Adobe Calls off $20bn. Acquisition of Figma

Adobe has had to call off its $20 billion deal to acquire Figma - which would have been Adobe's largest acquisition to date.

While the outcomes of the proposed acquisition were primarily unknown, it would have marked a turning point in the graphic design industry.

Figma is one of the most popular tools for professional designers, agencies, and teams, and it attracts over 3 million users every month.

With over a million teams relying on Figma for their design processes, it is no wonder why the proposed takeover by Adobe has gained significant interest.

Figma, for most use cases, is free for individuals to use.

Adobe, however, provides a far more expensive suite of tools, with new freelancers often outpriced.

Photoshop, Adobe's most well-known software, is renowned for being expensive, requiring a monthly subscription to even access the application.

With millions left questioning a potential new pricing structure or having to pay for Figma for the first time, the news of Adobe calling off this deal might settle the minds of many freelance designers and brand owners.

Beyond this, the acquisition would have given Adobe almost complete ownership of the most used professional tools in the design industry.

Legislation in the UK and EU to prevent monopolies from forming has caused Adobe to settle out of the deal and call it off entirely.

According to Adobe, the aim was to combine strengths and redefine the future of collaborative creativity and productivity.

So what would the impact of the deal have been for designers, and what has happened since Adobe terminated the agreement?

Adobe will pay Figma a termination fee of $1 billion.

As part of the deal to move forward with acquiring Figma, Adobe took on the risk of having to afford a settlement or termination fee if the plan did not go as expected.

Britain's Competition and Markets Authority raised concerns about the deal's impact on the design industry and its future.

According to Adobe, "the combination of Adobe and Figma [would] usher in a new era of collaborative creativity".

The UK's Competition and Markets Authority (CMA) expressed concerns that Adobe's acquisition of Figma would harm innovation in software most UK digital designers use.

The CMA's stance reflected similar apprehensions from the European Union about the potential reduction of competition in the market​​.

Despite Adobe's hopes for changing the design world through the merger

As a result of having to reverse the decision to take control of Figma, Adobe has to pay a termination fee of $1 billion.

Why did Adobe want Figma?

The initial rationale for Adobe's proposed acquisition of Figma was rooted in a vision to redefine creativity and productivity tools within the digital media industry.

Adobe aimed to integrate Figma's innovative, web-first collaborative design platform into its extensive suite of creative tools.

This integration would enhance Adobe's offerings by incorporating Figma's unique capabilities in real-time collaboration and design, catering to a rapidly evolving market where the demand for more dynamic and collaborative digital design solutions has surged.

Figma, known for its pioneering approach to product design on the web, presented an opportunity for Adobe to significantly expand its reach and capabilities in the UX/UI design domain, further solidifying its position as a leader in digital media tools.

Adobe sought to harness Figma's technology and talent to deliver more comprehensive and collaborative solutions to creatives and designers worldwide.

Combining Figma's strengths in collaboration and browser-based design with Adobe's expertise in 3D, video, vector, imaging, and fonts, the acquisition was a strategic step to accelerate innovation and reshape the future of creative workflows.

The ambition was to create a seamless end-to-end design environment, enabling designers and teams to work more efficiently and innovatively, thus addressing the broader market's evolving needs.

The Adobe Figma Purchase and Freelance Designers

The Adobe-Figma acquisition could have significantly impacted freelance designers by limiting the diversity of tools available for design work.

When there is no competition, there is no need for innovation.

With Figma under Adobe's umbrella, freelancers might have faced a more controlled market, potentially leading to increased costs and reduced innovation and functionality.

The takeover could have altered how freelancers operate, necessitating adjustments in their workflows, tool selections, and even pricing strategies for their services due to software availability and feature changes.

In an already expensive world, designers often have expenses related to the hardware, software and tools they use and would have felt the impact of a hike in software costs.

The Importance of Regulation and Intervention on Tech Mergers

The regulatory influence on tech mergers, such as the intervention by regulatory bodies in the Adobe-Figma acquisition, plays a crucial role in preserving competition and fostering innovation within the design and tech industry.

This oversight ensures the market remains vibrant and diverse, offering freelancers and designers various tools and services that cater to their unique needs.

By preventing the merger of too much power within a few tech giants, regulators help maintain a level playing field where smaller companies and startups can thrive, innovate, and challenge the status quo.

Preventing tech monopolies benefits freelancers and designers by keeping software costs competitive, encouraging the development of new features and tools, and ensuring that the digital design landscape remains dynamic and responsive to the needs of its users.

Therefore, regulatory actions protect the market from anti-competitive practices and indirectly support individual designers and freelancers' creative freedom and professional viability.

What does AI have to do with it?

The rise of AI in the design world also has its place in the Adobe-Figma acquisition.

Recently, with the 2024 release of Adobe's Photoshop, tools like generative fill, generative AI, and AI-enhanced subject selection and background removal have been added.

As generative AI technology becomes more integral to design tools, they promise to revolutionise how freelancers and agencies create, collaborate, and automate tasks.

This shift could amplify the importance of competitive markets, ensuring that AI-driven features remain accessible and affordable.

Regulation could play a pivotal role in shaping the AI-enhanced future of design tools, ensuring that advancements benefit the broader creative community without leading to control over AI technologies.

Implications for Collaboration and Workflow

The halted Adobe-Figma acquisition has implications for collaboration and workflow within the design community.

Figma's platform is praised for its seamless collaborative capabilities and has become a staple in the workflows of many freelancers and design teams.

This situation underscores the importance of maintaining a diverse ecosystem of tools that support various work styles and collaborative needs.

While Adobe's tools are far less collaborative, they have essential use cases and are preferred by many.

As design tools evolve, ensuring these platforms remain accessible is crucial for supporting collaborative design work and fostering an environment where creativity and efficiency work together.

What's the future of Figma?

The future of Figma, while now distinct from Adobe, remains bright.

As an independent entity, Figma will continue its trajectory of innovation and growth in the design tool space.

Its solid user base, significant annual revenue growth, and favourable cash flow position it well.

Figma's expansion and adoption of generative AI capabilities through its extensive plugin library demonstrate its potential to stay at the forefront of design technology for a considerable time.

The company's focus on collaboration, user experience, and cutting-edge features will likely make it a preferred choice among designers globally.