Adobe won't buy Figma after all

Adobe and Figma have called off their planned merger more than a year after the deal was announced. The software giant behind the likes of Illustrator, Photoshop and now Firefly was to pay $20 billion for the collaborative UI design platform, but the deal came in for intense scrutiny from competition regulators in the EU and the UK.

Dropping its acquisition of the platform that remains our pick of the best UI design tools will be a costly decision for Adobe. It will have to pay Figma a $1 billion reverse termination fee as a result. The move also leaves Adobe out of the UI design software market, at least for now.

The companies have cited regulatory scrutiny as the reason for the termination of the deal. The UK Competition and Markets Authority (CMA) had called for Adobe to sell off assets and source code for the deal to go through, a proposal that Adobe had rejected. A meeting on the issue was scheduled for this week, and the CMA wouldn't have made its final decision until 25 February. Meanwhile, the European Commission was also investigating the deal, a move that's now been dropped.

In a statement confirming the news, Adobe chair and CEO Shantanu Narayen said: “Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently. While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalize on our massive market opportunity and mission to change the world through personalized digital experiences.”

Figma CEO Dylan Field said in a statement: “It’s not the outcome we had hoped for. But despite thousands of hours spent with regulators around the world detailing differences between our businesses, our products, and the markets we serve, we no longer see a path toward regulatory approval of the deal.”

For Adobe, buying Figma made sense. Adobe dominates the software market in many areas of design, but UI is an exception. Its own Adobe XD, which was cut from the Adobe software list after the Figma deal, was always playing catch up other tools and didn't managed to establish itself. Figma was much more popular.

However, creatives that use Figma expressed concerns when the deal was announced. Many liked Figma's independence and light footprint and feared that Adobe would increase the cost of the platform, which currently has a free starter plan and a professional plan that starts at $12 per month per editor – significantly less than an Adobe Creative Cloud single-app subscription. Creatives have been quick to react to today's new on social media.

It will be interesting to see now how Adobe reacts and whether it will try to revive Adobe XD or launch another platform for UI design. Despite removing the option to purchase Adobe XD from its list of apps, support for the app still exists for previous users. However, it's been very much neglected, and there was little in the way of updates on UI design at Adobe MAX this year, suggesting Adobe assumed the Figma takeover was in the bag.

To learn more about Figma, see our recent day in the life feature with product designer Natasha Tenggoro. Also see our Figma review. Until the end of this month, you can get a free Figma Pro subscription with our online UX design course.