In Defense of

On September 15, 2022, Adobe announced they were buying Figma for $20 billion. Fifteen months later, they announced they weren't. In between, they paid Figma $1 billion. For nothing. [Adobe SEC 10-Q]

Both signatures — the $20 billion "yes" in 2022 and the $1 billion "nevermind" in 2023 — belonged to Adobe CEO Shantanu Narayen. Same executive. Same company. Two decisions. One very expensive disagreement with regulators. In March 2026, Narayen announced he would step down after 18 years as CEO, with Adobe stock down 23% year-to-date. The Figma receipt outlived his tenure. [CNBC, March 2026]

Not a share. Not a stake. Not a consulting agreement. Not even a discount on future negotiations. Just one billion dollars in cash, wired directly to a company Adobe would never own, in exchange for the privilege of ending the conversation.

Figma took the check. Then Figma went public in July 2025 at a $68 billion valuation. [Barchart/Yahoo]

Let those numbers sit for a moment.

Adobe offered $20 billion. Adobe paid $1 billion to walk away. The company they walked away from became worth 3.4× the original offer. Somewhere in that math is a business lesson. It's not a good one.

The Deal That Made Sense (September 2022)

Let's start with the obvious question: why would Adobe want Figma in the first place?

The answer is embarrassing. Figma had been quietly eating Adobe's lunch since 2016. While Adobe was busy raising subscription prices on Photoshop and Illustrator, a small startup in San Francisco built a browser-based design tool that let entire teams collaborate on the same file in real time. Designers loved it. Product managers loved it. Engineers who had never opened Adobe products in their lives were using Figma daily.

Adobe had a competing product. It was called Adobe XD. If you've never heard of it, neither had most of Adobe's employees.

By 2022, Adobe XD had accumulated some remarkable statistics. It had lost $25 million as a standalone product over three years. It had exactly 5 full-time employees. When Adobe's own executives were asked to describe XD's market position, they used phrases like "not meaningfully competitive." Five employees and $25 million in losses. Most startups fail with better numbers than that. Adobe XD wasn't a product. It was a tax write-off with a UI.

Meanwhile, Figma had 800 employees, $400 million in annual recurring revenue, and customers including Uber, Coinbase, Zoom, and Airbnb. It was growing 40% year over year. It was, in every measurable way, winning.

So Adobe did what dominant companies do when they can't compete: they tried to buy the competition. If you can't beat them, buy them. If you can't buy them, pay them $1 billion anyway. Adobe chose option three.

"$20 billion. Half cash, half stock. Twice Figma's private valuation. Announced with a straight face on September 15, 2022."

Adobe CEO Shantanu Narayen called it "transformational." Wall Street analysts called it defensive. Regulators called it a problem. Figma employees called their real estate agents. [Variety]

The Regulators Notice (October 2022 — November 2023)

Big Tech acquisitions in 2022 were entering a new era. After a decade of Facebook buying Instagram and WhatsApp without consequence, and Google absorbing every AI startup that showed promise, antitrust regulators worldwide had decided to actually do their jobs.

The Adobe-Figma deal became a test case in three separate jurisdictions:

Fifteen months of regulatory review. Two jurisdictions. Countless legal fees. And at the end, Adobe had spent enormous resources arguing that a deal shouldn't be blocked, only to walk away themselves because they couldn't get it approved. [Bloomberg] [Fortune]

In its defense: regulators can be unreasonable

Adobe genuinely believed it could out-argue the UK's CMA and the European Commission simultaneously. This is not stupidity. This is confidence. Different word, similar cost. Adobe spent fifteen months and untold millions in legal fees to argue that their product was so bad they deserved to buy the only good one. The regulators listened politely, took notes, and said no. Both of them. On both sides of the Atlantic.

Adobe's Defense (And Why It Backfired)

Adobe's argument to regulators was memorable, mostly for being self-defeating.

Here's what Adobe told the CMA, verbatim: "We don't compete with Figma in any meaningful way. Our only relevant product, Adobe XD, has lost $25 million as a standalone app over the last three years and has only 5 full-time employees."

Read that again slowly. A $200 billion company walked into an antitrust hearing and argued that its own product was garbage. Their lawyers charged by the hour for this.

Adobe's legal defense was essentially: Please approve this acquisition because our competing product is a spectacular failure.

The regulators heard this and thought: exactly. That's precisely why we're not approving it. If Adobe XD can't compete with Figma when they're separate companies, buying Figma isn't consolidation — it's surrender with a checkbook.

"Adobe walked into a courtroom, produced evidence of their own failure as competitors, and argued that this failure justified eliminating the only successful competitor in the market. The regulators wrote this down."

The CMA's final analysis identified three separate product markets where the merger would substantially reduce competition. Adobe, according to the CMA's public documents, refused to offer remedies. No divestitures. No behavioral commitments. No consolation prizes.

