Adobe buys Figma: 5 reasons for hope or doom

Adobe’s acquisition of Figma has changed the design landscape of UX. The question is whether this is for the worse or the better.

In this article, we’ll try to shed some light and give a preview of what’s to come.

The Figma takeover background

Adobe Inc. said the acquisition will take the form of a deal consisting of half cash and half stock. In addition, Figma’s CEO and employees will be granted 6 million additional restricted stock units that will vest within four years of closing. Figma (the company) is expected to disappear in 2023, “subject to receipt of required regulatory approvals and satisfaction of other closing conditions, including approval by Figma shareholders.”

Figma’s strengths are design and prototyping for individuals and teams running in a cloud-based environment that has about 4 million users to date. Adobe has since built and acquired a number of companies in the broader world of digital creation, pushing the company not only into the larger and more general realm of design, but also into marketing and other areas besides design.

The deal is worth $20 billion ($20,000,000,000), doubling the previous valuation of Figma’s company and setting a record for design company value acquisition. While Adobe shareholders are somewhat concerned, most market analysts believe there’s no reason to be. We’ll go into the reasons below.

Why does Figma do this?

Well, obviously for financial reasons. If you read our article “Huge news: Figma will no longer be free from April 2021”, we predicted something like this more than a year ago. And no, we do not have a crystal ball.

The business strategy was so clear and transparent that this new development comes as no surprise: the whole model was to build a huge base based on a freemium model and then capitalize on the large number of users by charging for things that were initially free. This is nothing new and was to be expected.

If anything, the only real “surprise” is that they managed to do this so quickly, even though most analysts thought it would never happen (as in “Figma will be strong enough to stand alone”). A few people thought a takeover was possible, but not so fast and certainly not as a complete takeover.

Why does Adobe do this?

Well, it’s not the first time Adobe has done this, so we do not need to come up with complicated theories: Adobe has done this many times before. Simply put, if they can not displace a competitor, or even if they can but the competitor has a large market share, Adobe buys the company. The best example of this is the now defunct Macromedia, which developed classic products such as Dreamweaver, Fireworks, and most notably Flash.

As an aside, Macromedia is also an interesting case: the company followed the same strategy of acquiring smaller companies until it was acquired by Adobe in 2005 for $3.4 billion.

As I said, the Figma acquisition is not Adobe’s first acquisition of a company. Rather, it is the 56th; but that’s not all: many of the companies acquired had also acquired other companies (as in the case of Macromedia). So these assets also became part of the Adobe empire.

Take a look at the most expensive companies Adobe has bought up over the years, and you’ll see many of the most widely used web development and design services.

In short, this has been Adobe’s behavior since it began, nothing new or special. However, if you look at recent acquisitions, there is a clear paradigm shift: It is no longer buying companies from the “classic” design sector. This makes perfect sense, since Adobe has a virtual monopoly in this market. Instead, the company is diversifying into applied design, marketing, video and 3D, UX, etc.

Figma statement about the buyout

Figma released an statement in their blog, in which they basically say that everything we mention in this article will never happen. Furthermore, they don’t mention Adobe purchased Figma, but that this is just a collaboration.

The full statement as follows:

Today, we’re announcing that Figma has entered into an agreement to be acquired by Adobe. This has been in the works over the past few months and I’m so excited to finally share this news with the world.

Ten years ago, Evan and I set out on a journey to make design accessible to all. Looking back, I’m proud to say we’ve made progress through introducing Figma to designers of all ages, geographies, and levels of experience.

Looking ahead, we’re still barely scratching the surface. There’s such an opportunity (and need!) to make design and developer tools more collaborative and accessible. When we started Figma, our stated vision was to “eliminate the gap between imagination and reality.” I believe we can reach this goal substantially faster through our plan to join forces with Adobe and leveraging their legendary team plus decades of expertise.

