The Adobe-Figma merger could affect the digital economy of Britain

Illustrators and designers in the UK might have limited design apps at their disposal if Adobe's plan to acquire Figma goes through.

The Competition and Markets Authority (CMA) has found that this acquisition is restricting some digital apps, websites and other products in the country, ultimately harming the digital economy of the country as businesses using these tools get affected. This comes at a time when Adobe has introduced new AI features to help graphic artists and businesses.

According to government reports, the contribution of the digital sector to the UK economy in 2020 was £142.3 billion which was 7.5 per cent of UK GVA, a 0.5 per cent rise from 2019.

Adobe, a recognised face in the global software industry specialises in photo editing, video editing, motion designing and other such interactive content tools while the 2012-founded Figma is a leader in screen designing and whiteboarding tools.

Screen designing software is crucial for making digital products and they are extensively used for making websites and applications. In September last year, Adobe announced that they are buying Figma for $20 billion.

Merger to reduce innovation

In the initial investigation, CMA found that screen design software developed and supplied by Adobe and Figma competes extensively in the app market and with this merger the competitive edge would be lost, limiting innovation in screen designing tools.

Figma already has a substantial share in the screen design software market while Adobe has levelled up with new investments. The competition between these two companies has been driving innovation and development of apps in this sector which would be gone when they merge.

A report by market research specialists IBISWorld shows that the app development industry in the UK is growing at a faster rate than the overall technology sector. As of 2022, Britain's app development industry was worth £19.4 billion with a 17.4 per cent increase in the market size.

Products analysed during the investigation

In a preliminary investigation, CMA checked the following software design tools provided by Adobe and Figma:

• Screen Design: This designing tool helps to make graphical layouts and user experience flows for websites and apps.
• Video editing: This is used for making video content by cutting, arranging and enhancing pre-shot video materials. Feature films and video clips are made through this.
• Raster Editing: This tool is used for composting multiple images, retouching and adjusting photos. It's a pixel-based image editing tool.
• Motion Design: This tool is essential for filmmakers as it is used for motion graphics and visual effects.

Many businesses and startups use the software provided by Figma and Adobe. With the merger their choices might get limited, coming in the way of their creative innovation.

The market could lose an able competitor

Adobe has the best tools for video, image and animation content and Figma is an emerging competitor that has the capacity to expand into Adobe's domain. This competition is essential for innovation in this sector which is in jeopardy in the wake of the merger, reveals CMA.

According to CMA, the acquisition could reduce the companies' urge to invest in software development in this area as the competition reduces. This could mean higher costs for the consumers using these apps while they lose out on better innovative options.

Speaking about the matter, Senior Mergers Director at CMS, Sorcha O'Carroll said that this would affect every industry as people and businesses rely on this tool.

"From holidays to movie streaming apps" any website and app selling things would be affected, said O'Carroll.

O'Carroll stressed the effect it can have on businesses as they lose better innovative tools at their disposal while paying higher costs for them.

CMA plans to go ahead with an in-depth investigation if the concerned companies don't address its concerns and put forward viable solutions.