Alejandro Arrieche
The Department of Justice (DOJ) of the United States is reportedly assembling a lawsuit against the creative software developer Adobe Systems to block its $20 billion acquisition of the collaborative website and app design tool Figma.
According to sources familiar with the proceedings who spoke to Bloomberg, the DOJ has already met with Adobe officials to discuss their concerns – a common step taken before antitrust lawsuits. It is the department’s concern that the spectrum of software choices for professional designers could be severely reduced by the takeover.
What is Figma and Why is Adobe Acquiring it?
In regards to the rumors, an Adobe spokesperson told CNBC that the company believes the deal “will deliver significant value to consumers”. In addition, the company representative commented that the two companies “focus on very different product areas today” while mentioning that the tech firm is already engaged in “constructive and cooperative discussions” with regulators in multiple corners of the world.
Back in September last year when Adobe announced the acquisition, the company informed investors that it expected to close the deal at some point this year. The California-based software developer said that Figma’s total addressable market was $16.5 billion as of 2022 and claim that the takeover would immediately add $400 million in annual recurring revenues to the business.
Figma is a collaborative product design app used by professionals to more easily build the user-facing interface of websites and applications. The software enables large product teams to meet, make comments, and real-time modifications to the end product to streamline the process of turning prototypes into finished designs.
In an interview with The Verge, Dylan Field, the Chief Executive Officer of Sigma, said that, if it wasn’t for the acquisition, the company may be well on its way to becoming a publicly-traded entity as its finances and the appeal of its value proposition are enticing enough to attract investors in the tech space.
Biden’s Antitrust Officials Have a History of Opposing Big Tech Acquisitions
The Biden administration has adopted a relatively hostile stand against large acquisitions made by big tech corporations. Thus far, the Federal Trade Commission (FTC) has spearheaded most of these efforts by taking on Meta Platforms (META) for its acquisition of the virtual-reality fitness app Within.
The FTC claimed that Meta’s actions reflected its intention of building a “virtual reality empire” as the company would own the hardware needed to access these apps, the marketplace where they are made available to the public, and the apps themselves. However, the FTC’s claim suffered a setback as Judge Edward Davila gave Meta the green light to complete the acquisition.
The agency has sued Microsoft (MSFT) to block its $68.7 acquisition of Activision-Blizzard acquisition along with multiple other regulators such as the Competition and Markets Authority (CMA) of the United Kingdom that have also expressed their concerns about the impact that the merger would have on the market’s structure.
In addition, the DOJ itself has also brought forward cases against big tech companies this year including a lawsuit against Alphabet (GOOG) for its monopoly on digital advertising. According to the department, the company has used a series of acquisitions to manipulate the auction process used to sell adverts via its AdWords platform and has unfairly quashed its competition by buying any business that threatens its long-standing dominance in the online marketing realm.
“In pursuit of outsized profits, Google has caused great harm to online publishers and advertisers and American consumers. This lawsuit marks an important milestone in the Department’s efforts to hold big technology companies accountable for violations of the antitrust laws”, a statement from the DOJ regarding the proceeding reads.
A separate lawsuit against the search giant was filed by the DOJ in 2020 for its practices to monopolize the search advertising market. The legal procedures for this cause are expected to commence in September 2023.
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This article was written for Business 2 Community by Alejandro Arrieche.
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