While this is not the end of the story, it is the closing of a chapter, and I want to thank all the Figmates (past and present), community members, and customers who helped us reach this milestone. You bet on us before there was a reason to — before cursors flying across the screen was normal, before design was at the center of the product process and before we knew what we were doing. Milestones are mirrors through which we can see the hard work of many and I am so grateful.

I understand this is a big change, especially for a platform you rely on every day. So I want to elaborate more on our plans for how this acquisition will work operationally and why I believe this is a partnership that will ultimately benefit you and the Figma platform.

Continue reading here (opens in new window)

Then, after this statement comes a very interesting disclaimer:

the words “will,” “expects,” “could,” “would,” “may,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “targets,” “estimates,” “looks for,” “looks to,” “continues” (…). As well as statements regarding our focus for the future, are generally intended to identify forward-looking statements. Each of the forward-looking statements we make in this communication involves risks and uncertainties from these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to: expected revenues, cost savings, synergies and other benefits from the proposed transaction. Adobe’s ability to enhance Creative Cloud by adding Figma’s collaboration-first product design capabilities and the effectiveness of Figma’s technology, might not be realized within the expected time frames or at all. Costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected;

https://www.figma.com/blog/a-new-collaboration-with-adobe/ disclaimer

In other words: “everything in this statement can be true or false, no guarantees at all”.

What to expect from now on?

Based on past history from both companies, we shouldn’t expect any surprise. Things will repeat as usual. Most important things to expect are:

1 – More expensive software

Figma will no longer be free. Not even a chance. $20 billion is not a pittance, and we know Adobe does not offer anything for free (with the exception of Adobe XD, which was the futile intent of competing against Figma). Maybe not in the short term, but say goodbye to free projects.

2 – Virtual monopoly

Adobe has a virtual monopoly on design software. The following chart from Statista shows that Adobe has an 80% market share in May 2022. Now, with Sketch only working on Mac and InVision failing as an alternative, the collaborative UI design market belongs to Adobe as well.

3 – Loss of privacy

Adobe has serious issues with user data security and privacy. It starts with the company installing software that audits all activity on the computer down to the registry level. This is a big problem because users have no control over their data: Either they accept the software or they don’t use it. Plain and simple.

But things become really worrying when you consider that Adobe has a history of data breaches. In other words, all user information is pretty insecure. And there’s nothing you can do about it.

Of course, they can argue that they’re doing this to prevent software piracy (which is rampant with their products). That’s reasonable and we can understand their point of view. But the fact remains: If you use an Adobe product, your privacy (and security) is “dubious” to say the least.

4 – Creative Cloud Integration

CC Integration can be considered a good thing in most cases. Having many resources at hand is a good thing and saves time. Of course, it also comes at a price. But as long as you can afford it, all in all it is a good thing.

5 – Increased quality and features

Let’s not kid ourselves: Adobe products are very high quality. And their vast resources are an advantage not to be underestimated. I’m very confident that Figma will reach heights we can’t even imagine, starting with AI-based processes and 3D manipulation. Maybe even content creation or reviving some projects like Dreamweaver or Adobe Express. Time will tell, but it’s definitely a good thing to keep an eye on.

Winners and Losers

All in all, Adobe is the clear winner, no matter what the future may bring. The same goes for Figma’s CEO and shareholders.

As for the losers, it’s too early to tell, but the gut feeling, based on the reactions of Figma’s broad user community, is users and the entire UX community in general. With the exception of Figma’s CEO, Dylan Field, I couldn’t find a single person who sees this as a positive move for anyone but shareholders.

Field’s very odd disclaimer doesn’t help either.

And unless something has changed in Adobe’s mindset (which I’ve no evidence of), they’ll repeat what they’ve always done: monopolize the market and charge for free stuff. Time will tell, but in the meantime, I expect to pay $60 for Figma in Creative Cloud. That’s a 300% increase per seat.

Prediction: Doom.

Fabio Devin

Fabio is Bachelor in Marketing, Master in Human Computer Interaction and a UX Evangelist.

He worked for some of the biggest companies in the world. As such, he has developed entire systems and businesses for clients of all sizes.