Sam Stromberg (.me)

From the Archives - Adobe Buys* Figma

Forward

I wrote a rapid response (if I was truthful in the dateline, the next day!) when Adobe announced its plans to buy Figma in 2022. More than a year later (December 2023) the parties announced the deal was off, and Figma itself IPO'd in July 2025. This was an attempt to pour cold water on all the hype that conflated the offer announcement with the deal actually being done -- but my read of the regulatory environment suggested that it wasn't going to be smooth sailing.

Putting on my editor hat... I was apparently leaning in to boldface at the time? This was when I was playing around with the email-newsletter medium (supported by Ghost out of the box), so maybe it was related to that? Also not a lot of h3 subheads, so maybe it was a way to break up the wall of text a bit. I'm switching some of the bolded transitions to section breaks

Original post (lightly updated for clarity)

Clearly, Adobe had been waiting for me to write about[1] the usurpation of their design-software throne before finally making their move[an offer to buy Figma]. And while the reported $20B acquisition cost is a lot, it's not LinkedIn or Slack money. What has surprised me is how little the regulatory review of the deal has figured into reporting – I have a feeling strings will become attached before it closes.[2]

An instructive precedent

An instructive example (one which I was planning to write about anyway) is that of Fitbit, acquired by Google in 2019... or, rather, the announcement was made in November 2019, but the deal didn't clear for more than a year, as the European Commission only granted its conditional approval at the end of 2020, and its American counterpart the Federal Trade Commission timed out of its prescribed review window in early 2021 (without lodging an objection, although they claimed to not have closed their books on the investigation). The EC imposed strict firewalls between Fitbit and other parts of Google's ecosystem, in the name of preserving competition in the wearables space.

In particular, data generated by Fitbit cannot be used to improve Google Ads (whether personalized or in aggregate), and the pairing of device and OS must offer open/equal API access to third parties on both the device-data side (e.g., by Strava or Nike Training Club) and on the Android side (e.g., by Samsung or Garmin wearables). In other words, although the merger happened, the most obvious and potentially-exclusionary benefits of a Fitbit-Android bundle are prohibited as anti-competitive behavior in a previously-unconsolidated market.

But wait!

What seems odd about this decision is that the market for wearables is not previously-unconsolidated, because Apple Watch has overtaken and now completely dominates Fitbit, and, indeed, the whole wearables market, by both units sold and marginal revenue. (It has also surpassed the entire Swiss watch industry in volume, but that's for another day.) And Apple Watch, notably, does not merely have preferential treatment in bundling with iOS, it requires it. Apple also has its own ad business, which also benefits uniquely from iOS user datastreams, which likely include data from Apple Watch. So the Google/Fitbit/Android restrictions aren't being levied against its toughest competition.

This could be because:

  1. iPhone doesn't hold a majority share of the mobile OS market in Europe the way it does in the US – so EU regulators may be more inclined to see it as an ordinary competitor, rather than the dominant incumbent.
  2. Apple developed the Watch in-house... or at least made key acquisitions early enough in their developmental pipeline that there was no commercialized product yet. As a result, there was no regulatory review of the Watch OS + iOS synergy or its effect on competition in the wearables space – rather, it was an Apple product release from the get-go.

Adobe may have waited too long

This is to say – if you let the disruptive competitor get far enough along that they're making money* (Figma is privately held) and eating into your market share, regulators get the opportunity to ask a lot more questions than if you acquire early and have your name on everything from the beginning.

A lot of the practical side of coverage of the deal announcement has been about Adobe making Figma more extensible by connecting it seamlessly with the rest of its product suite. But, to the extent that there exists a competitive market for design software, these integrations are (one of) the key thing(s) the EC found objectionable about Google-Fitbit.[3]

Comparatively speaking, the Figma-XD-InVision-Sketch market is at least somewhat more competitive[4] than that for Photoshop, Illustrator, Premiere, Lightroom, etc., and so bundling it in with them threatens its consolidation. It may take until next fall -- by which time we may assume Figma is either being left alone by its new overlords or complain that it's already been ruined -- but in a world where the Facebook-Instragram acquisition is considered paradigmatic anti-competitive behavior, the EC and FTC are likely to push back against the deal unless Adobe makes significant concessions.

Notes

  1. I might get around to reposting this one as well, it's pretty much "I actually read The Innovator's Dilemma and want to talk about "disruption" in a concretely-defined and rigorous way, about Adobe's positioning in 2022. ↩︎

  2. Should have said "if it closes" to look really smart, but I'm trying to keep vanity-editing after the fact to a minimum. ↩︎

  3. The other is the ad-data issue, which, considering the comparative lack of guardrails around mobile-phone location data, feels more like a statement of intent than an actual consumer protection.[5] ↩︎

  4. I'm just going to assume this was more true in 2022 than it is now. ↩︎

  5. I'm not totally sure what I meant by this? Since I would think the most sensitive data wearables are capturing are biosignals, not location data (which, to be sure, they can take from your phone's cell-tower pairings). But maybe it's like a "the horse is out of the barn on mobile-device privacy, strictly fencing wearables data is too little too late" thing. ↩︎