TL;DR:
- Adobe’s $20 billion acquisition of Figma faces regulatory delays, causing a shift in focus.
- Adobe’s recent annual conference highlighted its commitment to AI, unveiling new generative AI features.
- Figma’s absence from keynote speeches and exhibitions marks a departure from the previous year.
- Regulatory hurdles in the US, EU, and UK have slowed down the acquisition process.
- Adobe insists on its commitment to the deal, attributing the silence to regulatory constraints.
- A potential $1 billion breakup fee looms if the acquisition falters.
- Investor skepticism regarding Figma’s price tag has led to uncertainty about the acquisition’s future.
- Adobe’s stock has surged by over 65% this year, driven by its focus on AI.
Main AI News:
Adobe Inc.’s ambitious $20 billion endeavor to acquire Figma once epitomized the creative powerhouse’s quest to regain its industry allure. However, over a year since the announcement of this pivotal acquisition, regulatory hurdles have thrown a wrench into the works, prompting Adobe to shift its gaze toward the realm of artificial intelligence (AI).
During its annual conference in Los Angeles this week, Adobe showcased its renewed commitment to AI, unveiling innovative generative AI features integrated into signature products such as Photoshop. Remarkably, there was a conspicuous absence of Figma in keynote addresses, with a solitary reference during an extensive investor briefing. Figma, the digital design start-up, was notably absent from the exhibition floor.
This stark divergence from the previous year’s event, where Figma’s CEO, Dylan Field, took center stage alongside Adobe’s Chief Strategy Officer, Scott Belsky, signifies a dramatic transformation. In the past, Figma’s name reverberated throughout Adobe’s events with promising talks of future product integration. However, as Michael Turrin, an analyst at Wells Fargo, points out, times have changed. With the advent of Firefly, Adobe’s new suite of AI models, the urgency to acquire Figma appears to have waned.
Adobe executives assert their commitment to closing the deal, attributing the silence surrounding Figma to the regulatory limbo. The US Department of Justice’s second request for information, alongside reports of a potential lawsuit to thwart the acquisition, underscores the hurdles Adobe faces. Simultaneously, the European Union embarks on a “phase 2” review, questioning competitors about potential pricing power consolidation. The UK’s competition watchdog is also scrutinizing the deal.
Dana Rao, Adobe’s General Counsel, reassures that the company’s affection for Figma remains unwavering. However, practicality dictates that the two companies must await regulatory closure before collaboration. Hence, featuring Figma at a product conference would be premature.
At an investor event, Adobe’s CEO, Shantanu Narayen, refrained from discussing Figma, citing an abundance of internal innovations worthy of the spotlight. He cautioned against interpreting this silence as an indicator of any complications. Figma’s spokesperson confirmed their presence at the conference, underlining their commitment to the partnership.
The protracted waiting period has irked many. “It’s pretty frustrating when you want to buy a company, and 13 months later, you’re still waiting to see if you can or can’t,” expressed Dana Rao.
The acquisition’s deadline looms at the end of March, with a potential $1 billion breakup fee owed to Figma should it falter. Bloomberg Intelligence antitrust analyst Jennifer Rie suggests that achieving the purchase within this tight timeframe may prove challenging, with regulatory hurdles on the horizon.
Investor skepticism has always loomed over the high price tag of Figma, causing a substantial dip in Adobe’s market value post-announcement. Wells Fargo’s Turrin reveals that more investors are quietly hoping for the acquisition’s demise, anticipating increased AI investment or share buybacks to bolster stock prices should Figma slip through Adobe’s grasp. Adobe’s focus on AI has already paid off, with its stock surging by over 65% this year.
While Turrin remains cautiously optimistic about the Figma deal’s conclusion, his attention, like many others, has shifted elsewhere. At the recent conference, Turrin and his peers were engrossed in evaluating how Adobe’s generative AI tool, Firefly, stacks up against rivals like OpenAI’s Dall-E.
Conclusion:
Adobe’s strategic pivot towards artificial intelligence underscores its adaptability in the face of acquisition uncertainty. The delay in the Figma deal has allowed Adobe to strengthen its AI offerings, contributing to its impressive stock performance. This shift reaffirms Adobe’s resilience and positions it favorably in a rapidly evolving market where AI innovation holds the key to future success.
