US Justice Department requests more info from Adobe on $20b Figma buy
Antitrust scrutiny into one of the biggest deals for a private software developer
The Department of Justice is closely inspecting Adobe's eye-wateringly expensive purchase of web-first collaboration design startup Figma after making a second request for information from the pair.
The $20 billion cash and stock acquisition was announced in September and sent some corners of the creative industry into meltdown over concerns Adobe will merge the new plaything with its XD software and up the price list.
According to some reports, the DoJ has spent time contacting customers, competitors, and Figma's venture capital backers to collate views on the sale with a possible antitrust investigation in the offing.
In a filing with the Securities and Exchange Commission (SEC) this week, Adobe said it and Figma filed a notification and report form in relation to the Hart-Scott-Rodino Antitrust Improvements (HSR) Act with the DoJ and Federal Trade Commission on October 14. This is paperwork that must be filed and approved before mergers, acquisitions or transfers of security and assets can be completed.
"On November 14, 2022, the parties each received a Request for Additional Information and Documentary Material (a 'second request') from the DoJ with respect to the transaction," Adobe disclosed in the SEC filing.
As such, the sale is not allowed to be completed until 30 days after Adobe and Figma have responded with additional data or answers to questions. The filing states: "The HSR waiting period will expire 30 days after Adobe and Figma each certify their substantial compliance with the second request, unless earlier terminated by the DOJ or extended by agreement of the parties or court order."
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If the DoJ and FTC aren't satisfied with the responses, they could take action under antitrust laws including seeking divestitures of substantial assets of the two companies, asking them to license assets or terminate the agreement.
Regulatory authorities in other regions may also decide to take a keener look at the $20 billion sale, which would be among the largest takeovers of a private software developer on record.
Figma is a browser-based app built to manage file organization by showing projects and their files in a dedicated format. There's no installation, no patching, and no updates. It is a vector-based graphic editor and prototyping tool. The company launched in 2016 and has received $332.9 million funding to date.
It has an estimated 4 million users, some of which are drawn by its freemium pricing and relatively lightweight interface. In contrast, Adobe has more than 9,900 companies using XD, its rival software.
There are fears among some users that Adobe will combine the two and raise subscription costs, something that Figma co-founder Dylan Field said isn't happening, and that the platform will remain free for education users.
Should the deal not go ahead, Adobe will potentially have to pay Figma a $1 billion termination fee, under certain conditions. ®