Adobe Abandons Figma Buy In Face Of EU, UK Probes

Adobe and Figma have mutually terminated their merger agreement, announced in September 2022, in which Adobe had proposed to buy the maker of cloud-based design software for some $20 billion (£16bn), saying they saw no clear path to regulatory approval in the UK or the EU.

As part of the termination Adobe is to pay Figma a fee of $1bn.

Shares in the Photoshop and Illustrator maker rose more than 1 percent in early trading on Monday.

The deal fell foul of regulators who saw it as an example of dominant technology companies acquiring smaller firms that could grow into serious competitors.

Image credit: Figma

Regulatory probes

Adobe denied it competed with Figma in any meaningful way, saying in November its only relevant product was Adobe XD, which has lost $25m over the past three years and has only five full-time employees.

Investors had also balked at the acquisition’s high premium, causing a sell-off at the time of its announcement that wiped nearly $30bn off Adobe’s market capitalisation.

Designers had greeted the deal with similar concerns to those of regulators, remarking on social media that Adobe had a “stranglehold” on design software.

“Figma is amazing and free. And I’m sure that will be changing soon,” a user wrote on Reddit after the deal was announced.

The deal attracted regulatory probes in the EU and the UK, where the Competition and Markets Authority (CMA) suggested remedies including significant divestment of assets, source code and engineers to “restore the conditions of competiton”.

‘Strongly disagree’

Adobe rejected the proposals in a letter dated last week.

Bloomberg reported in February that the US Department of Justice was preparing a similar challenge.

“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” said Adobe chair and chief executive Shantanu Narayen.

Figma chief executive Dylan Field said the company had spent thousands of hours with regulators but “we no longer see a path toward regulatory approval of the deal”.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

Recent Posts

UK CMA Seeks Feedback On Microsoft, Amazon AI Partnerships

British regulator invites feedback on major partnerships Microsoft and Amazon have struck with smaller AI…

4 hours ago

Google Fires More Staff Over Israel Protest

Another 20 staff have been fired by Google over Israel protest and their “completely unacceptable…

5 hours ago

Australian PM Hits Out At Elon Musk Over Knife Attack Video

Censorship row brewing down under, after the Australian Prime Minister calls Elon Musk an 'arrogant…

6 hours ago

US SEC Seeks $5.3 Billion Fine From Terra’s Do Kwon

Financial regulator asks New York judge to impose $5.3 billion in fines against Terraform Labs…

7 hours ago

Microsoft Launches Smallest AI Model, Phi-3-mini

Lightweight artificial intelligence model launched this week by Microsoft, offering more cost-effective option for Azure…

10 hours ago

US Senate Passes TikTok Ban Or Divestment Bill

ByteDance protest falls on deaf ears, as Senate passes TikTok ban or divest bill, with…

12 hours ago