In September 2022, Adobe made headlines by announcing its plan to acquire Figma, a popular collaborative design platform, for a whopping $20 billion. This move sent shockwaves across the creative software industry as two former partners, one a leading player in creative software and the other an upstart, came together to form a powerful force in the market. Many see this as a significant development that could create an unstoppable industry juggernaut.

Yet just three months later, the deal lies in tatters, terminated under intense regulatory scrutiny on both sides of the Atlantic. What went wrong? And where do Adobe and Figma go from here?

Red Flags From the Start

While Adobe likely envisioned the Figma deal cementing its dominance in digital design and creativity, critics saw a competitive giant seeking to neutralize a threat by buying it outright. Figma had long been hailed as a viable challenger to Adobe’s own Experience Design platform; by folding Figma into its suite, Adobe could leapfrog its offerings while starving an innovative rival of oxygen.

UK and European regulators shared these concerns, wary that Adobe was cornering too much control over an essential creative market. When Adobe rejected the UK’s calls for significant divestments to approve the merger in mid-December, the deal’s fate was all but sealed. With deadlines looming and legal costs mounting, both companies agreed to walk away rather than wage a protracted, unwinnable war.

A Billion Dollar Breakup

While the regulators chalk up a win in stymying further consolidation, the abandoned deal also highlights the growing scrutiny over mega-mergers worldwide. Adobe finds itself out $1 billion in reverse break-up fees to Figma, hamstrung by red tape from gaining a key weapon against design upstarts. Figma gains a warchest to continue innovating independently but loses its shot at tapping Adobe’s vast resources and distribution channels.

The Road Ahead

Adobe says it remains well-positioned to lead in digital creativity without Figma; no doubt its forthcoming quarterly earnings will prove instructive on how much the deal’s collapse truly stings. As for Figma, its founders will continue charting their own course in design software. But one wonders whether Figma will someday find itself missing the scale only a deep-pocketed giant like Adobe could provide. While independence sounds romantic, it often comes at the cost of reach.

For now, though, designers and creatives nervous about further Adobe domination can breathe easier. The dream Adobe-Figma tie-up has been put to bed — even $20 billion couldn’t make this partnership last.