Three years ago, Adobe made headlines when it announced that it would pay $20 billion to acquire the design software company Figma. However, that deal never took place. Today, Figma has not only maintained its independence but also successfully completed one of the largest tech initial public offerings (IPOs) in recent history.
Figma went public on the New York Stock Exchange on July 31, 2025, with an IPO price of $33 per share. A spectacular debut ensued, with shares opening at $85 and closing at $115.50, giving the company a market valuation of almost $68 billion, more than three times the amount Adobe had proposed to pay.
How did this dramatic turnaround happen? Here are the three big reasons why Figma walked away from Adobe.
Regulators said no
Adobe announced plans to pay $20 billion to acquire Figma in 2022. However, antitrust authorities in the US, UK, and Europe took notice of the deal right away. They were concerned that allowing Adobe to acquire Figma would reduce competition in the design software market, where Adobe already dominates with programs like Photoshop and Illustrator.
The pressure from the antitrust authorities became unbearable by December 2023. Figma and Adobe decided to end the agreement. The agreement was so serious that Adobe was required to pay Figma a substantial $1 billion “termination fee.” The failed merger became a well-known illustration of the growing opposition to Big Tech mergers around the world.
Adobe’s inability to provide effective remedies
The main reason Adobe was unable to satisfy competition authorities with its $20 billion acquisition of Figma was because the regulators, especially those in the US, the EU, and the UK (Competition and Markets Authority, or CMA), had serious antitrust concerns. According to these officials, the acquisition would significantly lessen market competition for digital design software, which could impact innovation and drive up costs.
In particular, Adobe did not provide reasonable answers or compromises that would have allayed regulators’ concerns that the merger would strengthen Adobe’s monopoly-like position in this market. For example, the UK’s CMA suggested remedies that would have compelled Adobe to sell off substantial assets, resources, and potentially source code. Nevertheless, Adobe turned down these suggested fixes because they were probably thought to be too burdensome or harmful to Adobe’s business strategy.
Lina Khan’s leadership
Under the leadership of individuals such as former FTC chair Lina Khan, regulators are adopting a more stringent approach to mergers that have the potential to undermine competition. Khan even hailed Figma’s initial public offering as evidence that startups can prosper without being absorbed by tech behemoths.
The loss of Figma means that Adobe will lose out on a rapidly expanding rival that now has the resources and drive to continue expanding independently. The $1 billion fine and the emergence of a strong competitor demonstrate how the deal’s collapse changed the game.