PSPINC Official Company Blog

Last year, Adobe, the company behind the invention of the PDF and popular programs like Photoshop and Illustrator, announced its plan of acquiring the cloud-based design tool, Figma, for $20 billion. One that even our web designers use here at PSPINC. Adobe has a history of acquiring more than 50 companies in its 40-plus years of existence. So, if this is so standard for Adobe, why are people making such a big deal out of it? For starters, this is the most money Adobe’s ever spent in acquiring a company. About four times more. Their second largest acquisition behind Figma was Marketo in 2018 for $4.75 billion. So, the real question is, why is Adobe investing so much in buying out Figma?

Adobe has a rich history of acquiring companies and either adopting them as their own or letting them slowly die out. For example, Photoshop is arguably the most lucrative acquisition deal Adobe’s ever made. They purchased Photoshop for $34.5 million in 1995, right when computer technology and digital photography technology advanced. But Adobe has also bought out companies just to eliminate the competition slowly. An example would be FreeHand. And there’s a reason you probably don’t recognize the name. Adobe acquired FreeHand in 1994 for $525 million and by 2007, Adobe announced the end of FreeHand.

 

Figma, as of June 2021, has a valuation of $10 billion, but because Adobe sees the value in it, they offered double the amount. And it’s for a good reason; Figma allows for greater collaboration between designers. And it’s something Adobe hasn’t figured out how to do effectively yet. While Adobe has the Adobe Creative Cloud, many designers have expressed their frustration with its lack of collaboration features. Figma, however, has browser functionality, which is something Adobe doesn’t have with any of its design products. Including the program they created to directly competed with Figma, Adobe XD.

Because of Adobe’s history of products like FirstHand, Figma users are worried about what Adobe will do to what’s become an essential design tool. One of those worries includes making Figma a paid tool rather than a free one. The fact that Adobe’s offer is double Figma’s value speaks volumes, and it has the potential to create a big impact in the SaaS (Software as a Service) industry. Unfortunately, the Adobe-Figma deal is now facing anti-competition concerns. EU authorities are pushing for a formal investigation. And the U.S. Justice Department is preparing an antitrust lawsuit, which, if successful, would effectively block this deal. So, only time will tell how this will pan out.

 

Adobe and Figma have reached a mutual agreement to terminate their merger agreement after facing pressure from regulators.