Adobe Terminates Business with Figma, Pays $1Billion Compensation Fee

Adobe has decided that it will no longer go on with plans to buy Figma, a leading collaborative design platform as proposed earlier because regulators didn't approve of the proposed $20 billion deal.

Adobe and Figma reportedly agreed to cancel their planned merger, which was initially announced on September 15, 2022. Adobe will compensate Figma with the previously established termination fee of $1 billion. In a statement released on Monday, 17th of December, 2023, both parties disclosed that they saw “no clear path” to getting regulatory approvals from the European Commission and the UK’s Competition. 

"Although both companies continue to believe in the merits and procompetitive benefits of the combination, Adobe and Figma mutually agreed to terminate the transaction based on a joint assessment that there is no clear path to receive necessary regulatory approvals from the European Commission and the U.K. Competition and Markets Authority,” the statement said. 

Due to this cancellation, Adobe has to provide Figma with a cash payment of $1 billion as a reverse termination fee. Adobe chair and CEO Shantanu Narayen in a statement, said "Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently.” 

Regulators objected to Adobe buying Figma due to Adobe's dominant position in design software. They feared that if Adobe acquired Figma, a rapidly growing design platform more popular than Adobe's XD, it could stifle innovation by preventing Figma from thriving on its own. Designers shared similar concerns since the merger announcement in September 2022, but Adobe disagreed with these worries during the ongoing investigations.

Adobe had limited options to proceed with the deal because the pressure became a lot. There was a risk that, in an attempt to comply with antitrust regulations, Adobe might have to give up some of its applications, making it difficult to achieve its desired outcomes from the merger.

The CEO of Figma, Dylan Field said in a statement that this wasn't the outcome they had hoped for because they made this agreement 15 months ago but since it's not working out, they would move ahead to do even bigger things. "We entered into this agreement 15 months ago to accelerate what both Adobe and Figma could do for our respective communities. While we leave that future behind and continue as an independent company, we are excited to find ways to partner with our users," he said. 

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