. compete with each other.
Last month, both EU and UK regulators threw up big flags over the competition issue. The European Commission (EC) said the deal would “significantly reduce competition in global markets”, and a week later the Competition and Markets Authority (CMA) effectively blocked the deal, provisionally concluding that it would “harm innovation for software”. Used by the majority of UK digital designers.
Rao argued that the two companies are not currently competing. Adobe XD, Adobe’s closest product to a Figma competitor, was put on life support earlier this year. “We tried and failed with our tool,” Rao said. Adobe felt there was no “merger” between the two companies’ customers and, according to Rao, “there were no customer complaints about the competitor or the deal.” (Though designers using Figma disagree.)
There was a problem while competing on the road. Rao said regulators are “very focused” on the new principles of antitrust law, which “suggests that future competition is an important part of antitrust analysis.” Following the EC and CMA’s public statements, “We came together with Figma and said, ‘This is a good time to call it quits,'” says Rao, “when we look at the path forward and the time we’re talking and the duration of the conversations.”
Rao also discusses why Adobe didn’t fight like Microsoft did for its successful Activision Blizzard deal. Rao says he’s seen Adobe and Figma lobbying regulators and nothing happening, and they’ll have to decide whether to continue the fight — and both sides have decided it’s not worth it.
“The only way to solve the future competition problem is to not do something that someone might do,” says Rao. “That’s what they told us.”
Tune in for the full conversation Decoder With Rao in January.
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