Adobe and Figma ended their $20 billion acquisition dream this morning after regulators signaled it would continue to be rough going. Figma gets a $1 billion consolation prize as part of the deal, and as the leader in collaborative design, should land on its feet just fine.
But for Adobe, it could be another story. They badly wanted this company, recognizing that the offering they had put up to compete with it, XD, wasn’t nearly as strong. They tried to use their corporate clout to get control of what they saw as a lucrative side of their core creator business by buying the market leader.
In the end, though, the regulatory roadblocks proved too much for them, and after more than a year traveling to and from regulator meetings, the companies realized that it wasn’t going to happen and decided to walk away.
Adobe put on a brave face in their public statement, but it has to be deeply disappointed with this outcome. “While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalize on our massive market opportunity and mission to change the world through personalized digital experiences.”
Whether Adobe can be as strongly positioned without Figma isn’t clear, but they certainly were willing to pay a substantial price to bring them into the fold. They could just never convince the regulatory authorities that this wasn’t a blatant power grab by a rich company to take over a market using their corporate economic clout.
EU’s competition head, executive VP Margrethe Vestager, made it clear that she saw this as just such an attempt in her public statement. “By combining these two companies, the proposed acquisition would have terminated all current and prevented all future competition between them. Our in-depth investigation showed that this would lead to higher prices, reduced quality or less choice for customers.”
Ray Wang, founder and principal analyst at Constellation Research says this is a huge setback for Adobe, and forces them to turn back to their own design collaboration tool, XD. “Adobe realized that in a world of Generative AI the value is not the content creation, but the work coordination of content This deal sets Adobe back two years and will incentivize them to revamp XD to cover this crucial market,” he said.
Dana Rao, Adobe’s general counsel, told TechCrunch in October that that the company had all but dismantled the XD team, and was fully committed on having Figma fill that product need. “We tried to get into [collaborative design] with XD, but it failed. We abandoned that product. Essentially, it never made more than $15 million – $17 million a year for us. I think we’re down to five full time employees, who are keeping the lights on for contractual requirements,” he said. “And so if we’re going to get into the space of product design, for us, it would be through buying Figma,” he said at the time.
On the plus side, the company now has a bunch of money to play that it wouldn’t have had if the deal went through, and perhaps in a post-generative AI world, it could be put to better use, says Brent Leary, co-founder and partner at CRM Essentials. “The deal was announced pre-ChatGPT and the world has changed dramatically since then. And this may actually work out better for Adobe having the $20 billion back to maneuver and possibly shape the post-ChatGPT content creation process,” he said.
Wang says the company could also consider acquiring another collaboration startup like Miro, WebFlow or InVision, which have raised $476 million, $335 million and $356 million respectively (per Crunchbase data). While none of them would be a perfect replacement for Figma, any one could give the company a head start in the collaboration space, probably without attracting the kind of scrutiny they got from the attempt to buy Figma.
Figma, for its part, has not stood still since the deal was announced, proceeding and planning as the independent company it is. In fact, the startup has hired 500 people since September 2022. What’s more, it has developed new capabilities including tools aimed at developers and a generative AI layer on top of its popular FigJam whiteboard tool.
John Lilly, an early investor in Figma, says that he’s fired up for the company to continue independently. “This team is just an extremely special team. Over the past decade they’ve changed how design works completely — and this market for designing products is getting way bigger, fast,” Lilly told TechCrunch.
If he is right, that’s precisely why Adobe wanted to buy the company because it saw that too. Now Figma moves on alone, the same startup full of potential it was before the deal was announced in September 2022, and Adobe has to rethink its design collaboration strategy, starting essentially from scratch, not a position it probably saw itself in at this point.

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