Adobe has announced that it has entered into a mutual agreement with Figma to terminate their merger. The company said that after a joint assessment between the two companies, there was no clear path to gain regulatory approvals from the European Commission and the UK Competition and Markets Authority (CMA).
“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” said Shantanu Narayen, chairman and CEO of Adobe. “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’s CEO, Dylan Field, said that the deals had merits that became increasingly clear to him but admitted that the regulators don’t see things the same way. He went on to say that the companies are disappointed by the outcome.
Under the termination agreement, the two companies have resolved matters, including the transaction and Adobe paying Figma the agreed termination fee.
Regulators in the European Union and the United Kingdom have expressed concern that Adobe and Figma are close competitors, and the removal of Figma from the market could result in Adobe securing a monopoly position.
If Adobe did gain a monopoly, it could increase the prices of its products and services until a time when a new competitor arrives on the scene, as it would have little competition. With less competition, Adobe may also feel that it can rest on its laurels and stop innovating, as there just wouldn’t be any need to spend that money.
Regulators around the world have recently been scrutinizing big tech firms more closely in their proposed acquisitions. While Microsoft did successfully buy Activision Blizzard, it had a tough time with regulators who were very concerned that Microsoft might try to make Call of Duty an Xbox exclusive, which would seriously damage PlayStation’s ability to compete with Xbox.