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DOJ Preps Antitrust Suit to Block Adobe’s $20B Figma Deal

341 points by bsears 4y ago

satvikpendem 4y ago
That would be incredible, please do! Figma is the only design tool that actually approaches design from an engineering standpoint, which can be seen in their feature set of things like having reusable components, variants, inheritance etc, which then maps very cleanly onto the code side.
- andybak 4y ago
  Many of those features are in other apps. It's surely a difference of degree rather than kind? (I can't reel off a list as I don't do design day to day any more but I used to and I was a fan of apps that had exactly this approach.
  - satvikpendem 4y ago
    The degree matters IMO. The ones in Sketch or XD are laughable compared to Figma.
- gliiics 4y ago
  I'm not a fan of Figma at all and I am forced to use it since there is no better alternative. I found Adobe XD was better but it's getting discontinued (EDIT: last time I heard - I might be wrong? Can't find info on this anymore) and it doesn't run on Linux. My biggest gripe with Figma is the fact that you can only use components from the same file, unless you're paying (and even then you have to use a team, even if you are the only member, then create a project and add the file with the components in the project, enable sharing of the components, and make sure your second file is in the same project... not exactly a seamless experience, in a UX prototyping software of all places). Shall you decide not to pay and give up to only using components from the same file, good luck organizing it neatly, since you only get 3 pages.
  - vogt 4y ago
    They need subscriptions to make money, and paywalling shared asset libraries is how they make sure that you can effectively have a full feature free trial permanently. I really don’t see the problem here. A subscription is what, $12? You need to pay for an adobe CC license to have XD.
wdb 4y ago
I don't agree on the Blizzard stuff but in this instance I agree with what the US government is doing. Adobe is a stronger hold on the design tools market than any other company and Figma was good competition
- twright 4y ago
  What separates the two cases for you? Does it come down to there being more gaming companies compared to Microsoft than there are application-design companies compared to Adobe?
  - croes 4y ago
    It's still PS vs Xbox, MS vs Sony, but Adobe vs ???
    - jonny_eh 4y ago
      Not to mention Nintendo and Valve/Steam in the mix. Of all the issues that the video game industry has at the moment, a lack of platform competition isn't the issue.
  - CyanBird 4y ago
    In my case at least it is just pure spite against blizzard Just today they announced that they won't be funding SC2 esports anymore, and it is just yet another chip on their long defaced corporate image from my side of view
  - nindalf 4y ago
    Stratechery did a really good analysis of why the Blizzard acquisition should go ahead.
user3939382 4y ago
[flagged]
- jgalt212 4y ago
  Maybe, maybe not. Perhaps they got a free pass out of an acquisition way off oc current market levels.
bruceb 4y ago
I have read more than once Adobe might secretly be ok with this. Price agreed to before valuations fully cratered. I am sure Musk wished the DOJ could have helped him out as well.
- andsoitis 4y ago
  > I am sure Musk wished the DOJ could have helped him out as well. In what way? None of his existing businesses operate in even remotely the same market as Twitter.
  - bruceb 4y ago
    Security was floated as a reason: https://www.businessinsider.com/biden-elon-musk-twitter-deal-government-national-security-review-report-2022-10?op=1 https://www.businessinsider.com/biden-elon-musk-twitter-deal... I don't think was real possibility but was at least floated even it was to give something for partizans to chew on.
- 93po 4y ago
  thank god someone mentioned musk, i was starting to shake because it had been more than 30 seconds
  - triyambakam 4y ago
    In 20 years the coolest new startup will be called ELON
    - kijin 4y ago
      Perfect name if you want to develop electric rockets or somethin'.
      - dmitriid 4y ago
        Home electronics shop in Sweden https://www.elon.se/vitvaror https://www.elon.se/vitvaror Since 1967
AlexanderTheGr8 4y ago
I would not be surprised if Adobe intentionally added monopolistic terms to their deal with Figma or acted that the deal was monopolistic in front of antitrust officials in the hope that they might block the deal, considering that they are paying $20B for something that, in today's market, is worth way less than that. If I am not mistaken, the fact that DOJ is preparing a suit means that the deal will not go through for at least a year or more, so Adobe can delay paying. They can also, intentionally, perform poorly in court to let DOJ get an easy win and avoid paying Figma. In my opinion, the only losing party in this story is Figma. Adobe gets a chance to back out and DOJ gets a chance at an easy win. I am surprised FTC didn't jump on this, considering they are looking for wins, after their weak lawsuit against Meta's acquisition of Within.
- outside1234 4y ago
  Figma will get $1B in breakup fees. Not sure that's a loss.
  - jgalt212 4y ago
    Not for Figma, but for the VC's who've already paid for new jets or 8 figure apartments.
    - tyre 4y ago
      Why would it not be for Figma? The VCs won’t get cash from selling shares in the acquisition because the acquisition won’t happen.
      - jgalt212 4y ago
        Well, I guess it depends on your goals as Figma employee. So yes, but probably a net negative but the situation for the Figman employees and company is muddier than it is for the VCs.
  - tiffanyh 4y ago
    What’s worse, overspending $20B or giving up $1B?
obblekk 4y ago
