Adobe and Figma Abandon $20 Billion Merger Over Regulatory Concerns

15 months ago, in a $20 billion deal that has now come apart under regulatory scrutiny, Adobe announced the acquisition of Figma—its biggest rival in digital design.

Understandably, the announcement met with some concern—and, for some designers and developers, a sense of betrayal.

For these enthused users - 4 million strong at the time - Figma represented a cheaper (free) and better way to execute the design and prototyping of digital interfaces in a cloud-based environment. Adobe XD, on the other hand, started at $10/month, offering similar functionality but with a “clunkier” and somewhat “awkward” interface.

As Figma users nursed fears that their free, accessible tool would eventually exist behind Adobe’s paywall, antitrust bells rang out over the nature of the deal—never mind Adobe’s insistence that its shiny acquisition couldn’t be considered a direct competitor. Barely a month after the initial announcement, the U.S. Department of  Justice probed Adobe to better understand its deal with Figma in what would’ve been one of the largest takeovers of a private software company ever.

The DOJ continued to monitor the deal all through 2023, with no lawsuits as yet. However, Britain’s Competition and Markets Authority (CMA) took a more proactive approach. Last month, it maintained that the Adobe-figma merger would “harm innovation” for software used by the majority of UK designers. The CMA’s position and subsequent decision to thoroughly investigate the potential merger was supported by a similar European Union Probe.

Reuters reports that both Adobe and Figma kept frequent contact with antitrust agencies in the U.S., EU, and UK to try and get the merger over the line. However, UK regulators highlighted that it would require remedies for Adobe to divest Figma design, a core asset of the acquisition. In response to this, Adobe pointed out that the required remedies adversely affected a core benefit of the deal, effectively defeating its purpose.

The Photoshop owner still maintains that it doesn’t compete with Figma in any meaningful way. At least, not enough to trigger the antitrust Avengers. It argued that Adobe XD,  its only product that could spark antitrust chatter in the given context, wasn’t much of a competition as it had lost $25 million as a stand-alone app over the last 3 years.

Adobe Chair and CEO, Shantanu Narayen, shared in a press release on Monday, Dec 18, that “Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently.”

Dylan Field, Figma CEO and Co-founder, mirrored Adobe’s exasperated tone in a short blog post. “Figma and Adobe have reached a joint decision to end our pending acquisition. It’s not the outcome we had hoped for, but despite thousands of hours spent with regulators around the world detailing differences between our businesses, our products, and the markets we serve, we no longer see a path toward regulatory approval of the deal.”

While both parties walked away from the deal with a sour taste in their mouths, Figma retained its independence with a not-too-shabby $1 billion for its troubles, triggered by a clause in the merger agreement.

Adobe came in at #697 on this week’s HackerNoon Tech Company Rankings, while Figma finished at #2719

In Other News…

• The EU goes after X (formerly Twitter) in its first illegal content probe - Reuters
• Google set to pay $700 million as part of its Play Store dispute settlement - TechCrunch
• Lawmakers ask the DOJ to probe Apple for shuttering iMessage apps - Bloomberg
• Tesla recalls nearly all 2 million of its vehicles in the US - CNN
• Pakistan’s former prime minister uses AI voice clone to campaign from prison - The Verge

This brings us to the end of this News Brief.

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Asher Umerie, Editor, World News & Scifi @ HackerNoon.

All rankings are current as of Monday. To see how the rankings have changed, please visit HackerNoon's Tech Company Rankings page.