Adobe and Figma announced the termination of their merger

Adobe and Figma have jointly announced the termination of their proposed merger, following an exaggerated investigation from regulators in the UK and EU. The deal, which would have seen Adobe acquiring the Figma product design platform for a staggering $20 billion, faced increasing resistance due to concerns over market competition and potential stifling of innovation.

The regulatory authorities, particularly in the UK, were apprehensive about Adobe's perceived near-monopoly in the design software market. The fear was that the acquisition of Figma, a rapidly growing product design platform surpassing Adobe's XD application in popularity, might restrict independent growth and innovation.

As a consequence of the terminated merger, Adobe is obligated to pay Figma a reverse termination fee amounting to $1 billion in cash. Adobe's Chair and CEO, Shantanu Narayen, emphasized the companies' disagreement with the regulatory findings but underscored their mutual decision to proceed independently.

The UK's Competition and Markets Authority (CMA) had proposed remedies to address antitrust concerns, including significant divestment of assets, source code, and engineering resources. However, Adobe rejected these remedies in a letter dated December 14th, leading to further uncertainties regarding regulatory approval.

The European Commission was also investigating the deal, and there were indications that the US Department of Justice (DOJ) would initiate similar investigations in 2023. In the wake of Adobe and Figma's announcement, the European Commission has since dropped its antitrust investigation into the proposed merger.

Despite considerable efforts to communicate the distinctions between their businesses, products, and target markets, Figma's CEO, Dylan Field, expressed disappointment, stating, "It's not the outcome we had hoped for," and acknowledged the absence of a viable path toward regulatory approval.

The decision marks a significant turn of events for both companies, necessitating a reevaluation of their strategies in the evolving landscape of digital design and creativity. 

The technology community now awaits the individual trajectories of Adobe and Figma as they chart their courses independently.

Until then...

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