• Regulators said that if Adobe acquired Figma it would lessen competition in multiple markets.
• With this pushback in mind, Adobe and Figma have decided to scrap the acquisition.
• As a result, Adobe will have to pay Figma a reverse termination fee amounting to $1 billion.

Last year, Adobe announced that it wanted to acquire collaborative design platform Figma for as much as $20 billion. However, after more than a year, both firms have announced they are abandoning the proposed acquisition due to worries about obtaining the necessary regulatory approvals from the European Commission as well as the Competition and Markets Authority (CMA) in the UK.

The CMA said in June that it believed that the acquisition of Figma by Adobe would lead to a “substantial lessening of competition within a market or markets in the United Kingdom”. The European Commission went a step further and said that the acquisition would have repercussions on the design software market around the world.

“The Commission has conducted a wide-ranging investigation to understand the potential impact of the deal. This investigation has included, among others, analysing internal documents provided by the parties and gathering information and views from competing software providers and customers,” the commission said in a statement issued last month.

“The European Commission has informed Adobe of its preliminary view that its proposed acquisition of Figma may reduce competition in the global markets for the supply of interactive product design software and of other creative design software,” it added.

As you might expect, Adobe isn’t pleased with the decisions made by regulators.

“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” Shantanu Narayen, chair and chief executive officer at Adobe said in a statement. “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.”

“While we’re disappointed in the outcome, I am deeply grateful to everyone who has contributed to this effort and excited to find other ways to innovate on behalf of our respective communities with Adobe,” co-founder and chief executive officer at Figma, Dylan Field wrote in a blog post.

The CEO added that Figma will continue as an independent company.

As part of the deal, Adobe will now have to pay Figma a reverse termination fee of $1 billion according to a report by The Verge. While not unusual for a deal like this, it’s a nice chunk of change for Figma which it can use to further its reach and the capabilities of its software.

Figma users are celebrating this news as there were major concerns that once Adobe took hold of the firm it would strip the software of what made it great and move those features to other apps. However, users are also critical of Figma as it seems the bugs and quirks of the software have become rather irksome. Let’s hope Field et al use some of that $1 billion to improve the platform.