Uncle Sam to block Adobe absorption of Figma over monopoly fears
theregister.com
theregister.com
https://news.ycombinator.com/item?id=34917743
(330 points/4 days ago/85 comments)
That said...The sale was rumored to be about $20b. Does anyone really think that Figma has any chance of producing a return to shareholders even close to that sale price even if they charge customers aggressively?
The harm to citizens outweighs the benefit to shareholders by too much in this case to allow it.
If you think this is theoretical, see the startup scene in Europe and Canada.
And the differences between Europe/Canada vs US startups aren't because startups created there aren't allowed to be sold. They are.
The govt's goal is not to support rent-seeking or support monopolies. It's been a huge distortion in the market recently that people have been founding companies with the purpose of selling to their large competitor who wants to maintain monopoly pricing.
If (for example) Figma's existence and growth forces Adobe to compete at normal pricing and have to cut their monopolistic pricing by half that is a net win for society. Market competition is good. If the end result is Figma sells to Adobe and Adobe maintains their monopolistic pricing society loses. The govts main goal is to ensure maximal societal benefit by fostering innovation that improves productivity and market competition.
They have no issue with Figma selling, just not in a way that drastically reduces market competition and harms consumers.
Innovation is only good (and should be rewarded) if it improves long term productivity. The most consistent way to do this is through market competition. Entrepreneurs should not be rewarded for preventing competition or helping reduce/stagnate productivity.
Adobe is serving their shareholder interests by munching up the competition, Figma is selling to Adobe because of the reasons you outlined, and the regulators are stepping in to represent the interests of the public.
This is very much the system working as-designed
> The $20 billion purchase price for Figma equated to 50 times its forecast $400 million annualized recurring revenues in 2022
If you think that serves Adobe shareholder interest, you are mistaken.
Adobe rightfully sees itself standing on the edge of a cliff. Adobe XD, despite having some great features, was handily clobbered in the market first by Sketch, and then by the vastly lighter-weight Figma. Beyond that, Figma has a great, intuitive, smooth interface for making vector graphics. It's not nearly as powerful as Illustrator, but easily does what most interface and web designers need, and that's probably a huge chunk of Illustrator's market rather than the more intensive digital artist users.
If they lose Illustrator, the ecosystem is a lot less valuable. Photoshop has significant competition from relative newcomers and print media, etc. made in InDesign is has much less gravity than it used to.
So rather than trying to make better and more innovative products in earnest, they're going to try to buy and suppress their competition just like Autodesk and so many other dinosaur graphics companies.
In my personal usage, nothing that’s been added since CS1/CS2 has much meaningful impact. Heck rewinding to 7.x or even 6.x would pose only minor inconveniences.
Most companies just pop users into their corporate CC site license and give them a brand new fast laptop to run it on and be done with it. It's basically SAAS at this point.
The system was designed to criminalize any attempt to monopolize, not just block the transaction.
The Sherman antitrust act was quite clear about it:
> Sec. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof; shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.
Later it was made a felony.
It is not enforced this way by the courts.
Edit: I looked up the justice department’s stance. From: https://www.justice.gov/atr/antitrust-laws-and-you
The Sherman Antitrust Act
This Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids, and allocate customers, which are punishable as criminal felonies.
The Sherman Act also makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct.
The Act, however, is not violated simply when one firm's vigorous competition and lower prices take sales from its less efficient competitors; in that case, competition is working properly.
It it turns out, as almost everyone suspects, that Adobe is buying Figma not because Figma will be a source of revenue, but mainly to prevent competition, then it's a clear violation of the Sherman antitrust act and should be punished accordingly.
Before then in the front of the queue should be companies like Uber whose entire business plan was dumping to destroy the existing taxi industry, and then have the monopoly power to raise prices.
That's a pure monopoly play.
In the Silicon Valley wage suppression cartel, there were tons of evidence, including evidence that indicated intent, and awareness of the illegality.
Eric Schmidt, Google CEO, even wrote stuff like:
> I would prefer that Omid do it verbally since I don’t want to create a paper trail over which we can be sued later?
All they got was a measly fine.
Obama DOJ had no will to criminally prosecute even with ample evidence.
Regulators step in and say "That would be a monopoly", to which everyone involved says "Darn, well we can't continue trying to merge then, since that would be a felony".
This all seems totally fine and legal and working as designed.
Is that turns out to be true, then it seems a violation of the act.
I don't think their moat is defensible indefinitely for the cost they're asking, but this type of thing would buy them some time.
It is telling that they can't do something better with the 20bil, though. Not much innovation left to squeeze out and there's no chance Figma generates this type of revenue for years (if ever?).
Kanpai!
They could pivot to selling drugs.
Point is, who cares? Shareholders don't have an inalienable right to maximum profits.
I have no idea how to balance this btw.