30 June 2023
If you are covering the news that the CMA may refer Adobe’s acquisition of Figma to a deeper investigation, please find below a comment from Ben Barringer, equity research analyst at Quilter Cheviot:
“The news that the CMA wants to refer this deal to a deeper probe should not come as a surprise. You just have to look at their actions over the past year, and in particular with the Microsoft and Activision deal to see that the CMA is carving itself out a role as a regulator with the highest standards of consumer protection anywhere in the world. As the tech industry has matured, regulators are responding by being a lot pickier with the deals they will approve. If the Facebook purchase of Instagram happened today then it likely would have been blocked, and it is this environment that the likes of Adobe may find themselves struggling to navigate.
“This deal, as important as it is for Adobe, was always going to struggle to meet the high bar set by the CMA. Strategically it makes sense that they wish to buy Figma as collaboration has become so critical in the post-Covid world, and where remote working has become the norm. It will be difficult to satisfy the CMA and as such structural remedies will be required to get it through. This may mean that the deal no longer becomes as attractive for Adobe, but we will need to see their response first to see what avenues they believe they have. For investors in Adobe, this will be a cloud hanging over the company for a considerable period of time and if they were not to end up buying Figma it would leave the company deficient in this fast growing product area.”
