Shulou(Shulou.com)11/24 Report--

According to news in the morning of May 4, Beijing time, the British competition regulator has reportedly launched an investigation into Adobe's proposed $20 billion acquisition of design software company Figma, marking the latest review of technology industry acquisitions by the agency after blocking Microsoft's acquisition of Activision Blizzard, a developer of call of Duty games.

The UK Competition and Markets Authority is the first regulator to launch a formal investigation into the deal, but similar actions are expected from US and EU authorities.

The survey was launched on Wednesday local time. Nearly nine months ago, Adobe announced that it would acquire Figma, a San Francisco-based creative tool that helps designers collaborate remotely.

On the day the investigation was launched, Adobe said it expected "acquisitions to face a lengthy review process" in the "current stringent regulatory environment" and was in discussions with regulators in Brussels, the US and the UK.

Adobe said it looked forward to "continuing fruitful discussions with the US Department of Justice, the UK Competition and Market Authority and the European Commission on the positive business, market and economic impact of the deal as they review it".

Shantanu Naraye, chairman and chief executive of Adobe, said in announcing the acquisition that the merger would be "transformative". The purchase price of nearly $20 billion is twice the valuation of Figma in its most recent private equity round in 2021 and 10 times its valuation in 2019. The offer values the company at 50 times its annual recurrent income.

At the time, the acquisition was the most expensive for a private company, surpassing Facebook's $19 billion acquisition of WhatsApp in 2014.

The EU has not officially launched an investigation into the deal, but regulators are understood to be concerned that the deal will reduce a competitor in the market, leading to higher barriers to entry and less innovation, according to people familiar with the matter.

Meanwhile, Adobe and Figma have submitted information to the DoJ as the US government considers whether to launch a formal antitrust process, according to people familiar with the matter.

A week ago, the UK's Competition and Markets Authority blocked Microsoft's $75 billion (currently about 518.25 billion yuan) acquisition of Activision Blizzard to show its tough stance on acquisitions in the technology industry. consider these deals to pose a threat to market competition.

After the decision to block the deal was announced, the two companies and others in the technology industry said tough measures by the Competition and Markets Authority could stifle technology investment and innovation in the UK.

"Adobe's concern is that if you decide to take an anti-policy stance... as a government department, we should reduce mergers and acquisitions, and I think the natural result of this is that you will see a reduction in investment in start-ups because investors are currently getting returns through acquisitions rather than through public offerings," said one person close to Adobe.

Adobe is expected to argue that this is a vibrant market and that other companies can still thrive, emphasizing that Figma and Adobe are complementary.

The company will also argue that the two companies do not compete in the same market because internal surveys show that only 10 per cent of Photoshop users use Figma at the same time, two people familiar with the matter said.

The Competition and Markets Authority said it would decide whether to conduct an in-depth investigation into the deal by June 30.

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