Adobe and Figma ended their dream of a $20.000 billion acquisition after regulators signaled it would be difficult. Figma nevertheless receives a “consolation prize” of one billion dollars as part of the agreement and, as a leader in collaborative design, should recover without problems.
But for Adobe, it could be a different story. They desperately wanted this company, recognizing that the offer they had submitted to compete for it was not that strong. They attempted to use their corporate influence to gain control of what they saw as a lucrative aspect of their core creator business.
In the end, however, the regulatory hurdles proved too much for them, and after more than a year traveling to and from meetings with regulators, the companies realized that wasn't going to happen and decided to pull out.
Adobe exposed its brave profile in his public statements, but you must be deeply disappointed by this result. While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we remain well positioned to capitalize on our enormous market opportunity and our mission to change the world through digital experiences customized.
It's unclear whether Adobe can be in such a strong position without Figma, but they were certainly willing to pay a substantial price to bring them on board. They simply could never convince regulators that this wasn't a blatant power grab by a wealthy company to take over a market using its corporate economic clout.
The EU's competition chief, Executive Vice President Margrethe Vestager, made clear that she saw this as such an attempt at his public statement. “By combining these two companies, the proposed acquisition would have ended all current competition and prevented all future competition between them. “Our in-depth research showed that this would result in higher prices, reduced quality or fewer options for customers.”
Ray Wang, founder and principal analyst at Constellation Research, says this is a big setback for Adobe and forces them to return to their own design collaboration tool, XD. “Adobe realized that in a world of generative AI the value is not the creation of content, but the coordination of content work. “This deal sets Adobe back two years and will incentivize them to renew XD to cover this crucial market,” he said.
Dana Rao, Adobe's general counsel, said in October that the company had essentially dismantled the XD team and was fully committed to Figma filling that product need. “We tried to get into collaborative design with XD, but it failed. We abandoned that product. Basically, he never made more than $15 million ($17 million a year for us). I think we are left with five full-time employees, who keep the lights on to meet contractual requirements,” she said. "And if we're going to get into the product design space, for us, it would be by purchasing Figma," she said.
On the plus side, the company now has a lot of money to play with that it wouldn't have if the deal had gone through, and perhaps in a world of post-generative AI, it could be put to better use, Brent Leary says. co-founder and partner of CRM Essentials. “The deal was announced before ChatGPT and the world has changed dramatically since then. And this may actually work better for Adobe to have 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 startup like Miró, Web flow o InVision, which have raised $476 million, $335 million, and $356 million respectively (according to Crunchbase data). While none of them would be a perfect replacement for Figma, any one could give the company an advantage in the collaboration space, probably without attracting the kind of scrutiny they received when trying to buy Figma.
Figma, for its part, has not stood still since the deal was announced, proceeding and planning like the independent company it is. In fact, the startup has hired 500 people since September 2022. In addition, it has developed new capabilities including tools aimed at developers and a generative AI layer on top of its popular whiteboarding tool FigJam.
John Lilly, an early investor in Figma, says he's excited about the company continuing independently. “This team is just an extremely special team. Over the last decade, they have completely changed the way design works, and this market for product design is getting much bigger and faster,” Lilly said.
If Lilly is right, that's precisely why Adobe wanted to buy the company because they saw it too. Now Figma is plowing ahead alone, the same startup full of potential it was before the deal was announced in September 2022, and Adobe is having to rethink its design collaboration strategy, essentially starting from scratch, a position that was probably unseen. at the moment.
