In a surprising development, Adobe and Figma have officially terminated their $20 billion merger agreement which would have combined the two major cloud-based design platforms.
The deal, announced in September 2022, faced intense opposition from regulatory bodies in the UK and European Union over competition concerns in the design software market. The UK’s Competition and Markets Authority (CMA) proposed significant divestments from Adobe as a prerequisite for approval, while the European Commission was gearing up to voice similar objections.
With dim prospects of clearing the regulatory hurdles, Adobe and Figma mutually agreed to scrap the deal. Adobe will pay Figma a $1 billion break-up fee in accordance with the original agreement.
In a statement, Adobe CEO Shantanu Narayen expressed disappointment but accepted the fate of the merger. “While we believed the combination of Adobe and Figma would have created a more dynamic and innovative environment for designers and developers, the regulatory obstacles proved insurmountable,” he said.
Figma CEO Dylan Field shared similar sentiments over the collapsed deal. “We are confident in Figma’s future as an independent company and remain committed to empowering our users to create their best work,” he stated.
The termination throws the future plans of both companies into uncertainty. Analysts speculate Adobe may double down on competing with Figma internally, while Figma faces pressure to maintain market share and raise funds for growth.
More broadly, the abandoned merger exemplifies the increasing scrutiny of Big Tech consolidation, especially in software and creative platforms, by regulators seeking to promote competition. This outcome marks a win for those advocating against the accumulation of power by technology giants.
With the dust still settling, the future competitive landscape in digital design remains fluid. Whether Adobe and Figma thrive as standalone companies or get sucked into a larger consolidation battle is still unclear. One certainty is that the tussle to dominate design software is far from over.
