UK regulator warns Adobe's $20bn Figma deal could 'stifle' innovation

The deal was first announced by the US firms in September. But on Friday, the Competition and Markets Authority said that an initial investigation had identified concerns over the supply of screen design software.

In particular, it said that competition between Figma and Adobe had driven investment in updating and developing the software, and “this important rivalry could be lost if the deal goes ahead”.

It has now given the firms five working days to submit legally binding proposals that address its concerns, otherwise it will launch in-depth phase 2 review.

Sorcha O’Carroll, senior mergers director at the CMA, said: “Products sold by Adobe and Figma are critical for the development of digital services that people and businesses use on a daily basis.

“We’re worried this deal could stifle innovation and lead to higher costs for companies that rely on Figma and Adobe’s digital tools, as they cease to provide customers with new and better products.”

In a statement, Adobe said: “We remain confident in the merits of the case, as Figma’s product design is an adjacency to Adobe’s core creative products and Adobe has no meaningful plans to compete in the product design space.

“We look forward to establishing these facts in the next phase of the process and successfully completing the transaction.”

Figma told Reuters: “We believe strongly that our proposed combination with Adobe will not result in any reduction of competition in our respective markets.”