What does Adobe do now?

Welcome to Runtime! Today: why Adobe's decision to walk away from its $20 billion deal for Figma could be a turning point, the FBI gets results against a notorious ransomware gang, and the latest funding rounds in enterprise tech.

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Design of the times

Adobe has enjoyed a remarkable run across several different generations of tech, positioned — for better or worse — at the center of the market for software tools that let creative people shine. It will need to get pretty creative itself to chart a path into a new era.

Adobe's $20 billion acquisition bid for Figma last year surprised both Adobe investors and Figma's designer fans, but their decision Monday to walk away from the deal is just another sign of how so many things in enterprise tech have changed in the last 12 months. Deals that would have flown through the regulatory process a decade ago are being slowed to a crawl by increased scrutiny on the companies that control the digital world, which is a problem for Big Tech companies trying to reinvent themselves by scooping up Medium Tech companies.

• "Adobe and Figma mutually agreed to terminate the transaction based on a joint assessment that there is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority," the companies said in a joint statement Monday, while emphasizing that they both really wanted it to happen.
• Earlier this year the U.K. government — currently taking a close look at cloud infrastructure companies — said the proposed deal "has the potential to impact the UK’s digital design industry by reducing choice, innovation and the development of new competitive products."

Given Adobe's position in the creative software tools market, this deal might have raised eyebrows even in a more hands-off era.

• Anyone who's ever worked with a designer has heard complaints about Adobe, whose Photoshop and Illustrator tools are industry standards thanks to decades of inertia despite the frustration they cause inside creative departments.
• That was a big reason behind the rise of Figma, which makes it easier for people working on user interface design to collaborate and share ideas.
• But the combined company would have controlled 72% of the market for those tools, and Figma's customers were not thrilled about the prospect of having to depend on Adobe once again for their basic needs.
• While Figma probably isn't worth $20 billion after this year's enterprise tech slowdown, it's growing steadily, according to The Information, and will get a $1 billion break-up fee as a consolation prize.

Adobe, however, has a tricky path ahead.

• It once competed head-to-head with Figma through a product called Adobe XD, but according to Techcrunch it slashed spending on product development earlier this year in anticipation of the Figma deal going through.
• Last week it also reduced its earnings forecast for 2024, citing expectations that business software spending would remain weak.
• Adobe could look to other companies working on design tools, such as Canva, but there's no guarantee it could get a different deal past the same regulators.

And while this was a unique deal in a unique market, Adobe's failed attempt to acquire Figma will raise some interesting questions for enterprise conglomerates and venture-backed startups.

• This year alone showed how quickly product development schedules can change, thanks to the generative AI boom.
• At the very least, big tech companies looking to jumpstart their businesses with new ideas will need to prepare for a much longer deal cycle between the initial meetings and popping the champagne.
• And as we tally up the effects of the end of zero interest-rate policies, narrower paths to an acquisition could thin the herd of enterprise tech startups in 2024, as predicted last month by Redpoint's Scott Raney, even further.
• "If 'big tech' and the next layer of technology companies (such as Adobe) can’t buy 'startups,' the liquidity environment is going to change for the startup founders, and of course, the venture investors," wrote investor and former colleague Om Malik in the wake of the canceled deal.

One down, for now

The Department of Justice announced Tuesday that the FBI has provided a decryption key for victims of the ALPHV ransomware gang, and said it had seized digital infrastructure belonging to the group. ALPHV is also known as Blackcat, which was the group that sent MGM Resorts into crisis mode earlier this year before it suddenly went quiet in early December..

"Over the past 18 months, ALPHV/Blackcat has emerged as the second most prolific ransomware-as-a-service variant in the world based on the hundreds of millions of dollars in ransoms paid by victims around the world," the DOJ said in a statement. It said the key, which would allow victims to decrypt their files, was offered to 500 victims of ransomware attacks over the course of its investigation into the group.

That leaves hundreds of companies or individuals still affected, however, and as of Tuesday afternoon the ALPHV group had already "unseized" a web site used to leak data belonging to victims, which had been taken down by authorities, according to Bleeping Computer. No arrests have been made.

Enterprise funding

SimSpace landed $45 million in new funding to continue investing in security tools that let businesses make digital replicas of their tech infrastructure for training and penetration testing.

Braintrust Data raised $5.1 million in seed funding to launch the company, which is working on helping companies test AI models before putting them into production.

The Runtime roundup

MongoDB disclosed that someone hacked into its corporate systems and accessed customer data, although it doesn't appear that the attacker gained access to its Atlas cloud database.

AWS is overhauling its sales organization to focus more attention on bigger accounts, according to The Information.

IBM bought two data-integration tools from Software AG for $2.3 billion, which it said would add to its watsonx AI service and its hybrid-cloud management services.

S3 Express One Zone was one of AWS's biggest announcements at re:Invent 2023, but Confluent's Jack Vanlightly argued it's too expensive to be the "holy grail" of cloud data storage.

Thanks for reading — see you Thursday!