The Justice Department plans to file an antitrust lawsuit against Adobe to block its $20 billion acquisition of digital design startup Figma, Bloomberg reported Thursday as part of the Biden administration’s latest lawsuit against suspected big-tech monopolies.
The lawsuit 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 Sept. 15 — a deal that most Wall Street analysts thought was significantly overpriced at the end of September.
Its shares 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 forbesbut it has in the past denied allegations that the deal would create a monopoly.
Adobe has argued that Figma’s focus on website and app designs doesn’t directly compete with its branded products like Photoshop, while its own web design brand — XD — isn’t a significant force in the market.
According to Bloomberg, prosecutors met with Adobe’s team on Wednesday — which is standard before antitrust lawsuits.
What to look out for
Adobe still hopes to close the deal to buy Figma later this year, a company spokesman told Bloomberg.
President Joe Biden’s administration has taken several steps to increase antitrust enforcement, particularly involving large tech companies. The DOJ and eight states filed lawsuits against Google last month, alleging it made 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,” arguing that the online ad space business remains “very competitive.” The Federal Trade Commission filed a lawsuit against Meta in 2021, accusing it of an “anticompetitive spending spree” by buying companies like Instagram and WhatsApp. Meta has denied the monopoly allegations and blasted the lawsuit as “baseless.” The FTC separately sued Meta last year to block its acquisition of virtual reality fitness startup Within. The government is also trying to block an alliance between JetBlue and American Airlines, and a judge nullified a merger between Simon & Schuster and Penguin Random House after a lawsuit by the DOJ last year.
Adobe’s $20 billion deal to acquire Figma will make the startup’s co-founders – Dylan Field and Evan Wallace – billionaires, with tech giant Field also offering a more than $1 billion package to buy Figma at least continue for the next four years. The two decided to start a business together in the early 2010s while studying computer science at Brown University.
US Sues Google Over Alleged Advertising Monopoly – Latest Tech Antitrust Lawsuit (Forbes)
What Adobe is really paying for Figma: $20 billion — and another billion for CEO Dylan Field (Forbes)
Federal government sues Facebook – again – after court struck down first lawsuit (Forbes)
Adobe’s $20 billion acquisition of Figma turns co-founders into billionaires (Forbes)