Figma CEO laments the demise of a $20 billion deal with Adobe

Of the several deals that have fallen apart recently, Adobe’s $20 billion acquisition of Figma, an upstart design software maker, is one of the most instructive.

The companies had promised it would be a way to “usher in a new era of collaborative creativity,” but regulators in three jurisdictions saw it as an unacceptable attempt by a software giant to buy a promising future rival. For Figma CEO Dylan Field, this contrast underscored a fundamental divide between the way companies and regulators think about competition.

“It’s frustrating and sad that we can’t complete this,” Mr. Field said in his first interview since companies announced its demise on Monday.

The end of the deal is yet another feather in the cap for antitrust enforcers. Both the European Commission and the British Competition and Markets Authority were preparing to formally challenge the transaction. (Just hours before the companies announced the deal was dead, the CMA said Adobe had declined to offer solutions to address the concerns.) The Department of Justice – which meeting with representatives from Adobe and Figma last week – had considered whether I would be against it too.

“It is important in digital markets, but also in more traditional industries, to not only look at current overlaps, but also to protect future competition,” Margaretha Vestagerthe European Commission’s competition policy chief said after the deal’s demise was announced.

Regulators had a major concern: Would allowing Adobe to buy Figma rule out a future competitor? To some, the deal was analogous to Facebook acquiring Instagram in 2012. Those concerns have also bolstered other enforcement efforts, including those against Microsoft’s acquisition of gaming company Activision Blizzard and Meta’s acquisition of virtual reality start-up Within. (Both deals have closed.)

Mr. Field repeatedly argued that the deal would have allowed his company to create more supply, but said Monday that there is “ultimately a gap between how regulators understand our business and how we understand our business.”

By the weekend it became clear that the deal could not succeed. In recent weeks, “we have both seen how the path has become increasingly narrow,” Mr. Field said, and calling off the transaction would provide greater clarity and certainty for employees and customers.

In retrospect, Mr Field said the enforcement environment was different now than when the companies announced their plan in September 2022.

Regulators’ opposition to the Adobe deal means Figma is unlikely to find another buyer, Mr Field acknowledged, and the company would remain independent. He added that Figma had continued to expand over the past fifteen months, more than doubling its workforce to 1,300 and acquiring Diagram, an AI-based start-up.

Adobe must pay a $1 billion break-up fee to Figma. (Adobe’s investors were undeterred: The company’s shares closed 2.5 percent higher on Monday.)