Their strategy was to force approval through argument rather than negotiate a modified deal. It didn't work. Regulators don't approve $20 billion mergers because you asked nicely.

The $1 Billion Receipt

When the deal died on December 18, 2023, Adobe was contractually obligated to pay Figma a reverse termination fee of $1 billion in cash — commonly known as a breakup fee. [Figma S-1 SEC Filing] This clause had been negotiated fifteen months earlier, when Adobe was confident regulators would fold.

They didn't fold.

So Adobe wired one billion dollars to a company they would never own. Figma's CEO Dylan Field, in a statement that reads like it was drafted by his lawyers and edited by his therapist, said: "We no longer see a path toward regulatory approval, and Adobe agrees."

What happens to a startup when they suddenly receive $1 billion in cash and no acquisition obligations?

Figma hired 500 more employees, growing from 800 to 1,300 people. [Goodmans] They acquired an AI company called Diagram in June 2023 (yes, before the deal officially died — they were already using the settlement money on the assumption it was coming). They expanded internationally. They accelerated product development.

They used Adobe's money to become a better version of the company Adobe couldn't legally buy.

Cry me a river, right? Figma took Adobe's billion-dollar breakup gift and used it to become the company Adobe was afraid of. It's like paying your ex's gym membership and watching them get hotter.

In its defense: $1 billion is a rounding error

Adobe generates approximately $20 billion in annual revenue. So $1 billion in cash — for absolutely nothing — represents only 5% of one year's revenue. For a company that size, that's just a Tuesday. A very expensive Tuesday. But a Tuesday. Adobe loses more money in the time it takes you to read this sentence than most people earn in a year. A billion dollars is what falls between their couch cushions. The problem isn't the money. The problem is what the money bought: nothing. Not even a thank-you card.

The Twist That Kills (July 2025)

Figma went public on July 31, 2025.

Opening price: $33 per share. Initial market capitalization: approximately $19 billion. This was already, by itself, a validation of the failed deal — Figma was worth roughly what Adobe had offered three years earlier.

Then the stock started trading.

By end of day, Figma was worth just under $68 billion.

Let's establish what this number means. Adobe offered $20 billion in September 2022. Adobe paid $1 billion in December 2023 to walk away. Twenty months later, Figma became worth $68 billion.

Adobe could have owned all of that.

Instead, Adobe owned the receipt. A $1 billion receipt for the privilege of watching someone else succeed. Somewhere in Adobe's accounting department, someone had to file that under "miscellaneous expenses." That person deserves a raise. Or therapy.

The Real Business Model

There are three traditional ways to lose money in a corporate acquisition:

You can buy something you shouldn't. Overpay for a bad company. This is the classic mistake — Yahoo buying Tumblr, AOL buying Time Warner, HP buying Autonomy. Painful, but at least you got something.

You can sell something you should keep. Undervalue an asset before others recognize its potential. Yahoo passing on Google, Blockbuster passing on Netflix, Kodak selling its digital camera patents. Painful, but at least you had something.

Or you can invent the third method: pay a billion dollars to not buy something that will triple in value.

Adobe invented that.

They didn't overpay for a company. They paid for the privilege of not owning it. They didn't sell too early. They gave money away without receiving anything. They walked into a room, put a billion dollars on the table, said "I don't want any of this," and left. Then the thing they didn't want tripled in value.

"That's not a fumble in football. That's a fumble in accounting."

What Adobe Did With Its Time

Here's the darker part. While the Figma deal was dying, Adobe wasn't sitting still.

They were raising subscription prices. They were introducing hidden termination fees. They were getting sued by the FTC in June 2024 for deceptive cancellation practices. They were becoming, in the words of their own users on X, "predatory." Adobe couldn't buy the future of design, so they decided to squeeze the present. When you can't innovate, you can always raise prices. Adobe chose violence — the subscription kind.

Some of that revenue helped absorb the $1 billion loss. Some of it drove customers to alternatives like Affinity and DaVinci Resolve. And some of it — this is the part that stings — helped fund Adobe's next attempt to build a Figma competitor internally.

They're calling it "Adobe Express." It launched in beta in 2024. It has more than five employees now. It has not, as of publication, become worth $68 billion. It has more than five employees now, which means Adobe Express has already outperformed Adobe XD. The bar was underground. They cleared it.

In its defense: they built Adobe Express

After paying $1 billion to not own Figma, Adobe built an in-house alternative called Adobe Express. It launched in beta in 2024. It has more than five employees now. As of publication, it has not become worth $68 billion. But there is still time. Adobe Express could still triple in value. Or Adobe could pay someone $1 billion to take it off their hands. Either outcome would be, at this point, on brand.

Next in the Bent Over Club →

Elizabeth Holmes

"She lowered her voice to a baritone. Faked a blood-testing machine. Faked a $9 billion company. Convinced Kissinger, Murdoch, and four-star generals. Now serving eleven years."