Following increasing pressure from regulators in the United Kingdom and the European Union, Adobe and Figma announced on Monday that their agreement is ending.
This deal, which would have led to Adobe acquiring the product design platform Figma for $20 billion, will not take place.
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As a result of the termination, Adobe will be required to pay Figma a termination fee of $1 billion in cash.
“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our best interest to proceed independently,” said Adobe President and CEO Shantanu Narayen. “While Adobe and Figma shared a vision to transform the future of creativity and productivity, we are still uniquely positioned to seize the enormous opportunity and fulfill our mission to change the world through personalized digital experiences.”
Regulators cited Adobe’s near-monopoly in the design software market as they rejected the deal. With its acquisition of Figma, a fast-growing product design platform that has become more popular than Adobe’s rival app , regulators were concerned that Adobe would stifle innovation that could emerge independently of Figma. Since the merger was announced in September 2022, designers have expressed similar concerns, but Adobe has denied those claims during multiple ongoing investigations.
In a letter issued on December 14, Adobe rejected the remedies proposed by the UK Competition and Markets Authority (CMA) to approve the merger, following a detailed antitrust investigation. The CMA required Adobe to make significant concessions in terms of assets, source code and engineering, with the aim of “restoring competitive conditions”. All interested parties were expected to discuss the CMA’s interim decision to reject the deal on December 21, with a final decision on whether to approve or reject the acquisition scheduled for February 25.
The deal was subject to scrutiny by the European Commission, and according to Bloomberg in February 2023, the Justice Department was preparing similar investigations. Following Adobe's announcement, the European Commission also suspended its antitrust investigation into the merger.
Despite intense pressure, Adobe had limited room to move forward with the deal and move forward with acquiring all of the Figma assets it hopes to acquire. Or, in the case that its own apps were sacrificed to restore trust, to remain unaffected.
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“The outcome falls short of our expectations,” said Dylan Field, Figma’s CEO. “Despite thousands of hours spent with regulators around the world, detailing the differences between our businesses, our products, and the markets we serve, we no longer see any indication of approval of the deal.”
Source: theverge.com
