11 ms·

Uncle Sam to block Adobe absorption of Figma over monopoly fears

101 points by grdeken 4y ago

barelysapient 4y ago
I'm a longtime Figma user and selfishly I hope they don't get sold to Adobe. 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?
- zamnos 4y ago
  The question isn't Adobe will make back their money, though they will. The question is how much money they don't get because are customers using Figma and no longer have to pay Adobe.
- BoiledCabbage 4y ago
  The US govts primary concern is not figma shareholders. It's US citizens as it should be. The harm to citizens outweighs the benefit to shareholders by too much in this case to allow it.
  - curiousllama 4y ago
    What’s the implied harm to citizens?
    - yowzadave 4y ago
      Adobe could, with a monopoly position, jack up the price of Figma (or kill it off entirely) so as to not hurt the market position of their cash cow.
    - edgyquant 4y ago
      Less competition = a worse product. Figma is great and that’s entirely due to disrupting business from adobe. Allowing adobe to buy them means Adobe doesn’t have to innovate and can remain hyper dominate.
    - frereubu 4y ago
      For all those downvoting this question, I think you should take it at face value. It would be nice to think that "Genuine question..." is not a prerequisite for that.
    - bradleybuda 4y ago
      One harm to citizens is that future entrepreneurs will be less motivated to create new products in a regulatory environment that makes it difficult or impossible for them to profit from selling their businesses. Therefore there will be fewer disruptive / innovative products. If you think this is theoretical, see the startup scene in Europe and Canada.
      - BoiledCabbage 4y ago
        Of course they can still sell their product - to anyone except Adobe. 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.
- andrewxdiamond 4y ago
  Strangely enough every actor here is doing the right thing. 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
  - TedDoesntTalk 4y ago
    No, something is off: > 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.
    - ideamotor 4y ago
      It only serves their interest if it creates a monopoly.
    - freeqaz 4y ago
      What's growth rate on that revenue though? If it's like 20-30% growth per year... you're talking a pretty short amount of time (3-5 years) until that revenue multiplier is at parity with many publicly traded tech companies.
    - DrewADesign 4y ago
      Out of context? Sure. But Adobe isn't going to just buy it, operate it, and collect its revenue. 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.
- JKCalhoun 4y ago
  When Adobe moved to a subscription model (and not a very nice one at that) I vindictively hoped that they would spiral down the drain to irrelevance. Kanpai!
- duped 4y ago
  > 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? They could pivot to selling drugs. Point is, who cares? Shareholders don't have an inalienable right to maximum profits.
tompic823 4y ago
When this deal was originally announced, Adobe's stock took a ~10% hit. Now that the deal is getting blocked, their stock is again taking a hit? I certainly can't claim to understand the public markets.
- Zetobal 4y ago
  The first hit was from investors that didn't like the deal... the second is from investors that liked it. That the former won't come back makes sense and so does the market. Well at least in this case.
- patrickthebold 4y ago
  Maybe it's: "uh-oh Adobe must be in a really bad position if they agreed to pay 20b for Figma". Followed by, "Uh-oh, the need to buy Figma but can't".
- deleted 4y ago
  [deleted]
xnx 4y ago
Adobe got lucky with this deal in a way that Musk could only wish for.
sleepybrett 4y ago
good, now do google and facebook
edoggie 4y ago
Yet they couldn't be bothered to stop the merger of every major media company down to a total of basically three businesses.
- jeppester 4y ago
  Mistakes were made, lessons learned. Hopefully there will be fewer of these mergers and acquisitions going forward.
- twoodfin 4y ago
  Netflix, Amazon, and Apple?
deleted 4y ago
[deleted]
merricksb 4y ago
Discussion of Bloomberg source article four days ago: https://news.ycombinator.com/item?id=34917743 https://news.ycombinator.com/item?id=34917743 (330 points/4 days ago/85 comments)
solarkraft 4y ago
Wait, that state still works? Has Adobe forgotten to pay their LobbyCloud subscription bills?
baron816 4y ago
Blocking acquisitions is such a double edged sword. Yes you protect competition, which is good. The downside is that you remove an exit ramp for startups, which limits the incentives for startup formation in the first place. I have no idea how to balance this btw.

