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Adobe and Figma Abandon $20 Billion Merger Amid Regulatory Scrutiny

In response to mounting pressure from regulatory bodies in both the UK and the EU, Adobe and Figma jointly announced on Monday the termination of their proposed $20 billion merger agreement. As part of the termination, Adobe is obligated to pay Figma a reverse termination fee amounting to $1 billion in cash. The decision comes after regulators expressed concerns about Adobe's existing near-monopoly in the design software market and the potential consequences of its acquisition of Figma, a rapidly growing product design platform that has gained popularity surpassing Adobe's rival XD application.

Regulatory authorities were apprehensive that Adobe's acquisition of Figma could stifle innovation in the product design sector, particularly if Figma were to continue its growth independently. Despite Adobe and Figma asserting a shared vision to redefine the future of creativity and productivity, regulators remained unconvinced, leading to increased scrutiny of the proposed merger. The concerns raised by regulators focused on the potential negative impact on competition and innovation in the design software space.

Designers and industry experts had also expressed apprehensions about the merger, underscoring the potential risks to independent innovation in the product design realm. Adobe had consistently pushed back against such claims throughout the ongoing investigations.

The UK's Competition and Markets Authority (CMA) had suggested remedies to approve the merger following an in-depth antitrust probe. However, Adobe rejected these proposed solutions in a letter dated December 14th, prompting further discussions on December 21st. The CMA's provisional decision to block the deal had set a final deadline of February 25th for approval or rejection.

Simultaneously, the European Commission was conducting its own antitrust investigation into the merger. Following Adobe's announcement of the termination, the European Commission has also abandoned its antitrust inquiry.

Adobe's decision to terminate the merger underscores the challenges it faced in gaining regulatory approval, particularly in light of the proposed remedies. The termination fee of $1 billion in cash, payable to Figma, represents a significant financial outcome resulting from the conclusion of the merger agreement.

In a statement, Adobe's chair and CEO, Shantanu Narayen, expressed the companies' disagreement with recent regulatory findings but emphasized their commitment to moving forward independently. Despite the setback in their joint vision, both Adobe and Figma believe they are well-positioned to capitalize on their respective market opportunities and missions in the realm of personalized digital experiences.

For Figma, while the termination represents a deviation from the anticipated merger, CEO Dylan Field acknowledged the outcome was not what they had hoped for. Despite extensive efforts to engage with regulators and highlight the distinctions between the two companies, the path toward regulatory approval of the deal became increasingly elusive.


The termination of the merger agreement between Adobe and Figma marks a significant development in the tech industry, illustrating the challenges that even major players face when seeking approval for transformative acquisitions, especially in sectors where concerns about competition and innovation are paramount.

Adobe and Figma Abandon $20 Billion Merger Amid Regulatory Scrutiny
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