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There was no upside to this. Much like Microsoft's acquisition of Activision Blizzard, Oktas acquiring Auth0, it is just market consolidation.
by happymellon 3y ago
There was no upside to this.
Much like Microsoft's acquisition of Activision Blizzard, Oktas acquiring Auth0, it is just market consolidation.
- max_ 3y agoThe investors & founders of Figma clearly got the upside. I really don't know why every business transaction has to be some kind of mission that will take us to Nirvana. What is wrong with people taking money? If Figma is bad for Developers let them build an alternative since they are developers or they can just use several of the many Figma alternatives.
- satao 3y agoBecause monopolies hinge the growth of human development and should be avoided by any true capitalistic economy.
- gertrunde 3y agohinge -> hinder ?
- max_ 3y agoAdobe isn't a monopoly it is simply domainant. Consumers have a choice to use other alternatives. How does this "hinder the growth of human development"
- tremon 3y agoEvery dominant piece of software is its own monopoly as long as the documents have a proprietary format and there exist no independent readers/writers.
- superchroma 3y agoBecause they commonly swap to profit extraction models when they fail to integrate the acquisitions, and after that they typically shutter otherwise viable businesses. Most recently seen with Unity and Weta Technologies
- tmikaeld 3y agoWhy would Adobe pay 20$ Billion if "consumers have a choice to use other alternatives".. c'mon man.
- mschuster91 3y ago> How does this "hinder the growth of human development" Easy. The larger any company gets, the more difficult it becomes to compete with them as customers of a potential competitor expect a certain set of features to be available to even consider migration, and thus the large company gets ever more and more market share over time. On top of that the large company may simply outspend a competitor in advertising or sue competitors for barely-legal patents. Capitalism at its core is the ruthless elimination of inefficiencies, and competition is inefficiency (just look how many dozens of billions of VC were burned in the "gig economy" sector to get rid of competitors). The problem for the development of humanity is that an entrenched, dominant/monopolist company has zero reasons to innovate and progress.
- max_ 3y agoConsumers always have the opportunity to switch. Also, VCs do fund competitors so it's not as black & white as you think.
- troupo 3y ago> Consumers always have the opportunity to switch. No, they don't always have a choice
- mschuster91 3y ago> Consumers always have the opportunity to switch. For that, there needs to be an alternative option. Just look at Walmart and how they destroy small food stores in a massive radius around them as no small retailer can compete with their scale.
- ben_w 3y agoAll of that (including how dominant) is in the actual document the CMA published: https://assets.publishing.service.gov.uk/media/6565c3e262180b000dce82c1/Summary_of_provisional_findings_pdfa.pdf https://assets.publishing.service.gov.uk/media/6565c3e262180... Note the regulator phrases the concern, not as "monopoly", but as "substantial lessening of competition (SLC)". In particular, page 6, item 25: > We consider that Adobe’s and Figma’s platforms are characterised by network effects. These network effects cause the value of the respective platforms to increase with the number of users. These strengthen Adobe’s position in vector and raster editing software. They also strengthen Figma’s position in product design software. Network effects operate across markets. For example, the value of using Figma’s vector and raster editing offerings is greater the more Figma is used for product design, and vice-versa. Therefore the strength of the Parties’ positions in each of these markets is influenced by their strengths in the others, implying that the Parties exert multi-market competitive pressure on each other across vector editing, raster editing, and product design. Page 9, item 41: > The Parties identified more than 45 competitors in vector editing and more than 65 in raster editing. We undertook an assessment to identify the most relevant competitors in each of vector and raster editing software. We considered the extent to which these competitors are referred to in the Parties’ internal documents and in third-party evidence. We consider that very few competitors in vector editing software (Affinity and Corel Draw) and raster editing software (Affinity) provide any meaningful competitive constraint on Adobe’s product development for professional users, and that constraint is weak to moderate at most. This is particularly true for product design and related digital use cases
- max_ 3y agoSo when products compete on the market place, they shouldn't be allowed to win? Even in sports there are winners & losers.
- lopkeny12ko 3y agoUh, yes? That is literally the entire reason competition regulatory bodies like the CMA exist. To prevent monopolistic behavior and ensure no single entity gets big enough to squash all competition.
- strobe 3y agoit's monopoly, in professional setting in most cases is no possibility to use something else even if alternative tools is better for your specific task. It really similar to case of MS Word decades ago, now we have choose but not in the past. Figma had chance to grow later to level where it could become Adobe competitor, now it's no hope that would be any competition any time soon. Just to illustrate why I think that. Usually Adobe software used for everything so is no escape in most cases, but Figma became so widespread in popular specific case so it could really transform situation in way: use Adobe for everything but for UI/Web use only Figma. In that way everybody become committed enough to Figma ecosystem and they as company can start offering new tools which will able to capture Adobe businesses bit by bit.
- pie420 3y agoThat's every monopoly in history. Any smart monopoly allows just enough competition to tread water to show regulators that "hey, look, there's competition, we're just dominant".
- ben_w 3y ago> What is wrong with people taking money? Is the wrong question to ask. Money is a means to facilitate self-organisation in the economy — it's not a good in itself, only as a means to an end. For the most part, people are happy to not look too closely and just assume it's all good, but the entire point of regulators such as the Competition Markets Authority is to find the cases where a trade isn't good for the wider economy.
- indigo0086 3y agoThen thr wider economy can decide if it's good or not, and choose alternatives. The only thing that would really stifle consumer choice is ip laws that could just claim the entire solution of Figma is off limits
- YetAnotherNick 3y agoIf UK or Europe government think that merger of two US tech companies they don't control is bad for competition, they need to invest in creating a competition. And I am not talking about a million or two they give here and there, they need big investments. It baffles me that Europe programmers has similar or better education and skills than US, but they get paid 1/3rd of US's salary for the same cost of living for senior positions.
