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I agree. The whole point of a free market is that it should lead to a competitive market, in which profits shrink and consumer surplus expands. He literally says that Figma is threatening Adobe's margins. Stopping mergers of companies like this is ... exactly what antitrust is for?

I think the argument is that Figma might not exist in a world where such deals are blocked (or future Figmas may not come into existence if this deal is blocked), and thus would lead to more market harm than it would help. I'm not sure I agree with that reasoning, but it is plausible.

If that is the case that means that investors cannot see themselves competing with established players in the market. That would be an indication that the current market dominators should be broken up, not that they should be allowed to acquire more companies.

400 million revenue, 20 billion acquisition price. Sounds like free market to me? They paid up to protect their business and everyone walked away happy.

> everyone walked away happy

Except Figma customers.

Why wouldn’t they be happy? Nothing bad has happened to them. I know some are grumpy on Twitter but none have articulated a real harm. It’s just as likely this is good for them, like how Microsoft really improved GitHub.

Pointing toward an exception seems to prove the rule that is worrying Figma customers like me.

> like how Microsoft really improved GitHub.

There are a lot of GH customers that are upset over the way reliability has tanked since Microsoft acquired them

They know, as everyone else does, how Adobe operates.

> none have articulated a real harm

Higher prices.

> It’s just as likely this is good for them

How?

> everyone walked away happy

Only if you define the term everyone to be the VCs.

figma raised $330+ million over the years...have there been any public breakdowns of the VC/founder/employee equity split?

In my mind, points 2 and 3 conflict with point 1. If Adobe actually believed Figma was an existential threat to the future of their business, and they decided to use their current dominance to subsume it, that's equivalent to admitting failure at some level. And if that's true, then they're trying to stamp out any meaningful competition, which is the kind of thing the FTC should at least be paying attention to.

Just commenting because most of the replies seem to forget that the FTC doesn’t regulate competition because MONOPOLY but because their job is to ensure customers aren’t screwed over.

No one here seems to have raised a cogent argument that this is an unalloyed positive for customers (disclaimer: I have an adobe CC subscription and it is the buggiest piece of garbage around).

This is bad for customers and blocking the deal, based on current history, is the right course. Adobe can use that $20 billion to instead build a not-shit product.

Agreed, I think it's a big failure of the imagination to think that a monopoly-cementing acquisition is the only way to encourage more competition. A world in which large dominating companies can be overthrown by a promising upstart is, for me at least, a way more exciting world in which to start a new company. Adobe would not be spending this much money if they didn't foresee a future where Figma significantly disrupts their market position.

>And that Lina Khan should stay off this? Give me a break, this is exactly what she should be targeting if she is serious about antitrust. Adobe + Figma bundle destroys this market for anything not named Canva for at least 5-6 years.

But the concept of "market competition" isn't just something outsider observers like us can judge and say -- "Yes, we conclude that this Figma acquisition is anti-competitive."

True genuine competition also depends the actual founders' internal motivations and future plans -- which we can't see. In other words, there isn't any competition if the co-founders don't want to compete anymore. Humans have complex motivations and the FTC can't make them compete if they don't really want to.

Figma wasn't making profits yet. Yes, they were growing the revenue but every founder has different thresholds of fighting on vs selling.

For example of genuine competition, consider that Mark Zuckerberg said "no" to Yahoo's offer of $1 billion. He also said "no" to Microsoft's buyout offer of $15 billion. MZ valued his company more than Yahoo and Microsoft did, so "no" made sense to him.

Did founders Dylan Field and Evan Wallace have see their Figma company staying independent the same way? I guess not because they said "yes" to Adobe's $20 billion.

>The idea that FTC should reward innovation by allowing monopolistic/oligopolistic buyouts for big prices

As for the "innovation" paradox, what the blog author was trying to explain is that Figma never would have gotten this big unless the original VC investors saw a future possible acquisition by Adobe/Autodesk/Microsoft/etc. More startups get acquired than actually go all the way to IPO. Without the option of "Adobe might buy them later so we can get our investment money back", Figma never even becomes Adobe competition because they never got the $332 million in funding in the first place.

If Figma was a bigger publicly held company with other multiple powerful shareholders besides Dylan and Evan, that would make more sense for FTC to block the transaction because other owners+managers within that hypothetical company may really want Figma to "compete".

If startup cofounders really don't want to compete anymore, FTC can't do much about that.

> True genuine competition also depends the actual founders' internal motivations and future plans -- which we can't see. In other words, there isn't any competition if the co-founders don't want to compete anymore. Humans have complex motivations and the FTC can't make them compete if they don't really want to.

Any citations for this extremely novel legal theory?

>Any citations for this extremely novel legal theory?

