On Monday, Adobe decided to abandon its $20 billion acquisition of the collaborative design platform, Figma. The company cited a lack of a clear route to obtaining antitrust approvals in Europe and the UK. This move marks the discontinuation of one of the most significant buyout deals involving a software startup.
Last year, the cash-and-stock deal agreement faced intense scrutiny from regulators concerned about Big Tech acquisitions that could enhance the market influence of established companies or involve startups perceived as emerging competitors, according to a report by Reuters.
Figma, based in San Francisco, will receive a $1 billion termination fee from Adobe. The web-based collaborative platform provided by Figma for design and brainstorming is utilized by several firms, including Uber, Coinbase, and Zoom Video Communications.
Over the past year, Figma has increased its workforce from 800 to 1300 individuals and is projected to boost its annual recurring revenue by 40 per cent, surpassing $600 million this year, as per sources cited by the report.
Amid the generative AI trend, Figma has expanded into software development and introduced new features, while Adobe has entered the scene with generative photo tools like Adobe Firefly. Both companies, Figma and Adobe, have reaped the benefits of this AI popularity.
Last month, the Competition and Markets Authority (CMA) in Britain expressed concerns that the deal would negatively impact innovation in software widely utilized by UK digital designers. This echoed similar apprehensions from the European Union regarding the potential decrease in competition.
In recent months, the CMA has garnered attention for its actions against prominent deals, including Microsoft's acquisition of Activision-Blizzard valued at $69 billion.