Adobe and Figma logos over cracks.
Image assets courtesy: Adobe and Figma.

Adobe has canceled its acquisition of the design platform Figma. However, Adobe will still have to pay Figma one billion as a penalty for terminating the deal.

What was the takeover?

Figma is a collaborative web design application that was first released in 2016. The app was a competitor to Adobe XD and by 2021 Figma was valued at $10 billion. The company had also launched Figma Community, where designers could publish their work, and a digital whiteboard capability called FigJam. In September 2022, Adobe announced that it had agreed to acquire Figma for around $20 billion in cash and stock.

What happened next?

The announcement of the takeover wasn’t popular with Adobe’s shareholders and the company’s value fell by 17%. Designers who used Figma also expressed their concerns that Figma might be made a part of Adobe’s Creative Cloud suite. Undeterred, Adobe pressed on with the deal, but there were soon several regulatory investigations into the acquisition.

Who was looking into the merger?

In the United Kingdom, the business competition watchdog, the Competition and Markets Authority (CMA), halted the takeover. The CMA stated that “Adobe’s deal to buy Figma would likely harm innovation for software used by the vast majority of UK digital designers.” The European Commission was also reviewing the acquisition under European Union merger laws. In addition, the U.S. Department of Justice was looking into the takeover. As a result, on December 18, 2023, it was announced that the merger had been abandoned.

What has Figma said?

In a blog post, Dylan Field, Co-founder and Chief Executive Officer for Figma, said, “Fifteen months into the regulatory review process, Figma and Adobe no longer see a path toward regulatory approval of our proposed acquisition.” Field also confirmed that it has been a joint decision between the two companies. In addition, Field said, “Figma’s founding vision was to ‘eliminate the gap between imagination and reality’ … We want to make it easy for anyone to design and build digital products on a single multiplayer canvas — from start to finish, idea to production.”

What has Adobe said?

At the time the acquisition was terminated, Adobe’s chair and CEO, Shantanu Narayen, said, “Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently.” Since then, Adobe’s general counsel, Dana Rao, has given an interview with The Verge. Rao said that there wasn’t an overlap between Figma and Adobe XD. However, he went on to explain that the regulators had essentially said “The only way to solve a future competition issue, that someone might do something, is to not do the deal.”

What we think

Only time will tell whether the regulators’ rulings in the UK, Europe and the U.S., which stopped the acquisition, were right. Some designers had also expressed concerns about what would happen after Adobe took over its competitor. Either way, it’s been a costly business for Adobe, as the company has had to pay a one billion penalty clause to terminate the deal. However, despite that, shareholders responded positively, and Adobe’s stock rose slightly after the announcement.

Pete Tomkies is a freelance cinematographer and camera operator from Manchester, UK. He also produces and directs short films as Duck66 Films. Pete's latest short Once Bitten... won 15 awards and was selected for 105 film festivals around the world.