After facing pressure from EU regulators, Adobe and design app Figma have agreed to mutually break up, costing the former a lucrative $ 20 billion deal.
Adobe said in a recent statement that the companies are doing this because they cannot find a “clear path to receive [the] necessary regulatory approvals from the European Commission and the UK [CMA]”, or the Competition and Market Authority. It goes on to say they both “strongly disagree” with the findings, however, they believe it’s best for everyone that they put this messy situation behind them. What’s more, Adobe will pay Figma a reverse termination fee which, according to the US SEC (Securities and Exchange Commission), comes out to $ 1 billion.
So, what happened? Let’s break it down.
Adobe announced plans to purchase its competitor Figma for the aforementioned $ 20 billion back in September 2022 when its own UI (user interface) design platform, Adobe XD, failed.
This move raised a lot of eyebrows from regulators. The CMA conducted an investigation into the deal earlier this year, claiming the acquisition would’ve resulted in a near-monopoly, stifling innovation in the design space. The organization then gave Adobe an ultimatum: either sell off Figma’s main product, Figma Design, or the purchase will be blocked. Adobe rejected the proposal and decided to end things on its own terms instead of fighting.
The response from the internet has been overwhelmingly positive – ecstatic that the acquisition is dead. On Reddit, you have comments from people breathing a sigh of relief. On TheVerge’s report, one comment exclaims that it's a Christmas miracle. And you see the same thing on X (the platform formerly known as Twitter): a ton of celebration going on. But why?
There are multiple reasons for this animosity, but in this situation, it’s mainly because they don’t want to see Adobe get any bigger. As a poster on X points out, they already have a “monopoly on almost all design tools” with UI design being the one field they don’t have control over. Had they been allowed to buy Figma, Adobe would essentially have the whole design market in its clutches with no worthy rivals.
Analysis: Cost of doing business
People have also criticized the brand for the cost of their services. Photoshop, for example, costs $ 23 a month, roughly $ 276 for the whole year. However, if you cancel your subscription after 14 days, Adobe will charge you an early termination fee that is 50 percent of the contract’s remaining balance. Designers were worried similar pricing would be forced on Figma’s platform.
This is undoubtedly good news for users who didn’t want Adobe as the new parent company, but we’re not out of the woods yet. Figma CEO Dylan Field wanted the purchase to go through, saying he was “disappointed in the outcome”. It’s entirely possible that some other titan of the industry eventually could pick up Figma without blowback from regulators. Comments on social media say they wouldn’t be surprised if Microsoft one day made a bid. It’s certainly possible.
While we have you, be sure to check out TechRadar's list of the best Adobe Photoshop alternatives in 2023.