In case you ever find yourself with as much leverage as Figma seemingly had… always negotiate a break up fee to compensate for exactly this. T-Mobile famously got a $4B breakup fee after DOJ blocked ATT from acquiring them. That $4B was used to buy more spectrum and overhaul the brand, leading to huge growth to the point that T-Mobile is now a big 3 player (it used to be big 2 only). If Figma wrangles $2-3B cash out of this, they could probably take down the entire adobe ecosystem.
- roflyear 4y ago
  It would be wonderful if someone took down adobe.
- deleted 4y ago
  [deleted]
- maroonblazer 4y ago
  Substituting one Goliath for another is not the future we should be interested in. I'd like to see a competitive landscape where we, the users of these tools, enjoy the benefits of healthy competition.
- lotsofpulp 4y ago
  T-Mobile US ($177B) even has a bigger market cap than Verizon ($162B) and ATT ($138B). ATT’s management has been garbage for the last 15 years.
  - smcin 4y ago
    Post-merger/acquisition of Sprint, yes (initiated in 2018 and finally allowed by regulators in 2020). Interesting detail about the prior 2014 Softbank/Sprint bid to acquire T-Mobile: > "It was reported that... Sprint had insisted on a low termination fee to prevent regulators from being given an incentive to block the deal, as had occurred with AT&T's failed attempt to purchase T-Mobile." https://en.wikipedia.org/wiki/Merger_of_Sprint_Corporation_and_T-Mobile_US https://en.wikipedia.org/wiki/Merger_of_Sprint_Corporation_a...
neosat 4y ago
Adobe pays a high valuation in an inflated market for Figma, to continue showing growth that has mostly stalled. Also helps them cross-sell their other products once they get into smaller companies where Figma has a strong foothold. Market Tanks, valuations tank (to reasonable levels or perhaps still slightly inflated levels but not as crazy as before) Generative AI brings a new threat (and new potential acquisition targets in the near future) Adobe: How do we get out of this (now) bad deal? .....Oh wait.. DOJ: Preps anti-trust suit ... now Speculating.... Adobe doesn't really contend strongly the anti trust charge. Pays $1B or so (saves $19B for future acquisitions) Figma......some dreams crushed, but I guess $1B is not too shabby
- ohmanjjj 4y ago
  Ericsson tried that strategy with Vonage. Failed and paid $6B for a $500M business at best.
- eastbound 4y ago
  Why don’t such companies just create a venture fund with 49% ownership to buy all the small actors? They could even call it “funding the competition so that there is some”.
- danielfoster 4y ago
  This would be an interesting play, but Adobe likely agreed to use "best efforts" to complete the transaction as part of the deal. This would include putting up a strong defense to any anti-trust lawsuits Any sort of shenanigans in this area would almost certainly leave a paper trail.
omeze 4y ago
my heart goes out to the employees. startup money ain't real til its in your bank account. Personally, it felt really bad when Plaid/Visa was blocked (I was at Plaid), but the anticompetition evidence was a tad too on the nose from Visa's end for the DOJ to let it go through.
benatkin 4y ago
Damn. With penpot destined to take Figma's place I thought things were going swimmingly. I'd rather they put that effort into FAANGs.
- notpushkin 4y ago
  I do hope Penpot takes Figma's place, but you just can't be so sure at this point.
  - leetrout 4y ago
    First I have heard of Penpot. Do you have a favorite link that gives more insight on why you want it at the top?
    - notpushkin 4y ago
      No particular link, but: - it's free and open source - it can be self-hosted (for fun or because you're working on something way too secret): https://penpot.app/self-host https://penpot.app/self-host - its' file format is based on open standards, no vendor lock-in: https://help.penpot.app/user-guide/import-export/ https://help.penpot.app/user-guide/import-export/
readonthegoapp 4y ago
https://archive.ph/QuoBQ https://archive.ph/QuoBQ isn't the way this works as follows? - bigtechco buys smalltechco - merger happens for a few months, drama, layoffs, etc. - doj sues - judge/supremes block well, i see some articles talking about some "recent DOJ victories after a string of losses", so hopefully i'm wrong. i don't understand why things work like this -- seems strange. i did read how the supremes decided a long time ago that mergers/acquisitions were always good and right as long as prices went down or stayed low-ish temporarily -- that was the fiction they created, anyways. and what's the pre-suit meeting about. DOJ: hey, stop this. ADO: no. DOJ: ok, then we filing suit. ADO: ok. DOJ: that's it? ADO: yes. DOJ: u sure? we really gonna do it..!!??? ADO: yeah, we know, thanks.
saos 4y ago
This is the best news! Maybe Adobe should improve XD
- CyanBird 4y ago
  Fuck adobe I won't forgive them for all the lies that they spun with the allegorithmic acquisition
Xcelerate 4y ago
To anyone who studies law in this area, is the DOJ at least consistent with regard to the deals they decide to block or allow to go through? I’m not asking whether they are making the right decision, but rather if whatever approach they use is applied the same way across cases each time.
pc_edwin 4y ago
This may ultimately be a positive outcome for those involved with Figma. Consider Facebook's acquisition of WhatsApp and Instagram, which were acquired at what proved to be bargain prices. The founders came to regret the transaction, while Mr. Zuckerberg appeared prescient. Although it may appear to be a challenging and lengthy path for Figma to achieve the acquisition premium on its own, I am of the belief that it is a more attainable goal than it may seem. Moreover, it is worth noting that Adobe not only has the potential to be disrupted, but it is in fact in need of it. The company has been met with widespread criticism for various reasons, and as such, it presents an opportune market for Figma to capitalize upon.
Clubber 4y ago
They should have done it in 2005 and blocked the Macromedia acquisition. https://www.wired.com/2005/04/adobe-acquires-macromedia/ https://www.wired.com/2005/04/adobe-acquires-macromedia/

