What does Adobe’s $20 billion acquisition of Figma mean?

Last month, we all heard the news that Adobe had an agreement with Figma to acquire it for $20 billion. To date, this is the biggest acquisition that Adobe has had to ever make. Therefore, to begin, let’s give some background on Figma.

Figma was launched on 27th September 2016 and became known as not only the best UI design tool for collaboration but also known as a direct competitor to Adobe XD. Figma also still has free and paid plans. You can get the paid plans after a 7-day free trial, but some paid plans are very expensive. Like Adobe XD, Figma is a browser-based tool for designing interfaces, but it also has mobile apps and desktop apps for Windows and Mac. Figma has features such as Figma Community and FigJam.

Figma homepage on the web

Next, let’s look into Adobe’s acquisition history and some information on their acquisition of Figma.

Adobe homepage after a user logs into their Adobe account

Since being founded in 1982 in a city called San Jose in the state of California in the United States, Adobe has made 31 acquisitions and 43 investments. In terms of acquisitions, this has cost Adobe over $13.21 billion.

The first acquisitions that Adobe made were Emerald City Software on 26th March 1990, BluePoint Technologies on 21st June 1990, OCR Systems on 29th June 1992 and Aldus Corporation on 31st August 1994.

Adobe then went on to purchase the following notable software:

• Photoshop — 1st January 1995.
• Frame Technology — 30th October 1995 (for $500 million).
• Sandcastle — 14th March 1997 (for $3.5 million).
• GoLive Systems — 4th January 1999.
• Macromedia — 3rd December 2005 (for over $3.5 billion).
• Business Catalyst — 31st August 2009.
• Behance — 21st December 2012 (for more than $150 million).
• Mixamo — 1st June 2015.
• Magento — 21st May 2018 (for $1.68 billion).
• Frame.io — 19th August 2021 (for $1.275 billion).

Here is some information about Adobe’s acquisition of Figma from Adobe’s point of view:

• The combination of Adobe and Figma will usher in a new era of collaborative creativity.
• Together, Adobe and Figma will reimagine the future of creativity and productivity, speed up creativity on the web, advance product design and inspire global communities of creators, designers and developers.
• The combined company will have a huge, fast-growing market opportunity and capabilities to drive meaningful value for customers, shareholders and the industry.
• “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.” — Shantanu Narayen, chairman and CEO of Adobe.
• The transaction is expected to close in 2023.
• After the transaction closes, Dylan Field, who is Figma’s co-founder and CEO, will continue to lead the Figma team, reporting to David Wadhwani, president of Adobe’s Digital Media business.
• Until the transaction closes, each company will continue to work independently.

Now, here is some information about Adobe’s acquisition of Figma from Figma’s point of view:

• When we started Figma, our stated vision was to eliminate the gap between imagination and reality, which can be reached significantly faster through our plan to join forces with Adobe and leverage their legendary team plus decades of expertise.
• There is a huge opportunity for us to incorporate Adobe’s expertise in imaging, photography, illustration, video, 3D and font technology into the Figma platform.
• Adobe is deeply committed to keeping Figma operating autonomously, and we plan to continue to run Figma the way we have always run Figma — continuing to do what we believe is best for our community, our culture and our business.
• The goal is to look back at this acquisition as an inflexion point where Figma started building even faster as we want to continue making Figma Design, FigJam and the Figma community platform even better.
• Recognising that we are in an unpredictable, inflationary environment, we currently have no plan to change Figma’s pricing.
• Finally, all of Figma will continue to be free for education as Figma’s education offering was a critical part of our conversations and Adobe is completely aligned on growing the number of designers, developers and creatives in the world.

Let’s look at the pros of Adobe’s acquisition of Figma:

• An opportunity will be created for soon-to-be former employees of Figma to create new businesses, which may lead to building brand-new disruptive design tools.
• Businesses, customers and end users will all benefit a lot from design through this acquisition.
• Adobe and Figma will have a rare opportunity to bring together capabilities for brainstorming, sharing, creativity and collaboration and deliver these innovations to hundreds of millions of customers worldwide.
• Figma’s capabilities will speed up the delivery of Adobe’s Creative Cloud technologies on the web, which makes the creative process more productive and accessible to more people.
• Adobe and Figma will be able to benefit all stakeholders in the product design process, from designers to product managers to developers, by bringing powerful capabilities from Adobe’s imaging, photography, illustration, video, 3D and font technology into the Figma platform.

Now, I just want to finish off by looking at the cons of Adobe’s acquisition of Figma:

• Adobe’s acquisition of Figma is projected to be bad for designers as the lack of competitors in design software enables Adobe to keep a monopoly on the market, forcing designers to learn or re-learn how to use some alternatives from scratch, such as Framer or Sketch.
• The pricing model of Figma may still be changed, which may turn out to be a catastrophe for access and inclusion in the industry as Adobe has a bad reputation for charging hefty prices for their design software on their Creative Cloud.
• There may be an exodus of Figma staff, even though Dylan Field, Evan Wallace and other members of the main team will likely continue in their roles.
• There is speculation that Adobe XD will not be a supported product within 5 years.
• Adobe’s acquisition of Figma will most likely break up the relationship that Figma has had with Microsoft for the last 10 years as thousands of designers and developers at Microsoft rely on Figma every day to build Office, Windows and more.

After looking at Adobe’s acquisition history, some information on their acquisition of Figma and the pros and cons of the acquisition, my conclusion is that while it may be good for Figma to have some new features added to it with the help of Adobe, I am very suspicious about the pricing of Figma, and the maintenance of free access to Figma once the transaction closes. This is because I like the fact that the staff at Figma are trying to keep up with the latest and future design trends, such as animation and 3D design, to innovate Figma to another level. However, I want Adobe to keep Figma free to use as this is one of the reasons why Figma has been so popular to use in the first place. Generally, we all need to wait for what happens in the next year or two to know what truly happens to Figma.

That’s what I know about Adobe’s $20 billion acquisition of Figma. Thank you for taking the time to read this and I hope it was in some way helpful to you. Have a great day. Until next time, bye.

— Ike