Figma CEO laments demise of $20B Adobe deal

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Among the several deals that have unraveled recently, Adobe's $20 billion acquisition of Figma, a start-up design software maker, is one of the most instructive.

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

“It's frustrating and sad that we can't complete this,” Field said in his first interview since the companies announced his disappearance on Monday.

The end of the agreement is another achievement for antitrust authorities. Both the European Commission and Britain's Competition and Markets Authority were preparing to formally challenge the transaction. (Just hours before the companies announced the deal was done, the CMA said Adobe had refused to offer solutions to address the concerns.) The Department of Justice, which met with representatives from Adobe and Figma Last week, he had been weighing whether to oppose it as well.

“It is important in digital markets, as well as in more traditional industries, to not only look at current overlaps but also protect future competition.” Margarita Vestagersaid the head of competition policy at the European Commission, after the deal's demise was announced.

Regulators had one major concern: Would allowing Adobe to buy Figma eliminate a future competitor? For some, the deal was analogous to Facebook's purchase of Instagram in 2012. That concern has also underpinned other law enforcement efforts, including those against Microsoft's acquisition of gaming company Activision Blizzard and the Meta's acquisition of virtual reality startup Within. (Both deals were closed).

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

Over the weekend it became clear that the deal could not succeed. In recent weeks, “we've both seen the path narrow,” Field said, and abandoning the transaction would provide more clarity and certainty to employees and customers.

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

Regulators' opposition to the Adobe deal means Figma likely won't be able to find another buyer, Field acknowledged, and the company will remain independent. He added that Figma had continued to expand over the past 15 months, more than doubling its workforce to 1,300 and acquiring Diagram, an artificial intelligence-based startup.

Adobe will have to pay a $1 billion breakup fee to Figma. (Adobe investors were not discouraged: The company's shares closed up 2.5 percent on Monday.)



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