Design Domination Podcast Episode #167: Adobe Acquiring Figma: The Full Scoop

Music: https://www.bensound.com

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You probably heard last year about the Adobe-Figma deal. Last week, the whole thing was called off. I am here to give you the full scoop on the deal.

Adobe vs Figma

But first a little background about the two companies.

Figma is a collaborative UX design tool for building websites and apps that was founded by Dylan Field and Evan Wallace in 2012. Adobe has been around for 40 years and is the industry giant.

More than 65% of Figma users are non-designers, unlike Adobe, whose main audience is designers.

Figma has been Adobe XD’s biggest competition. Figma commanded 77% of the UI design market in 2021, and that percentage has only increased since then. The whole collaboration aspect to Figma has been a unique selling point.

Designers seem to strongly prefer one over the other.

Figma also doesn’t come with the hefty price tag that Adobe software does. Figma has a free option, and it’s always free for students and educators.

Something that’s particularly interesting about this whole situation is that Adobe removed XD from Creative Cloud, put it into maintenance mode and said they are not investing in ongoing development but that they will continue to support existing customers by fixing bugs and security or privacy issues.

Adobe Acquiring Figma

It was announced on September 15, 2022 that Adobe would acquire Figma for $20 billion in cash and stock. Adobe shares dropped 17% right after that, the biggest drop since 2010.

Adobe claimed that the acquisition would bring:

“powerful capabilities from Adobe’s imaging, photography, illustration, video, 3D and font technology into the Figma platform.”

They wanted to bring their font, stock and Creative Cloud assets into Figma.

After the merger, Dylan Field, Figma’s co-founder and CEO, was expected to continue leading the Figma team and to report to Adobe’s president of Digital Media business, David Wadhwani.

Designers’ Concerns Over Adobe Acquiring Figma

Many designers were understandably upset when they heard about the merger.

Designers have been upset with Adobe a long time, and especially when they went with to a subscription model back in 2012 or so, and more recently with Adobe removing Pantone colors from the software.

Would there be price increases once Adobe took over Figma? Adobe has such control over the market.

Would there be fewer updates and features made to Figma after Adobe acquired it? Many designers have companied about this on the Adobe forums.

Would Adobe take what made Figma great and just incorporate those features into XD, especially since Adobe had put XD into maintenance mode?

Would Figma become bloated and slow like other Adobe software?

Would there be issues with crashes, which a lot of Adobe users have complained about in the past?

These are all legitimate concerns.

Regulatory Concerns of Adobe Acquiring Figma

But designers weren’t the only ones concerned with the acquisition.

This whole deal came under scrutiny by the U.S. Department of Justice, the Competition and Markets Authority in the UK and the European Commission.

The U.S. Department of Justice had been preparing to sue Adobe to block the deal.

The Competition and Markets Authority blocked the deal until their concerns were addressed, saying that the deal could “eliminate competition,” “reduce innovation” and “remove Figma as a threat to Adobe’s flagship Photoshop and Illustrator products.”

They also said the deal would “likely harm innovation for software used by the vast majority of UK digital designers.”

The European Commission said the deal could “significantly reduce competition in the global markets.”

Adobe said they didn’t see “any overlap between” their customers and Figma’s. Adobe’s general counsel, Dana Rao, went so far as to say there were “no competitor or customer complaints about the deal.”

Were they not reading comments online from designers?

The European Union issued Adobe a formal antitrust complaint about concerns with competition.

Adobe said that their only product that was relevant to the antitrust concern was XD and that it had lost $25 million as a standalone app over the last three years.

Because of the Competition and Markets Authority’s concerns, they suggested that Adobe sell Figma Design because of its “overlapping operations” with XD. But that would defeat the whole purpose of the acquisition in the first place.

Did Adobe Buy Figma?

Adobe and Figma had until December 19, 2023, to respond and prove that the merger wouldn’t harm competition in the future. Final decisions by the Competition and Markets Authority and European Commission were to be made in February of 2024.

Adobe and Figma were hoping to make get this deal done by the end of 2023. But they both decided to go ahead and kill the deal since they couldn’t “see a path toward regulatory approval.”

As a result, Adobe will pay a termination fee of $1 billion to Figma. Not a bad consolation prize.

Many designers are celebrating that the merger won’t happen. There are a lot of comments under Dylan Field’s announcement on Twitter.

Many say that this merger would only have benefitted the founders, investors and Adobe. I would have to say I agree with that.

I mean, for Adobe, this would have been the missing link in their suite of creative software.

I could see how this could potentially have been good for designers too—giving them access to Adobe fonts and stock. But can’t Adobe and Figma figure that out without Adobe owning more of the market? I mean, Adobe didn’t buy out Pantone for designers to be able to use their colors inside their software. But that is a whole other can of worms…

The other thing is that I think a lot of designers’ existing concerns with Adobe and their software would have needed to be addressed for them to be happy about this.

Competition is a good thing. It keeps the software companies on their toes in terms of paying attention to what designers want and keeps pricing more fair, whereas when one giant own the market, they can slack off. They can charge more. Designers don’t have a choice. They lose their voice.

As a designer, how did you feel about this merger? Do you think this was about enhancing what Adobe and Figma offered? Do you feel like Adobe was simply trying to buy out the competition?

Do you think Adobe will make a comeback with XD?

Let me know in a comment, and be sure to like, share and subscribe.

If you liked this episode, check out the one about Adobe Removing Pantone Colors and 5 Common Web Accessibility Mistakes.