Figma has grown from a startup tool to the industry standard for UI/UX design and collaboration. Its focus on the web and real-time editing radically transformed the workflow, generating value so immense that it culminated in a proposed $20 billion acquisition deal by Adobe.

However, in December 2023, the industry witnessed a dramatic collapse. The story of the failed acquisition not only reveals the magnitude of the rivalry in design software, but also underscores how technological innovation and antitrust regulation are redefining the future of competition.

The clash of giants: Future competition and the failed merger

The $20 billion deal to buy Figma was abandoned under intense pressure from European Union (EU) and UK regulators.

The main issue was not current competition. Adobe XD, Adobe’s closest product to a Figma competitor, had been “put on life support” earlier that year. Adobe argued there was “no overlap between” customers of the two companies and “no competitor or customer complaints about the deal”. However, the European Commission (EC) said the deal could “significantly reduce competition in the global markets”, and the Competition and Markets Authority (CMA) provisionally concluded that it would “likely harm innovation”.

The obstacle came from newer doctrines of antitrust law, which are “very focused” on future competition as a critical part of the antitrust analysis. Adobe General Counsel Dana Rao explained that the regulators were essentially telling them that “the only way to solve a future competition issue, that someone might do something, is to not do the deal”. Following the cancellation, both companies quickly realized they would have to “put the gloves back on and become ruthless competitors”.

The collaborative technology that broke down silos

Figma’s success lies in its capability for real-time collaboration. This multiplayer editing functionality was pioneering for a design tool. Figma’s innovation allowed teams to work together seamlessly, regardless of their geographical locations.

Figma’s collaboration solves chronic operational problems, making it invaluable for professional teams:

1. Goodbye to file chaos: Figma offers a transparent and almost flat document system. This eliminates “final-final-ver.99…” files and questions about ownership, providing “good visibility into the team activities”.

1. Role integration: The collaborative functionality is invaluable for distributed teams. The handover to engineers happens with a single click on the “Share” button.

1. The role of the UX Writer: UX writers and content designers gain a seat at the table by being able to participate directly in the early design stage. By being in the same visual and remote space as the designer, copy needs can be planned ahead of time, avoiding the frustrating situation of trying to replace lorem ipsum text and write within the confines of a design created without writer input.

Figma addressed the engineering challenge of real-time collaboration by developing its own solution.

• Avoiding OTs: Figma decided not to use Operational Transformations (OTs), the standard algorithm used by applications like Google Docs. This was because OTs were “unnecessarily complex” for Figma’s problem space, and as a startup, they valued the ability to ship features quickly.

• CRDT Inspiration: Their technology was inspired by Conflict-free Replicated Data Types (CRDTs). CRDTs guarantee eventual consistency (if no more updates are made, all clients will eventually see the same document state).

• Simplified Centralization: Figma does not use pure CRDTs. Since it uses a centralized client/server architecture (where the server is the central authority), it simplified the CRDT system, removing the performance and memory overhead associated with decentralized systems.

• Atomic Changes: Changes are atomic at the property value boundary. If two clients change the same property on the same object simultaneously, the document will end up with the last value sent to the server. This means that simultaneous editing of the same text value doesn’t work in Figma, which was an acceptable compromise because Figma is a design tool, not a text editor.

The AI Era Offensive: Figma as a One-Stop Shop

Figma is making bold moves to stay ahead, expanding its competitive scope to challenge nearly all major design tools, seeking to become a “one-stop shop” for design and marketing. At its annual Config conference, they announced new AI-powered products.

The development of Figma Make was enabled by the infrastructure created for Figma Sites, which required developing Code Layers. This made it possible to write code directly inside of Figma and convert designs into React code, not just HTML and CSS.

Feedback Culture and Human-Centric AI Product Evaluation

Innovation at Figma is supported by a culture that prioritizes early feedback.

Inspired by design critiques, engineering critiques (eng crits) are a core part of the Figma workflow.

• Purpose: They are a “safe space” for brainstorming novel approaches to technical problems, getting expert support on technical designs, identifying challenges, and sharing knowledge.

• Not Approval: Eng crits are explicitly not an approval or decision-making meeting. Feedback that comes “too late” (like in a formal technical review) can lead to “launch-blocking feedback”.

• Use of FigJam: These sessions are often run in the open canvas of FigJam. This allows reviewers to leave stickies silently and in parallel, facilitating multiple conversations at once and keeping the feedback focused.

For Figma Make, the team adopted a human-centric evaluation process. The goal was to scale “human taste” and make it actionable. David Kossnick, Figma‘s Head of Product, AI, led this process.

1. Defining Subjective Success Metrics: To determine what “good” looked and felt like, Kossnick used two key scores, graded by humans on a scale of 1 to 4:

1. • Design Score: Assessed if the visual result looked good and was something a user would actually use.

1. • Functionality Score: Assessed if the element created from the prompt actually worked as expected.

1. Qualitative Gathering at Scale: Figma used four concentric circles of feedback. The internal gathering on FigJam was the most helpful. In a massive FigJam board, the PM and Design teams (the target persona) generated over 1,000 examples of use cases and failures. This helped them identify the core problem: designers converting designs into functional prototypes.

1. Data Assessment Framework: Figma uses a framework that combines four types of judgment to improve the product:

1. • Deterministic: Pass/fail tests that can be automated (e.g., does the AI-generated code compile?).

1. • Taste and Judgment: Human evaluation scaled through internal tools and contractors, structured using detailed brand guides to assess qualitative output (e.g., is the shortened text actually good?).

1. • AI as Judge: AI models are trained to evaluate quality based on human judgment guidelines.

1. • Usage Analytics: A/B testing in production to see which models or features perform better among real users.

The Hero’s Dilemma

Figma is strongly positioned as the leading design tool for years to come. However, the company is approaching its Initial Public Offering (IPO).

An observer notes that as Figma approaches its IPO, the pressure to maintain growth and satisfy shareholders “will likely lead to price increases”. This leads to the dilemma, quoting The Dark Knight: Figma could “either die a hero or live long enough to see yourself become the villain”, implying the risk of evolving into the next monopoly design software (a role formerly held by Adobe).

Behind every great product, there’s a well-crafted idea and a team capable of bringing it to life. Figma has changed how people collaborate; we work with that same spirit in our graphic design service, helping companies like yours turn concepts into brands that truly connect.