The Deal
Adobe announced its $20B all-cash and stock acquisition of Figma in September 2022, the largest-ever acquisition of a private software company. Figma had become the dominant collaborative design platform, growing from $400M to $700M ARR. The deal would have given Adobe control over both traditional (Photoshop/Illustrator) and modern (Figma) design workflows.
Strategic Rationale
Adobe needed Figma to prevent disruption of its Creative Cloud business. Figma collaborative, web-native approach was winning the next generation of designers away from Adobe tools. The acquisition was both defensive (eliminate a competitor) and offensive (add modern collaboration to Adobe ecosystem).
Impact
UK CMA and EU regulators determined the deal would substantially lessen competition in digital design tools. After 15 months of regulatory review, Adobe and Figma mutually terminated the deal in December 2023. Adobe paid a $1B termination fee to Figma.
What Happened After
Both companies invested heavily in AI features post-termination. Figma acquired Diagram for AI design tools and built AI capabilities natively. Adobe launched Firefly (generative AI) and AI features across Creative Cloud. The failed deal forced both companies to compete on AI innovation rather than consolidation.