341 points by bsears 4y ago

That would be incredible, please do! Figma is the only design tool that actually approaches design from an engineering standpoint, which can be seen in their feature set of things like having reusable components, variants, inheritance etc, which then maps very cleanly onto the code side.

andybak 4y ago
Many of those features are in other apps. It's surely a difference of degree rather than kind? (I can't reel off a list as I don't do design day to day any more but I used to and I was a fan of apps that had exactly this approach.
- satvikpendem 4y ago
  The degree matters IMO. The ones in Sketch or XD are laughable compared to Figma.
gliiics 4y ago
I'm not a fan of Figma at all and I am forced to use it since there is no better alternative. I found Adobe XD was better but it's getting discontinued (EDIT: last time I heard - I might be wrong? Can't find info on this anymore) and it doesn't run on Linux. My biggest gripe with Figma is the fact that you can only use components from the same file, unless you're paying (and even then you have to use a team, even if you are the only member, then create a project and add the file with the components in the project, enable sharing of the components, and make sure your second file is in the same project... not exactly a seamless experience, in a UX prototyping software of all places). Shall you decide not to pay and give up to only using components from the same file, good luck organizing it neatly, since you only get 3 pages.
- vogt 4y ago
  They need subscriptions to make money, and paywalling shared asset libraries is how they make sure that you can effectively have a full feature free trial permanently. I really don’t see the problem here. A subscription is what, $12? You need to pay for an adobe CC license to have XD.

wdb 4y ago

I don't agree on the Blizzard stuff but in this instance I agree with what the US government is doing. Adobe is a stronger hold on the design tools market than any other company and Figma was good competition

twright 4y ago
What separates the two cases for you? Does it come down to there being more gaming companies compared to Microsoft than there are application-design companies compared to Adobe?
- croes 4y ago
  It's still PS vs Xbox, MS vs Sony, but Adobe vs ???
  - jonny_eh 4y ago
    Not to mention Nintendo and Valve/Steam in the mix. Of all the issues that the video game industry has at the moment, a lack of platform competition isn't the issue.
- CyanBird 4y ago
  In my case at least it is just pure spite against blizzard Just today they announced that they won't be funding SC2 esports anymore, and it is just yet another chip on their long defaced corporate image from my side of view
- nindalf 4y ago
  Stratechery did a really good analysis of why the Blizzard acquisition should go ahead.