- tmikaeld 3y ago> ..let them build an alternative.. Sure, let's just throw something together and it will work as good as something worth 20$ billion dollars..
- chrisandchris 3y agoThe fun fact around this is that, whatever number you believe, each paying user is worth something north of 50-100k to Adobe. Figma has 4 million active users, maybe 5% signed up for a paid plan, will make 100k for each user at the acquisition price.
- max_ 3y agoYou honestly think someone needs $20bn to build a Figma alternative or clone?
- ben_w 3y agoAdobe clearly thought that or they wouldn't have paid that much, and so did their shareholders or they would have sued for wasting money.
- boeingUH60 3y agoThey're paying for the network effects, not the app. They can build a Figma clone with less than $10 million, but good luck getting people to use it.
- kevindamm 3y agoSupposing that one company's cash-value offer is equivalent to what it would cost to build, there would be no point in building a startup. That value estimate is what the built thing plus company staff plus brand recognition plus timing is worth. Hardly the same thing as what it would cost to build again. Especially now knowing an effective UI/UX for the task.
- andsoitis 3y ago> Adobe clearly thought that or they wouldn't have paid that much, and so did their shareholders or they would have sued for wasting money. Value is not the same as cost. The cost of acquiring something is not the same as the cost of building something.
- codr7 3y agoI feel the issue here is that Figma has become the standard tool for UI design, it's what everyone uses and everyone knows. Which means there's a potentially huge collective cost if it goes downhill.
- MajimasEyepatch 3y agoEndless consolidation isn't the only way to make money. There's plenty of money for Figma to make if they remain an independent company, _and_ their customers would be better off.
- wdb 3y agoDon’t think Microsoft the dominant creator of games compared to Adobe which is the dominant creator of graphics tools.
- aeurielesn 3y agoMicrosoft is trying to buy more than just Activision/Blizzard I the games industry.
- kemotep 3y agoTheir goal (in my opinion) is to have enough studios to be cranking out one or more games each month for game pass. With many games taking over 3 years now to make and about 10 of those Activision studios working on just Call of Duty, they have several more studios to go.
- that_guy_iain 3y agoIn my opinion, they're just playing catch up with Sony. Sony started buying up studios years ago and has some quality studios pumping out top notch games which are Playstation Exclusive. To deal with that Microsoft is buying up some too, they just went straight to the top and decided to go for an already estabished studios instead of going for smaller ones and investing until they deliver in 5-10 years.
- TerrifiedMouse 3y agoWhat people hated about Microsoft’s acquisition was that it will deprive its competitors IPs they used to have access to - eventually. Sony’s acquisitions are less “egregious” as the companies they acquire usually generated few to no (valuable) IPs for their competitors - there are exceptions of course. That’s why most all of their acquisitions fly under the radar.
- that_guy_iain 3y agoYea, but the problem was originally caused by Sony. Many say it's anti-competive but really it's basically done to compete. I would say making games console exclusive should be banned if you want to remove things like this.
- throwaway2990 3y agoMicrosoft’s aquisirion of activision likely saved blizzard. MS only has 15% of the console market.
- Lacerda69 3y agoIMO the problem was the acquisition of Blizzard by Activision. I agree that MS will be a better steward than Activision who managed to completely ruins Blizzards reputation since the acquisition.
- vsnf 3y agoWhile saying nothing about the quality of their games or the decline thereof, Blizzard did a perfectly good job torching their reputation themselves when the report of their insane and inappropriate office antics was made public.
- fnordsensei 3y agoThey also host more or less the entire PC gaming market.
- throwaway2990 3y ago[flagged]
- kypro 3y agoIf I was to try to steel man an argument for why acquisitions like this are good it would be that a lot of startups like Figma only exist because acquisitions are common and therefore offers early investors an exit on their investment that isn't 1-2 decades in the future. If we got rid of M&A in tech there would significantly less investment and much less innovation, which I think you could argue is bad for the ecosystem as a whole and the end consumer of these products – even if individual acquisitions are often not great when viewed independently. Or to look at it another way, big tech basically outsources their R&D to startups and the successful projects (companies) are then acquired. And this goes both ways given the goal of a lot startups is to be acquired.
- crote 3y agoThe problem isn't that they are acquired, the problem is that they are acquired by their primary competitor, leading to a quasi-monopoly. If Figma was being acquired by literally any other company the regulators wouldn't have any problems with it.
- jliptzin 3y agoInvestors don’t have to structure their deals such that selling the company or an IPO is the only way to get their money out though. They could say give me 10% of profit until I get 10x my investment, etc. At least that way investors are aligned with creating a company with sustainable profits, rather than the VC pump and dump that we’re all familiar with.
- capybara_2020 3y ago
- tpurves 3y agoAt least with Activiaion Blizzard under new management, there's a hope of reviving the Starcraft franchise? But otherwise yes, Okats & Auth0, Figma + Adobe 100% travesty. As would have been nvdia + arm.
- HlessClaudesman 3y agoWith the sale price passed directly on to consumers in the inevitable form of higher subscription fees. Designers believing themselves to be forever locked into the Adobe clown cloud are literally turkeys paying for Christmas.
- pfannkuchen 3y agoIf you aren’t allowed to sell something, you don’t really own it. Whoever decides the valid sale conditions also owns part of it, it’s just off the books (so to speak). Do we really want governments implicitly part-owning companies that aren’t related to violence? At least a monopoly can be out innovated.