Adobe-Figma deal could be Delayed by a DOJ Lawsuit worth $20 Billion

Adobe-Figma deal could be delayed by a DOJ lawsuit worth $20 billion

As Bloomberg reported yesterday afternoon, the US Department of Justice is getting ready to file a lawsuit against Adobe and Figma for the $20 billion merger announced last year on the grounds that it is an anti-competitive agreement.

In addition to the EU's announcement earlier this month, the U.K.'s competition arm is also studying the acquisition closely. There is some disagreement between Adobe and the claim that the deal is anticompetitive as the two companies look at very different markets - creativity and collaboration - in their statement.

Figma specializes in interactive product design, focused on building a collaborative web platform. Adobe is a leader in creative tools, enabling millions of users to create amazing visual content. As a result of our collaboration, the company says that millions of consumers will be able to transform their productivity with creativity as a result of our shared vision.

As part of its continued efforts to bring the deal to completion, the company indicated that it is continuing to work closely with all regulatory bodies. It is our belief that the transaction will be completed in 2023, in line with our previously stated guidance. We are in constructive and cooperative discussions with regulators in the United States, the United Kingdom, and the European Union, among others.

In response to Adobe's statement, Figma simply mirrored it by making its own statement. Figma is reimagining product design, bringing the power of collaborative, web-based tools to teams all over the world. Adobe, on the other hand, is delivering the most advanced tools available to help people express their creativity everywhere in the world.

With our complementary strengths, we have the potential to create tremendous value for consumers. We look forward to continuing to engage regulators and discussing the benefits that can be brought to consumers through a combined Adobe and Figma entity."

It is my belief that Adobe and Figma's arguments are not correct and that this deal is critical for Adobe to remain relevant in a world increasingly dominated by generative AI in the creative industry. According to Ray Wang, founder and principal analyst at Constellation Research, the deal is necessary for Adobe to remain competitive.

It may appear too obvious, but I think Adobe needs to make some bets on something to ensure that they don't become irrelevant in the future. If they don't, their core creative business could disappear within 10 years, let alone in five," Wang told TechCrunch. "We should be honest with ourselves about Stable Diffusion, Stable AI, Midjourney and DallE.

According to him, if the DOJ is successful, it could have a devastating effect on businesses' ability to react to changes in the market in the future.

If the DOJ blocks a company's expansion and compliance with its fiduciary responsibility, this would result in a death sentence for businesses, Garcia said. “Adobe needs to find new businesses and adjacent businesses,” he pointed out.

According to Dylan Field, Figma's CEO, who spoke at TechCrunch Disrupt last year, he believes that by merging with Adobe he will be able to move much faster than he could on his own, a standard statement for any CEO whose startup is being sold:

Dylan stated in his words, "I started forming a thesis, which was 'creativity is the new productivity' and since we at Figma do not have the resources to get there right now, I began to form a hypothesis: creativity is the new productivity.". we are unable to do that," he explained, giving the standard answer most startups give when selling to a bigger company.

As for our goal to be able to go into all of these more productive areas, that is going to take a lot of effort on the part of the team. To be able to do that within the context of Adobe, I think gives us a huge advantage and I am really looking forward to that."

It is estimated that Figma has raised over $333 million before the acquisition announcement, according to Crunchbase. In its most recent investment, a $200 million round in June 2021, the company was valued at $10 billion. When the companies announced the acquisition in September 2022, the final price was double what had been negotiated in 2021 when the company announced the acquisition.