My point is that human emotions, passion, and endurance to withstand the stress of running a startup -- cannot be mandated by the FTC. That's not a legal theory that requires any cites.

If the founders don't want to mentally "stay in the game" to compete... that means there really isn't competition that we're hoping for. Founders are humans and not robots with a simple "compete" switch that the FTC can just flip on. If you disagree and think the FTC can force founders to do what they really don't want to do, explain how? Blocking this Adobe's transaction doesn't force cofounders to compete. They can still "sell" Figma in many ways besides a straight acquisition. Just more hoops to jump. Exclusive technology licensing to Adobe, or joint ventures, etc. Those would be a legal quasi "acquisition" by another name. The creative ways to structure "strategic business partnerships" are made possible because the founders would rather get some monetary reward instead of continuing to compete with Adobe.

Ok, outside observers like us can all pound the table saying "Figma should stay independent so there's competition for Adobe!" But... if the founders have mentally quit and don't want to compete, now what? See the problem?

You’re talking about a company with around a hundred million dollars in revenue. The founders can quit if they want, they can join the circus who fucking cares? The corporation is a distinct legal entity it can hire someone else.

None of this has anything to do with the fact that monopolies are destroying society and the FTC has a mandate to stop them.

>The founders can quit if they want, they can join the circus who fucking cares? The corporation is a distinct legal entity it can hire someone else.

But again, it's not a "distinct legal entity" that's competing that you can just assume as a given. You still need the people behind that entity with the state of mind to really want to compete.

Focus on the human actors .... If the other shareholders on the Board of Directors would rather sell their Figma ownership to Adobe to go along with founders Dylan & Evan selling -- instead of hiring new managers to replace them to continue trying to compete with Adobe, then there is no underlying competition there for the FTC to try and preserve.

Again, true competition requires motivation from the founders and the Board of Directors to actually want to compete.

The VCs in multiple rounds invested millions specifically in Dylan & Evan -- and not random hired managers -- to run Figma. They'd rather not hire replacements because it's too risky. Trying to find some hired guns that inevitably have less passion and energy than the original founders -- makes Figma less competitive, not more.

The thinking is similar for Adobe as the buyer. For them, the acquisition terms would have to include Dylan & Evan as "key people" joining Adobe as vice presidents for some years to keep improving Figma (or merging it with Adobe XD, etc) while their Adobe stock compensation vests.

> there is no underlying competition there for the FTC to try and preserve.

This is where you’ve made a mistake. It just means they thought there was more value in selling than competing. It doesn’t mean there’s zero value in competing, doesn’t mean they have no will or desire to compete.

What do you think would have happened if this deal fell through?

When you contemplate business decisions you don’t get to consider illegal actions as your opportunity cost.

Like if you’re selling copper plumbing fixtures you can’t be like well if we were selling kilos of cocaine instead our prospects for higher margins would be different. It’s not even useful as a thought experiment.

Similarly, the value of Figma to a company that will use the purchase to create a monopoly position is higher than it would be to a general investor or public market. That’s because owning monopolies is more profitable.

But they’re also illegal. So I don’t give a fuck. And the fact that the founders are sad that it’s less profitable to do business without unlawful transactions isn’t relevant to anything.

> monopolies are destroying society

I had a double take when I read that, in this context.

Are you saying that a monopoly on design software products is destroying society? It seems a little dramatic, no?

Yes. Software monopolies join all the other monopolies in being a huge driving force in increasing inequality in this country.

The thing which kills me is that Adobe won't do an on-line text editor which supports styles which will then seamlessly import into InDesign.

Surely they're not making that much from InCopy licenses that this wouldn't pay off in the long-term.

What is the antitrust risk? As both you and the author say, there’s viable alternatives in the market - and this deal will encourage more of them. It’s unclear how any consumers are harmed by this.

None of the investment thesis is about making Figma better than it was or cheaper than it was. Every dollar they paid is because they believe they can squeeze more than a dollar out of consumer surplus and into their bottom line by preventing competition between Figma and their legacy products.

Consumers will be harmed by Figma becoming a more expensive, worse product and Adobe remaining a more expensive, worse product.

Antitrust risk is simple: Adobe takes up Figma, bundles it into existing Creative Cloud and essentially "dumps" the horrible parts of Creative Cloud onto the market as part of the bundle. Competing with bad parts of Creative Cloud is not possible because they are essentially subsidized by the strong parts.

Might be a controversial opinion, but this is exactly what Microsoft did with Teams at a certain point. Teams was just dumped on enterprise clients along with the usual Office 365 shebang, and Slack couldn't compete effectively because the bundle effect was too strong(and by compete effectively I mean that if Teams was offered as a standalone Slack would destroy it in every review).