Adobe argues Figma will help it rethink design tools for the cloud era; Adobe's competing product, XD, generated just $15M in annual revenue after seven years
Adobe executives think there's a lot that critics of its $20 billion purchase of Figma are missing. Tweets: @kantrowitz , @alexrkonrad , and @tolles . Thanks: @inafried Tweets: Alex Kantrowitz / @kantrowitz : Adobe had to do the Figma deal. It was the right move. And at the same time a damning indictment of its business. https://www.axios.com/... Alex Konrad / @alexrkonrad : Ironically, one acquired CEO who wasn't offered a big retention package, per filings, was AppDynamics' David Wadhwani — a key player in the Figma deal, now on the Adobe side. Salesforce couldn't hold on to Tableau's Adam Selipsky, back as CEO at AWS. https://www.forbes.com/... https://twitter.com/... Chris Tolles / @tolles : “And Adobe initially offered Field more, the sources add, before the CEO settled upon a roughly even split with staff” — props to the CEO for giving more to his crew here https://twitter.com/... Thanks: @inafried
Context & Ripple Effects
Adobe is defending its $20 billion Figma purchase by pointing to an uncomfortable internal number: XD, its own answer to Figma, generated just $15M in annual revenue after seven years. The defense lands in the middle of a running debate over the deal's price — 50x Figma's reported $400M ARR — and whether Adobe is paying up because it must, not because it wants to.
The coverage arc so far has framed the acquisition as a defensive response to free alternatives and pricing pressure from a rival whose ARR was still doubling, with questions raised about Adobe's M&A whack-a-mole strategy. The retention package for Figma's team, reportedly the largest since Facebook bought WhatsApp, adds another layer to what Adobe is really paying for.
First-order effects
- XD's $15M-after-seven-years figure effectively concedes that Adobe could not compete with Figma on its own — the internal build path failed, leaving acquisition as the only route to the collaborative, browser-based design market.
- Figma's doubling ARR was creating direct pricing pressure on Adobe's core creative business, so the $20B price is best read as the cost of stopping a competitor rather than buying revenue.
Second-order effects
- Rivals watching the deal — including the free and low-cost tools FT flagged as the trigger — now face an owner with Adobe's distribution, raising the bar for any challenger trying to unbundle Creative Cloud the way Figma did.
- The WhatsApp-scale retention package signals that Adobe is buying people and momentum as much as product, which raises the cost of future acquisitions of fast-growing startups and pressures deal structures across the industry.
Third-order effects
- If the pattern holds, incumbents will keep absorbing the cloud-native tools that unbundle their suites — but the deal's subsequent stall under regulatory scrutiny shows that path is no longer guaranteed, pushing acquirers toward building or partnering instead.
- Design tools are consolidating around whoever owns the collaborative canvas; if the deal closes, Adobe controls both the legacy suite and its disruptor, and if it doesn't, Figma remains the independent standard that forced a $20B defensive bid.
The trend: Cloud-era incumbents are paying record premiums to acquire the products unbundling their franchises — with regulators increasingly positioned as the deciding vote.