user3939382 4y ago

[flagged]

jgalt212 4y ago
Maybe, maybe not. Perhaps they got a free pass out of an acquisition way off oc current market levels.

bruceb 4y ago

I have read more than once Adobe might secretly be ok with this. Price agreed to before valuations fully cratered. I am sure Musk wished the DOJ could have helped him out as well.

andsoitis 4y ago
> I am sure Musk wished the DOJ could have helped him out as well. In what way? None of his existing businesses operate in even remotely the same market as Twitter.
- bruceb 4y ago
  Security was floated as a reason: https://www.businessinsider.com/biden-elon-musk-twitter-deal-government-national-security-review-report-2022-10?op=1 https://www.businessinsider.com/biden-elon-musk-twitter-deal... I don't think was real possibility but was at least floated even it was to give something for partizans to chew on.
93po 4y ago
thank god someone mentioned musk, i was starting to shake because it had been more than 30 seconds
- triyambakam 4y ago
  In 20 years the coolest new startup will be called ELON
  - kijin 4y ago
    Perfect name if you want to develop electric rockets or somethin'.
    - dmitriid 4y ago
      Home electronics shop in Sweden https://www.elon.se/vitvaror https://www.elon.se/vitvaror Since 1967

AlexanderTheGr8 4y ago

I would not be surprised if Adobe intentionally added monopolistic terms to their deal with Figma or acted that the deal was monopolistic in front of antitrust officials in the hope that they might block the deal, considering that they are paying $20B for something that, in today's market, is worth way less than that. If I am not mistaken, the fact that DOJ is preparing a suit means that the deal will not go through for at least a year or more, so Adobe can delay paying. They can also, intentionally, perform poorly in court to let DOJ get an easy win and avoid paying Figma. In my opinion, the only losing party in this story is Figma. Adobe gets a chance to back out and DOJ gets a chance at an easy win. I am surprised FTC didn't jump on this, considering they are looking for wins, after their weak lawsuit against Meta's acquisition of Within.

outside1234 4y ago
Figma will get $1B in breakup fees. Not sure that's a loss.
- jgalt212 4y ago
  Not for Figma, but for the VC's who've already paid for new jets or 8 figure apartments.
  - tyre 4y ago
    Why would it not be for Figma? The VCs won’t get cash from selling shares in the acquisition because the acquisition won’t happen.
    - jgalt212 4y ago
      Well, I guess it depends on your goals as Figma employee. So yes, but probably a net negative but the situation for the Figman employees and company is muddier than it is for the VCs.
- tiffanyh 4y ago
  What’s worse, overspending $20B or giving up $1B?

obblekk 4y ago

In case you ever find yourself with as much leverage as Figma seemingly had… always negotiate a break up fee to compensate for exactly this. T-Mobile famously got a $4B breakup fee after DOJ blocked ATT from acquiring them. That $4B was used to buy more spectrum and overhaul the brand, leading to huge growth to the point that T-Mobile is now a big 3 player (it used to be big 2 only). If Figma wrangles $2-3B cash out of this, they could probably take down the entire adobe ecosystem.

roflyear 4y ago
It would be wonderful if someone took down adobe.
deleted 4y ago
[deleted]
maroonblazer 4y ago
Substituting one Goliath for another is not the future we should be interested in. I'd like to see a competitive landscape where we, the users of these tools, enjoy the benefits of healthy competition.
lotsofpulp 4y ago
T-Mobile US ($177B) even has a bigger market cap than Verizon ($162B) and ATT ($138B). ATT’s management has been garbage for the last 15 years.
- smcin 4y ago
  Post-merger/acquisition of Sprint, yes (initiated in 2018 and finally allowed by regulators in 2020). Interesting detail about the prior 2014 Softbank/Sprint bid to acquire T-Mobile: > "It was reported that... Sprint had insisted on a low termination fee to prevent regulators from being given an incentive to block the deal, as had occurred with AT&T's failed attempt to purchase T-Mobile." https://en.wikipedia.org/wiki/Merger_of_Sprint_Corporation_and_T-Mobile_US https://en.wikipedia.org/wiki/Merger_of_Sprint_Corporation_a...

