Following rising pressure from UK and EU regulators, Adobe and Figma stated on Monday that they are amicably cancelling their merger deal. Under which Adobe would have acquired the Figma product design platform for $20 billion.
Adobe will be obligated to pay Figma a $1 billion cash reverse termination fee as a result of the termination.
“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 CEO Shantanu Narayen in a statement. “While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalize on our massive market opportunity and mission to change the world through personalized digital experiences.”
Regulators resisted the purchase, citing Adobe’s near-monopoly in the design software industry. Regulators were concerned that by buying Figma, a rapidly developing product design platform that is now more popular than Adobe’s competitor XD programme, Adobe would impede innovation that may have occurred if Figma had been allowed to thrive freely. Designers have raised similar concerns since the merger’s announcement in September 2022, but Adobe has refuted those assertions throughout the many current investigations.
Adobe rejected remedies proposed by the UK’s Competition and Markets Authority (CMA) to approve the merger following an extensive antitrust investigation in a letter dated December 14th. The authority demanded that Adobe relinquish key assets, source code, and engineers in order to “restore the conditions of competition.” On December 21st, all parties were due to address the CMA’s preliminary decision to freeze the sale, with a final deadline to accept or reject the purchase set for February 25th.
The European Commission was also looking into the agreement
Bloomberg reported in February 2023 that the DOJ was planning similar inquiries. Following Adobe’s declaration, the European Commission has likewise decided to discontinue its antitrust probe into the acquisition.
With all of that pressure piling up, Adobe had very little wiggle space to proceed with the transaction while still obtaining all of the Figma assets it had planned to get — or, in the event of its own applications being sacrificed in antitrust appeasement, keep.
“It’s not the outcome we had hoped for,” Figma CEO Dylan Field said in a statement. “But despite thousands of hours spent with regulators around the world detailing differences between our businesses, our products, and the markets we serve, we no longer see a path towards regulatory approval of the deal.”