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Why Adobe tried to buy Figma

December 19, 2023
2 minutes

Strategy | Business Models | Tech

Figma websitePhoto: Figma.com


The Wall Street Journal: “Adobe has called off its planned $20 billion acquisition of the collaboration-software company Figma, weeks after a U.K. regulator warned that the deal would likely harm innovation.

Adobe and Figma said Monday morning that they have mutually agreed to terminate the cash-and-stock transaction because they couldn’t see a clear path to receiving regulatory approval from the European Commission and the U.K. Competition and Markets Authority.” (link)

But, why Adobe tried to acquire Figma in the first place? Well, there are two reasons: (1) the innovative approach Figma introduced in the design software market and (2) the strategic benefits Adobe seeks for its future positioning.

Let’s take them one by one:

1/ Figma represented a significant shift in the design software landscape, differentiating itself from competitors like Sketch and Adobe’s products. Its unique selling point was its browser-based platform, enabling unparalleled collaboration and integration in design workflows, a stark contrast to the desktop-centric models of its rivals. This innovation was critical in a market increasingly defined by teamwork and complex projects involving designers and developers. While Figma did not directly challenge Adobe’s flagship products like Photoshop and Illustrator in terms of their core functionalities, its evolving capabilities and potential for expansion into broader feature sets posed a long-term strategic challenge. The introduction of APIs and support for third-party plugins in Figma signaled a move towards creating a more comprehensive and integrated design ecosystem, a threat to Adobe’s dominance in the field.

2/ From a strategic standpoint, Adobe’s acquisition is a forward-looking move to maintain its leadership in the rapidly evolving design software market. Recognizing the shift towards more collaborative and web-based tools, Adobe’s acquisition of Figma is a step towards adapting to this new paradigm. Unlike Adobe’s acquisition of Macromedia, which was more about consolidation, this move is about embracing and leading a transition to a new way of working in design. The considerable investment made by Adobe, including a significant acquisition cost and stock options for Figma’s team, underscores the strategic importance Adobe places on Figma’s technology and market presence. This acquisition was less about eliminating competition and more about integrating a pioneering platform into Adobe’s suite of tools, ensuring Adobe remains at the forefront of the design software industry.\

So, on the 18th of December, this move failed. What’s next for Adobe? Simply put, focusing on innovation: Adobe Firefly (generative AI at full speed) while developing a robust plugin ecosystem.

 

 

 

 

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