neosat 4y ago

Adobe pays a high valuation in an inflated market for Figma, to continue showing growth that has mostly stalled. Also helps them cross-sell their other products once they get into smaller companies where Figma has a strong foothold. Market Tanks, valuations tank (to reasonable levels or perhaps still slightly inflated levels but not as crazy as before) Generative AI brings a new threat (and new potential acquisition targets in the near future) Adobe: How do we get out of this (now) bad deal? .....Oh wait.. DOJ: Preps anti-trust suit ... now Speculating.... Adobe doesn't really contend strongly the anti trust charge. Pays $1B or so (saves $19B for future acquisitions) Figma......some dreams crushed, but I guess $1B is not too shabby

ohmanjjj 4y ago
Ericsson tried that strategy with Vonage. Failed and paid $6B for a $500M business at best.
eastbound 4y ago
Why don’t such companies just create a venture fund with 49% ownership to buy all the small actors? They could even call it “funding the competition so that there is some”.
danielfoster 4y ago
This would be an interesting play, but Adobe likely agreed to use "best efforts" to complete the transaction as part of the deal. This would include putting up a strong defense to any anti-trust lawsuits Any sort of shenanigans in this area would almost certainly leave a paper trail.

omeze 4y ago

my heart goes out to the employees. startup money ain't real til its in your bank account. Personally, it felt really bad when Plaid/Visa was blocked (I was at Plaid), but the anticompetition evidence was a tad too on the nose from Visa's end for the DOJ to let it go through.

benatkin 4y ago

Damn. With penpot destined to take Figma's place I thought things were going swimmingly. I'd rather they put that effort into FAANGs.

notpushkin 4y ago
I do hope Penpot takes Figma's place, but you just can't be so sure at this point.
- leetrout 4y ago
  First I have heard of Penpot. Do you have a favorite link that gives more insight on why you want it at the top?
  - notpushkin 4y ago
    No particular link, but: - it's free and open source - it can be self-hosted (for fun or because you're working on something way too secret): https://penpot.app/self-host https://penpot.app/self-host - its' file format is based on open standards, no vendor lock-in: https://help.penpot.app/user-guide/import-export/ https://help.penpot.app/user-guide/import-export/

readonthegoapp 4y ago

https://archive.ph/QuoBQ https://archive.ph/QuoBQ isn't the way this works as follows? - bigtechco buys smalltechco - merger happens for a few months, drama, layoffs, etc. - doj sues - judge/supremes block well, i see some articles talking about some "recent DOJ victories after a string of losses", so hopefully i'm wrong. i don't understand why things work like this -- seems strange. i did read how the supremes decided a long time ago that mergers/acquisitions were always good and right as long as prices went down or stayed low-ish temporarily -- that was the fiction they created, anyways. and what's the pre-suit meeting about. DOJ: hey, stop this. ADO: no. DOJ: ok, then we filing suit. ADO: ok. DOJ: that's it? ADO: yes. DOJ: u sure? we really gonna do it..!!??? ADO: yeah, we know, thanks.

saos 4y ago

This is the best news! Maybe Adobe should improve XD

CyanBird 4y ago
Fuck adobe I won't forgive them for all the lies that they spun with the allegorithmic acquisition

Xcelerate 4y ago

To anyone who studies law in this area, is the DOJ at least consistent with regard to the deals they decide to block or allow to go through? I’m not asking whether they are making the right decision, but rather if whatever approach they use is applied the same way across cases each time.

pc_edwin 4y ago

This may ultimately be a positive outcome for those involved with Figma. Consider Facebook's acquisition of WhatsApp and Instagram, which were acquired at what proved to be bargain prices. The founders came to regret the transaction, while Mr. Zuckerberg appeared prescient. Although it may appear to be a challenging and lengthy path for Figma to achieve the acquisition premium on its own, I am of the belief that it is a more attainable goal than it may seem. Moreover, it is worth noting that Adobe not only has the potential to be disrupted, but it is in fact in need of it. The company has been met with widespread criticism for various reasons, and as such, it presents an opportune market for Figma to capitalize upon.

Clubber 4y ago

They should have done it in 2005 and blocked the Macromedia acquisition. https://www.wired.com/2005/04/adobe-acquires-macromedia/ https://www.wired.com/2005/04/adobe-acquires-macromedia/