I think the Figma IPO proves Khan was right. $60B market cap today vs the $20B Adobe offered in 2023.
There was some criticism about regulatory overreach when the deal got blocked. Now Figma employees are rich, the design tools market stays competitive, and we have another major independent tech company instead of just another Adobe product line.
This is exactly why we need regulators willing to tell Big Tech "no" sometimes. Competition creates more value than consolidation.
It absolutely proves that she was right. If you care about market cap? She was right. If you care about employee comp? She was right. If you care about consumer choice, she was right. Number of listings, new potential acquirers for your startup, more diverse office geography, right right right right.
The idea that there's a significant lobby on fucking Hacker News unhappy that a startup IPO'd for a zillion bucks and made everyone rich is twilight zone shit. It makes no sense according to the stated values in the fucking masthead.
I think you're hitting the real divide here. Some people are so ideologically opposed to any regulatory intervention that they can't admit when it works, even when the evidence is staring them in the face. Also notable [0]: "[...] in any given year, we see up to 3,000 merger filings that get reported to us. Around 2% of those actually get a second look by the government, so you have 98% of all deals that, for the most part, are going through. Around 2% of those actually get a second look by the government, so you have 98% of all deals that, for the most part, are going through." The FTC wasn't blocking everything, just the deals that would entrench monopolies.
> Some people are so ideologically opposed to any regulatory intervention that they can't admit when it works, even when the evidence is staring them in the face.
We have a problem where regulators are bad at their jobs most of the time, and then people develop the heuristic that all regulation is bad.
You need some rules to price major externalities. Not minor externalities, because regulatory overhead and enforcement are themselves externalities and it doesn't do any good to burn $1 in overhead to prevent $0.90 in some other cost. But you want a ban on leaded gasoline.
And you need antitrust rules, because "the market is more efficient" is fundamentally predicated on competitive markets. Real competition is the sine qua non of that actually working. Most government inefficiency is because the government is a monopoly, and private monopolies are just as bad.
The problem is politics breaks everyone's brains. One party says "regulation good" and the other side says "regulation bad" before either of them considers what the regulation actually does. And then you have one party promoting illiterate nonsense like price controls or justifying busybodies who want to micromanage things they don't even understand or trusting the government with mass surveillance data just because they're not a private company, and on the other side you have people with no objections to tying arrangements or companies with double-digit market share buying even more of their competitors.
"Everything should be made as simple as possible but no simpler." That last bit turns out to be kind of important.
> We have a problem where regulators are bad at their jobs most of the time, and then people develop the heuristic that all regulation is bad.
No, we have a problem where 95% of regulations work so well that no one even remembers that they exist (child labor, etc). A media environment that reports on outliers for clicks and corporations that want to dump industrial waste in rivers.
> No, we have a problem where 95% of regulations work so well that no one even remembers that they exist (child labor, etc).
This is quite false. There are a few regulations that have a high cost/benefit ratio (e.g. ban leaded gasoline), and a few that are completely upside down (e.g. DMCA 1201), and then there are the vast majority which are the regulatory bureaucrat equivalent of busy work and are neutral at best. Positions exist to make new regulations, so they make new regulations.
But each new one has overhead, and then we get cost disease and high cost of living and increased market consolidation because regulatory compliance is a fixed cost that large corporations can bear more easily than smaller companies, and the complexity is used to disguise corruption. All of that is legitimately bad.
90% of them are completely worthless, and it's a significant problem that we have an apparatus structured to perpetually accumulate new ones without ever going back and cleaning house to remove the ones that can't be justified.
Right winger says problem is government. Left winger says problem is corporations. Repeat ad nauseum. Yes both can be bad.
95% of regulations and 95% of companies work so fantastically that nobody realizes they exist. Sure.
But re: regulation, that 5% tends to be in the really really important stuff.
How’s housing…and healthcare… and higher education…and the national debt…in the US going?
All of those things make up vastly more than 5% of the economy and are arguably all broken in the US because of poorly designed regulation.
I think assuming most regulation is “good” is an extremely dangerous proposition given regulation is extremely difficult to change or overturn once in place.
It’s important to also remember every regulation requires enforcement at gunpoint. You cannot choose to not follow them.
Your whole comment is good but I want to signal boost the most important point you made.
Private cartels are just bad governments with even less accountability or incentive to be efficient. Take the worst DMV office in the world and put it in charge of something way more important than license plates.
> Private cartels are just bad governments with even less accountability or incentive to be efficient.
It's kind of six of one, half a dozen of the other. You can't vote out a monopolist, but unless there is a law against competing with them, there is a threshold for how bad they can get before somebody actually does. The problem is that threshold can be way past the point of anywhere you want to be.
Whereas governments can get even worse because if you resist their unreasonableness they declare you a criminal and resort to violence and you can't go to the police because they are the police. Voting can mitigate this, but there are governments without democracy, democratic governments that are structurally insulated from accountability in practice (see US incumbency rate and Congress abdicating its role to unelected regulatory bureaucrats), and even in a pure direct democracy you still have two wolves and a sheep voting on what's for dinner.
> but unless there is a law against competing with them
Ah, but that is why the monopoly uses its considerable resources to lobby passing laws that at least make it more difficult for someone to compete with them.
