Deal Gone Bad: How Adobe's Failure to Purchase Figma Opened Doors for New Competition

The tech industry witnessed a significant development on Dec. 18, 2022, when Adobe, a formidable software giant, underwent a monumental setback in its ambitious quest for expansion. After more than a year of regulatory scrutiny, Adobe's monumental $20 billion deal to purchase the San Francisco startup darling, Figma, fell apart. This event sent shockwaves throughout the industry, especially among creatives and designers who heavily rely on Figma's collaborative platform.

Dylan Field, Figma's CEO and co-founder, expressed optimism about the company's future in a Dec. 18 blog post. He asserted that Figma was still destined for great things, despite the acquisition's collapse.

The Background of the Acquisition

The story behind this failed deal is intricately linked to the evolving landscape of the graphic design software market and the fierce competition among tech giants like Adobe, Autodesk, and Microsoft.

Figma's collaborative web-based design platform swiftly gained popularity among designers and creative professionals after its founding in 2013. By the late 2010s, Figma had become a formidable rival to Adobe's industry-standard design software, such as Photoshop, Illustrator, and InDesign.

Realizing the potential threat that Figma posed to its longstanding dominance of the design software market, Adobe embarked on a strategic attempt to purchase the startup for a staggering $20 billion, a whopping $10 billion more than Adobe's previous largest acquisition.

The Shady Tactics Used by Adobe to Obtain Figma

The primary tactic Adobe used to gain favor for this acquisition was the promise of fairness and its willingness to undergo rigorous regulatory scrutiny to ensure the deal's transparency and positivity. Adobe asserted that the acquisition would benefit the design community and ensure Figma's long-term success. Unfortunately, it seems that this was a ploy used to help Adobe gain more time to weaken Figma from the inside.

The Collapse and Figma Fighting Back

Despite Adobe's assurances, the deal faced severe opposition from regulators and antitrust authorities. They argued that the acquisition would harm artistic creativity and stifle competition in the design software market.

The deal's collapse left many industry watchers wondering about the future of the design software market and the role of mergers and acquisitions.

In his blog post, Field didn't reveal specific plans for Figma's next steps, but he promised to focus on innovation and delivering new features to customers.

The Future: Emerging Competitors

While Figma has retained its dominant position in the design space, new competitors have emerged as alternative options.

  1. Adobe XD: Previously considered a lesser companion to Illustrator, this software has gained traction and became a more appealing alternative to Figma due to its integration capabilities with other Adobe suites.
  2. Onboard: With its intuitive interface and focus on collaboration, Onboard is becoming an attractive choice, especially for remote teams.
  3. Microsoft Whiteboard: As the M.S. Office suite continues to dominate the productivity space, this collaborative design tool is conveniently integrated into their ecosystem.

These emerging competitors pose a real challenge to Figma's dominance, with Adobe XD potentially becoming a formidable alternative.

Conclusion

The story of Adobe's failed acquisition of Figma is a tale of ambition, antitrust regulations, and the perseverance of innovative startups.

While the deal's collapse may have temporarily stalled Adobe's expansion plans, it has also opened doors for new competition and ensured a more competitive and innovative future for the design software market. As Figma continues to thrive and adapt to the changing landscape, designers and creative professionals are the real winners.

The demise of this deal has shown that sometimes, even in the ruthless world of corporate takeovers, regulators can ensure that fairness and competition prevail.

How do you think this scenario will play out for Adobe and Figma? Which competitor do you think will gain traction in the design software market? As always, curious minds want to know!