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Adobe has abandoned its proposed $20 billion acquisition of product design software company Figma, as there was “no clear path to receive necessary regulatory approvals” from UK and EU watchdogs.
Adobe refused to offer remedies to satisfy the UK Competition and Markets Authority’s concerns last week, according to a document published by the regulator on Monday, arguing that a divestment would be “wholly disproportionate.”
The companies had been battling multiple regulatory challenges, with the EU’s executive body, the European Commission, publishing a statement of objections to the deal last month arguing the takeover could “significantly reduce competition in the global markets.”
Competition regulators around the world have sent mixed signals over the aspirations of Big Tech groups hoping to acquire promising start-ups and potential rivals, at a time when public markets have been largely closed to new listings.
The deal, which was first negotiated during the COVID-19 pandemic’s boom in tech investment and announced in September 2022, would have valued Figma at roughly 50 times its annual recurring revenue, and double its last private funding round in 2021.
Earlier on Monday, the CMA had published the companies’ responses to its provisional findings, which Adobe and Figma said contained “serious errors of law and fact” and took “an irrational approach to the gathering and appraisal of evidence.”
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I think this is good. Adobe doesn’t need to get bigger, it needs to let go of some of its parts.
Also figma balls
I had no idea this was happening and I’m so relieved it hasn’t.
Great news. Adobe is terrible.
Speaking with the Financial Times last week, Figma chief executive Dylan Field said: “It is important that those paths of acquisition remain available because very few companies make it all the way to IPO. So many companies fail on the way.”
I.e. “Our business model never included plans for us to actually have to compete!”
The concept of competition among tech companies has done a complete 180 on its original meaning. It’s no longer predominantly about crafting superior products; rather, it’s become a race to secure the largest amount of investor funding.
In this transformed landscape, the product itself and revenue generation often take a backseat, or at best, hold a tertiary importance. The heart of customer-centric ethos, especially crucial elements like data security, are now distressingly overlooked. What matters is getting the next investment to become the next “unicorn” and be acquired for billions of dollars. Silicon Valley Companies want the easy way out, do only a fraction of the work for an exponential amount of the benefits.
Don’t get me wrong, there are reasons to seek investment, getting a good product built is actually complex and you actually need a lot of different people working on it. The alternative is losing years of your life on a sisyphean ordeal of soul-crushing, hundred-hour work weeks (and that’s real work, not “let me check twitter” work), making you question your life choices and whether you should just throw it all away, abandon technology, become a hermit and move to a shed in the mountains.
The problem is that the EXPECTATION today is that you’re gonna build a third of a product, care about 1% of the actual business behind it and then pivoting exclusively to the pursuit of investment, letting everything else rot
What’s so good about this particular acquisition failure is that Figma is actually a really good product, and Adobe would most certainly have fucked it up.
I wonder if Adobe will come back on their word that XD’s a discontinued product now that they’re not about to take over its competitor.
I expect them to pull the feature set into Photoshop, Illustrator, or Dreamweaver because they love bloat.
