Block Block Block

The merger challenges continue. Adobe-Figma, Black Knight-ICE, ForgeRock and Thoma Bravo...

Welcome to BIG, a newsletter on the politics of monopoly power. If you’d like to sign up to receive issues over email, you can do so here.

So many antitrust actions, so little time. Here’s a summary of merger challenges or reported merger challenges, put out over the past week.

• Housing and Mortgages: ICE and Black Knight are the two key makers of loan origination software, which is the platform on which mortgage banks to offer mortgages. LOS software is tied to other products, like regulatory compliance, loan leads, e-sign packages, pricing engines, and borrower portal software. The combined firm would have 60% of the market for LOS software, and Black Knight on its own is already being sued for antitrust violations.
  

  ICE-Black Knight would also have significant power in other areas, like adjacent services provided to lenders, as well as mortgage servicing, which is the software that manages collecting checks from borrowers and remitting money to investors. Black Knight has been on a merger spree, and in 2019 and 2020 bought Compass Analytics and Optimal Blue, which do data analytics to help lenders price loans. And ICE bought Merscorps, the national electronic registry of mortgage. The combination of data, tools, and customer lock-in make this merger quite dangerous.
  

• Graphic Design: The Antitrust Division is challenging the $20 billion acquisition of collaborative software firm Figma by graphic design specialist Adobe. Adobe makes software that lets designers edit photos and cut video, heavy duty tools for professionals. Figma offers a platform that is much more lightweight for designing websites and apps, but allows for group collaboration. (Think Microsoft Office vs Google Docs.)
  
  Adobe is paying 50 times revenue because what Figma, while only a minor direct rival, has mapped out is what design will look like in the future. What Figma users love is they can jointly edit and design, which is impossible with Adobe’s tools that are built for single users on desktop computers. It’s not conceptually hard to attach heavy duty Adobe-like tools to Figma’s platform, but it’s impossible to do the reverse. If this deal gets blocked, Adobe will have to come into the market to compete with Figma, and Figma, as well as other third parties, will start challenging Adobe’s exceptionally lucrative set of franchises.
  
  As with Meta-Within and Microsoft-Activision, this merger challenge is about a technological inflection point. Basically, will the graphic design space look like Apple’s app store, with one bottleneck? Or will it look like the web, where anyone who uses the http protocol gets to put up a website without gatekeeper? That’s what this case will be about.

• ID Management and Private Equity: Back in November, I wrote up private equity giant Thoma Bravo’s acquisition of two rival software firms in the identity management space, Ping Identity and ForgeRock. Normally this kind of purchase would go through without the agencies even noticing, but in this case, the Antitrust Division is conducting a deep investigation of the merger. Will they file a challenge? I don’t know. But given Antitrust Attorney General Jonathan Kanter’s skepticism towards private equity, I suspect if there’s a case, they’ll be bringing it