17 months ago in September 2022, Adobe announced the company would acquire Figma for a total of $20 billion. Yes, you heard that right — $20 billion.

This came as shellshock for most, as Adobe was willing to pay 2x Figma’s valuation and 50x Figma’s annual recurring revenue. Now, 15 months later on December 2023, Adobe decided to terminate this acquisition. Both companies have reached a mutual agreement after hitting so-called roadblocks from EU and UK regulators.

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What does this mean for Figma?

The termination of this contract means that Figma faces uncertainty in its development path. While the acquisition deal promised a hefty sum and retention packages for its CEO and employees, potential suitors like Microsoft might hesitate due to regulatory hurdles. 

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Figma operates in a highly competitive market for product development tools, ranging from all-in-one solutions like Sketch and Penpot to specialized point tools like Miro and Zeplin. The emergence of low-code environments further intensifies this competition, with companies like Salesforce offering accessible app-building platforms. The rapid pace of innovation, particularly driven by AI, adds another layer of complexity.

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The significance of these competitors lies in the constant evolution and expansion of the market, presenting Figma with ongoing challenges to maintain its position and relevance. With Adobe terminating its acquisition of Figma, the competitive landscape becomes even more uncertain. While Figma has demonstrated resilience and innovation, the intensifying competition and the potential loss of a major strategic opportunity with Adobe could pose significant hurdles to its future growth and success.

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Adobe-Figma acquisition: What does it mean for Adobe?

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For Adobe, this move appears to be a solid step forward, with their shares soaring over 60% since the announcement. Despite regulatory concerns, which are now alleviated, there's optimism that Adobe might redirect the earmarked funds toward expanding its buyback program. Additionally, Adobe Express, a collaborative tool, is evolving to fill the void that Figma's absence might create.

Adobe used to have a product that tried to compete in Figma’s market called Adobe XD, but it was never a viable competitor. Adobe recognized that and moved XD into “maintenance mode,” meaning they stopped developing new features for XD a long time ago.

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As for tools like Photoshop and Illustrator, which most people are familiar with, they focus on more creative use cases like photo editing and advanced illustration. These are very, very powerful tools, but they’re not at all suitable for helping teams build websites and apps, which is what Figma is focused on.

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While the collaboration between these two powerful software could’ve been revolutionary, it wasn’t meant to happen – at least currently. We do not know what the future has in stock. 

Either way, Figma remains on top of its market for the innovative platform and features that it keeps continuously introducing. So, even if the termination of the contract between Adobe and Figma has surely posed a threat to the latter, it doesn’t by any way mean that Figma won’t continue thriving on the market. 

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With its commitment to innovation, user-friendly interface, and versatile collaborative features, Figma continues to attract users and solidify its position as a leading product development tool.

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To learn more about Figma, do check out our other free resources and articles.