DOJ Taking a Closer Look at Adobe’s $20B Figma Purchase

The Department of Justice (DOJ) is contacting customers, competitors, and Figma's venture capital backers, closely inspecting Adobe's massive $20 billion purchase of the web-first collaboration design startup. The DOJ made a second request for information from the two companies on November 14.

All signs point to the possibility that an antitrust investigation is in the cards.

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Figma, first launched in 2016, is unique in that it is a vector-based graphic editor and prototyping tool that requires no installation, no patching, and no updates. The browser-based app was designed to manage file organization by displaying projects and their files in a dedicated format. It has received $332.9 million in funding to date.

The acquisition, a combination cash and stock deal, was first announced September 15, causing many in the creative industry to panic over the likelihood that Adobe will decide to merge Figma with its XD software and raise prices.

However, Figma co-founder Dylan Field said that will not happen, and promised the platform will remain free for education users.

Adobe and Figma say they filed a notification and report form in relation to the 1976 Hart-Scott-Rodino Antitrust Improvements (HSR) Act with the DOJ and Federal Trade Commission (FTC) on October 14. Before any mergers, acquisitions, or transfers of security and assets can be completed, this paperwork must be filed and approved.

Only after Adobe and Figma have responded with answers to questions and additional data and have waited 30 days can the sale be completed. According to the companies’ filing with the Securities and Exchange Commission (SEC), "The HSR waiting period will expire 30 days after Adobe and Figma each certify their substantial compliance with the second request, unless earlier terminated by the DOJ or extended by agreement of the parties or court order."

However, if the DOJ and FTC don’t find the companies’ responses satisfactory, under antitrust law they could take actions such as seeking divestitures of substantial assets of the companies, asking them to license assets, or even terminating the deal entirely.

The deal would be one of the largest takeovers of a private software developer ever, which may inspire regulatory authorities in other regions to take a closer look as well.

There are currently more than 9,900 companies using Adobe’s XD, while Figma has an estimated 4 million users worldwide, many of whom were drawn by its freemium pricing and relatively easy-to-use interface.

If the deal is nixed, Adobe may have to pay Figma a $1 billion termination fee, providing certain conditions are met.