Adobe has called off its plans to acquire design software rival Figma for around $20 billion, the two companies announced on Monday.
The companies said that they "mutually agreed to terminate the transaction" because they couldn't see a way to get the necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority, which argued that the deal would harm competition.
"Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently," Adobe's CEO and chair Shantanu Narayen said in a statement.
The CMA had said that the acquisition would lead to a substantial lessening of competition in all-in-one product design software, vector-editing software, and raster-editing software and would mean that the merged company would have less incentive to develop its products and improve their quality.
"In particular, the Merger would eliminate an important dynamic competitive threat to Adobe's Illustrator and Photoshop in markets where Adobe has had an entrenched leadership position for decades," the CMA said.
The companies said in a filing with the UK CMA that they disagreed with its assessment that the merger would reduce competition. They said that they were not close competitors, and that the merged company would continue to compete against other product-design tools.
The companies had originally announced the acquisition in September 2022. Adobe will now pay Figma a termination fee, which it said in an SEC filing earlier this year came to $1 billion.
