Tag Archives: Mergers, Acquisitions & Takeovers

Adobe terminates its $20 billion Figma acquisition amid regulatory scrutiny

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Adobe is abandoning its planned $20 billion acquisition of Figma after the companies determined that there was no clear path to obtaining approval from UK and European Union regulators. The two sides have signed an agreement that fully resolves all aspects of the Adobe-Figma merger termination. Adobe will pay the collaborative design platform a previously agreed $1 billion termination fee after failing to overcome regulatory hurdles.

In November, the UK's Competition and Markets Authority (CMA) and the European Commission both cited concerns over the proposed acquisition's impact on competition. The CMA said in its provisional findings that that the merger would “eliminate competition between two main competitors.” The watchdog said it was considering either blocking the deal or requiring Adobe to sell Figma's core product, Figma Design, along with Adobe XD.

Earlier on Monday, Adobe claimed that it wouldn't offer the CMA any potential remedies. “It is clear that no realistic remedy would satisfy the concerns the CMA is maintaining,” an Adobe spokesperson told Bloomberg. “We believe that the best path forward is to continue our ongoing engagement with the CMA on the merits.”

Last month, the EC sent Adobe a Statement of Objections, in which it warned the company that its planned purchase of Figma "may reduce competition in the global markets for the supply of interactive product design software and of other creative design software," such as vector editing tools (i.e. Illustrator and its ilk) and Photoshop-style raster editing tools. The EC planned to make a final decision on the merger by February 5. Adobe had indicated it was willing to offer possible remedies to appease European regulators, but it appears that's no longer the case.

“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” Shantanu Narayen, Adobe chair and CEO, said in a statement. “While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalize on our massive market opportunity and mission to change the world through personalized digital experiences.”

Adobe also anticipated a potential lawsuit from the US Department of Justice in an attempt to block the deal Stateside. The company and Figma reportedly met with DOJ officials last week to try and secure approval for their merger. 

This article originally appeared on Engadget at https://www.engadget.com/adobe-walks-away-from-its-20-billion-figma-acquisition-amid-regulatory-scrutiny-132203336.html?src=rss

The UK’s competition regulator is reviewing Microsoft’s links to OpenAI

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The UK is considering an investigation into Microsoft's partnership with OpenAI to decide if it has resulted in an "acquisition of control" that's subject to antitrust law, the Competition and Markets Authority (CMA) wrote today. The regulator said it's considering "recent developments," no doubt referring to the Sam Altman CEO ouster drama in which Microsoft played a large role. 

"The CMA is now issuing an ITC to determine whether the Microsoft/OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, the potential impact on competition," it said in a news release. "The CMA will review whether the partnership has resulted in an acquisition of control — that is, where it results in one party having material influence, de facto control or more than 50% of the voting rights over another entity."

The regulator noted that the "close and multifaceted" partnership includes a multi-billion dollar investment by Microsoft, technology development cooperation and cloud services. It added that both firms have significant activities in financial and related markets, meaning their business dealings directly affect investors. It added that Microsoft was recently involved in developments related to OpenAI's governance.

When Sam Altman was fired by OpenAI's board, Microsoft stepped in to hire him, and a majority of OpenAI's staff threatened to bolt to Microsoft as well. OpenAI's board relented soon after and Altman returned as CEO. "Microsoft executives have since concluded that the current situation [with Altman back in charge] is the best possible outcome," according to a New Yorker expose on the drama. 

In a statement, Microsoft told Engadget that its relationship with OpenAI keeps both companies independent. "Since 2019, we’ve forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies," said Microsoft's vice-chairman and president, Brand Smith, in a statement. "The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI’s Board, which is very different from an acquisition such as Google’s purchase of DeepMind in the UK. We will work closely with the CMA to provide all the information it needs.”

The CMA is now seeking views on whether the partnership creates a relevant merger situation and how it impacts competition in the UK. If an investigation is launched, it would be the second one involving Microsoft in the last year, following the company's Activision Blizzard acquisition. The UK's probe had material effects on that merger, as Microsoft agreed to sell Activision Blizzard game streaming rights to Ubisoft to satisfy the CMA. 

This article originally appeared on Engadget at https://www.engadget.com/the-uks-competition-regulator-is-reviewing-microsofts-links-to-openai-115248453.html?src=rss

Adobe and Figma deal will ‘harm’ digital design sector, UK report suggests

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Back in June, the UK’s Competition and Markets Authority (CMA) began an in depth investigation into the planned $20 billion Adobe and Figma merger. The organization has released its findings and, well, they don’t paint a rosy picture. The probe tasked independent experts to determine whether or not the merger would reduce competition in the design space and the results suggest that, in fact, it’ll do just that.

It must be noted, however, that these are provisional findings. With that said, the CMA’s message is clear. The group states that the merger will “eliminate competition between two main competitors”, which is fairly obvious given Figma and Adobe’s standing in the industry. The findings also state that the deal would “reduce innovation” and the development of competing products. Finally, it’ll also “remove Figma as a threat” with regard to Adobe’s flagship software suites like Photoshop and Illustrator.

Figma is a giant player in the UK design space, accounting for 80 percent of the market. It’s also a major part of the country’s $19.4 billion app development sector. Without the merger, the CMA suggests, Figma would continue to develop or expand products that challenge Adobe. That goes away once the merger is in place because, you know, why challenge yourself?

The investigation concludes that the merger would eliminate competition between these two major players across multiple fields, including product design, image editing and illustration. These sectors account for $60 billion in annual revenue across the UK, adding up to nearly three percent of the national economy, with 850,000 skilled workers across the impacted industries. Another intent of the investigation was to suss out if the merger would damage the UK’s economy and it concluded it most likely will.

Again, these are provisional findings and the CMA has yet to consult the data to reach a final decision as to whether or not it’ll allow the sale to go through. It plans on taking some time to “listen to any further views,” likely referring to Adobe. To that end, Adobe argues that buying Figma would strengthen both companies, saying that the Creative Cloud apps would get some of Figma’s collaborative features and vice-versa. The company says it’s “deeply committed” to keeping Figma an independent entity and that it has no plans to change the pricing, including Figma’s free tier.

If the deal’s approved by the UK, which looks more unlikely with this report, Adobe still has some other battles to fight before this merger officially goes through. The acquisition still faces a US investigation, and the EU has issued its own dire warning.

This would be the larger-ever-purchase for Adobe in its storied 41-year history. Figma, on the other hand, is a relative newcomer to the market, springing forth in 2012.

This article originally appeared on Engadget at https://www.engadget.com/adobe-and-figma-deal-will-harm-digital-design-sector-uk-report-suggests-163954858.html?src=rss