DOJ Reportedly Planning To Sue Adobe Over Figma Acquisition

Topline

The Justice Department is planning to file an antitrust lawsuit against Adobe seeking to block its $20 billion acquisition of digital design startup Figma, Bloomberg reported Thursday, in the Biden Administration’s latest action against alleged Big Tech monopolies.

Key Facts

The suit could be filed as early as next month, according to Bloomberg, citing a source with knowledge of the case.

Adobe reached the $20 billion agreement to buy Figma on September 15—a deal most Wall Street analysts felt significantly overvalued the company, which makes website design software and lets multiple users collaborate on designs through the cloud, sending Adobe’s stock tumbling more than 25% by the end of September.

Its stock fell more than 5% at times in after-hours trading Thursday after Bloomberg’s story broke.

Adobe did not immediately respond to a request for comment from Forbes, but it has denied accusations in the past that the deal would create a monopoly.

Adobe has argued Figma’s focus on website and app designs does not directly compete with its marquee products like Photoshop, while its own web design brand—XD—is not a significant force in the market.

Prosecutors met with Adobe’s team Wednesday, according to Bloomberg—which is commonplace before antitrust lawsuits.

What To Watch For

Adobe still hopes to close the deal to buy Figma this year, a company spokesperson told Bloomberg.

Key Background

President Joe Biden’s administration has made several moves to ramp up antitrust enforcement, especially involving large tech companies. The DOJ and eight states filed suit against Google last month, claiming it embarked on a series of acquisitions that “corrupted legitimate competition” by absorbing online advertising competitors. Google responded by blasting the DOJ for “doubling down on a flawed argument that would slow innovation,” and it has argued the online ad space business remains “highly competitive.” The Federal Trade Commission in 2021 filed a lawsuit against Meta, accusing it of an “anticompetitive spending spree” by buying companies like Instagram and WhatsApp. Meta has denied the monopoly allegations and blasted the suit as “meritless.” The FTC separately sued Meta last year to block its acquisition of virtual reality fitness startup Within. The administration is also attempting to block an alliance between JetBlue and American Airlines, and a judge last year nixed a merger between Simon & Schuster and Penguin Random House following a DOJ suit.

Tangent

Adobe’s $20 billion deal to acquire Figma will make the startup’s cofounders—Dylan Field and Evan Wallace—billionaires, with the tech giant also offering Field a package of more than $1 billion to continue running Figma for at least the next four years. The two decided to start a company together while studying computer science at Brown University in the early 2010s.

Further Reading

U.S. Sues Google Over Alleged Advertising Monopoly—Latest Tech Antitrust Suit (Forbes)

What Adobe’s Really Paying For Figma: $20 Billion — And Another Billion For CEO Dylan Field To Stick Around (Forbes)

Federal Government Sues Facebook—Again—After Court Struck Down First Lawsuit (Forbes)

Adobe’s $20 Billion Takeover Of Figma Makes Cofounders Billionaires (Forbes)