101 points by grdeken 4y ago

I'm a longtime Figma user and selfishly I hope they don't get sold to Adobe. 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?

zamnos 4y ago
The question isn't Adobe will make back their money, though they will. The question is how much money they don't get because are customers using Figma and no longer have to pay Adobe.
BoiledCabbage 4y ago
The US govts primary concern is not figma shareholders. It's US citizens as it should be. The harm to citizens outweighs the benefit to shareholders by too much in this case to allow it.
- curiousllama 4y ago
  What’s the implied harm to citizens?
  - yowzadave 4y ago
    Adobe could, with a monopoly position, jack up the price of Figma (or kill it off entirely) so as to not hurt the market position of their cash cow.
  - edgyquant 4y ago
    Less competition = a worse product. Figma is great and that’s entirely due to disrupting business from adobe. Allowing adobe to buy them means Adobe doesn’t have to innovate and can remain hyper dominate.
  - frereubu 4y ago
    For all those downvoting this question, I think you should take it at face value. It would be nice to think that "Genuine question..." is not a prerequisite for that.
  - bradleybuda 4y ago
    One harm to citizens is that future entrepreneurs will be less motivated to create new products in a regulatory environment that makes it difficult or impossible for them to profit from selling their businesses. Therefore there will be fewer disruptive / innovative products. If you think this is theoretical, see the startup scene in Europe and Canada.
    - BoiledCabbage 4y ago
      Of course they can still sell their product - to anyone except Adobe. 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.
andrewxdiamond 4y ago
Strangely enough every actor here is doing the right thing. 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
- TedDoesntTalk 4y ago
  No, something is off: > 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.
  - ideamotor 4y ago
    It only serves their interest if it creates a monopoly.
  - freeqaz 4y ago
    What's growth rate on that revenue though? If it's like 20-30% growth per year... you're talking a pretty short amount of time (3-5 years) until that revenue multiplier is at parity with many publicly traded tech companies.
  - DrewADesign 4y ago
    Out of context? Sure. But Adobe isn't going to just buy it, operate it, and collect its revenue. 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.
JKCalhoun 4y ago
When Adobe moved to a subscription model (and not a very nice one at that) I vindictively hoped that they would spiral down the drain to irrelevance. Kanpai!
duped 4y ago
> 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? They could pivot to selling drugs. Point is, who cares? Shareholders don't have an inalienable right to maximum profits.

tompic823 4y ago

When this deal was originally announced, Adobe's stock took a ~10% hit. Now that the deal is getting blocked, their stock is again taking a hit? I certainly can't claim to understand the public markets.

Zetobal 4y ago
The first hit was from investors that didn't like the deal... the second is from investors that liked it. That the former won't come back makes sense and so does the market. Well at least in this case.
patrickthebold 4y ago
Maybe it's: "uh-oh Adobe must be in a really bad position if they agreed to pay 20b for Figma". Followed by, "Uh-oh, the need to buy Figma but can't".
deleted 4y ago
[deleted]

xnx 4y ago

Adobe got lucky with this deal in a way that Musk could only wish for.

sleepybrett 4y ago

good, now do google and facebook

edoggie 4y ago

Yet they couldn't be bothered to stop the merger of every major media company down to a total of basically three businesses.

jeppester 4y ago
Mistakes were made, lessons learned. Hopefully there will be fewer of these mergers and acquisitions going forward.
twoodfin 4y ago
Netflix, Amazon, and Apple?

deleted 4y ago

[deleted]

merricksb 4y ago

Discussion of Bloomberg source article four days ago: https://news.ycombinator.com/item?id=34917743 https://news.ycombinator.com/item?id=34917743 (330 points/4 days ago/85 comments)

solarkraft 4y ago

Wait, that state still works? Has Adobe forgotten to pay their LobbyCloud subscription bills?

baron816 4y ago

Blocking acquisitions is such a double edged sword. Yes you protect competition, which is good. The downside is that you remove an exit ramp for startups, which limits the incentives for startup formation in the first place. I have no idea how to balance this btw.