Yeah I think you're right. It's a sad commentary on the times when a group of people so far above average in caring about outcomes and data just go completely lizard brain in a way that comes out of their own paychecks.
Some people are so ideologically opposed to any regulatory intervention
These are people who are ideologically opposed to any regulatory intervention? How can such an extreme position even begin to make sense? This is like letting boxers (or MMA fighters) fight in the ring without a referee, isn't it? As it is, there are lax rules that are getting even more relaxed by the day and even those lax rules aren't enforced consistently, for big businesses and those with money.
There are obviously the people in this cohort and there are also the people who think they will be in this cohort, who think they will be the victors in a cartel-like world.
Heck, before layoffs and the threat of AI started concentrating even more power into tech leadership there were plenty of tech folks along for the ride as the high paid, in demand workforce benefiting from the above.
So now the monopolies are just hiring away all of the people they want from the startup and leaving the company as a shell of its former self - leaving both investors and the employees left behind high and dry.
That means if there are 10 developer - 7 working on the product and 3 working on the fundamental AI problem, those 7 aren’t going to be left (the company didn’t want the product anyway) and the 3 researchers are going to be hired.
Something similar happened with Google and Windsurf. So who benefited from the anti acquisition mood of the previous FTC? Not most of the employees who could have made more just working for a public company in the first place and not even the investors.
Google accomplished the same thing with less red tape and didn’t have to hire the people they didn’t want.
> So now the monopolies are just hiring away all of the people they want from the startup and leaving the company as a shell of its former self - leaving both investors and the employees left behind high and dry.
If this was a viable strategy then they would have just done it regardless, right?
Meanwhile the solution to that is to break up the monopolies to begin with. You don't have trillion dollar companies monopolizing the labor pool if you don't have trillion dollar companies.
Companies get money from workers (i.e. customers), pay some back to workers (employees), and keep the rest as profit (or waste it on some kind of bureaucratic inefficiency). Workers can get more money by either paying less as customers or getting paid more as employees.
Monopolies screw them on both ends. Customers pay more because there are fewer suppliers, and then employees make less because there is less competition for hiring which also makes it easier for the large employers to coordinate non-poaching agreements.
In a market where there are only a small handful of incumbents and then a bunch of precarious cash-strapped startups, the incumbents collude with each other so that they only have to outbid the startups. The startups, meanwhile, are at a disadvantage because e.g. the incumbents control search engine rankings or app distribution channels, which lowers their competitiveness and therefore the amount they can afford pay to employees in competition with the incumbents. The incumbents are then the high bidder even while offering something less than they would have had to in the alternative.
So in what world are startups going to have the funding or the infrastructure to have warehouses worldwide to compete with Amazon or servers to compete with AWS?
Or in Google’s case the infrastructure to design custom processors with the demand to actually buy enough slots from TSMC to make it affordable?
You can’t make laws to undue scale efficiencies. A startup isn’t going to make a phone in their garage to compete with Apple no matter what magically thinking they have about the government passing laws.
Most startups can’t even pay the wages of a mid level employee at BigTech company that has been out of school for three years.
Just like any other industry, if a startup can’t afford the free market price of labor, that’s a them problem.
> So in what world are startups going to have the funding or the infrastructure to have warehouses worldwide to compete with Amazon or servers to compete with AWS?
In a competitive market you don't have that. Instead of a massive conglomerate having a warehouse in every region, Alice, Bob and Carol each have a warehouse near New York, Dan, Erin and Frank have one near Houston, etc., and then a dozen independent aggregators each negotiate with a warehouse in each region to store goods for anyone who wants to offer fast delivery everywhere.
Meanwhile doing that, whether you're Amazon or not, is inefficient for anything that doesn't need to be delivered on short notice. If you have a recurring subscription to get a box of toiletries every month, it doesn't matter if it arrives on the 17th because they mailed it from a local warehouse on the 16th or a centralized warehouse on the 10th, and delivery companies offer discounts if you palletize shipments based on region even if they come from a central location, which removes the cost of having local warehouses for those regions.
> Or in Google’s case the infrastructure to design custom processors with the demand to actually buy enough slots from TSMC to make it affordable?
If there is aggregate demand for those processors then you sell them to the other people who want them regardless of whether they're within the same corporation, and then they don't have to be.
> You can’t make laws to undue scale efficiencies. A startup isn’t going to make a phone in their garage to compete with Apple no matter what magically thinking they have about the government passing laws.
The defect is in expecting one entity to make the entire phone.
One company makes a screen, one makes a battery, one designs a processor, another fabs it, another makes memory, another makes the OS (or it's open source), another lays out the system board to integrate the various components, another does final assembly, etc.
When you don't require the whole thing to be done under the same umbrella it doesn't take a trillion dollar company to do any given piece.
> Most startups can’t even pay the wages of a mid level employee at BigTech company that has been out of school for three years.
Suppose phone components were easily available as a fungible commodity, and had standardized interfaces so that integrating them was only a modest amount of work, i.e. a year of effort for a full-time engineer. Then you get a phone which sells as an also-ran -- a million units a year for three years, less than 0.5% of Apple's sales volume. The phone sells for $250, less than the cheapest new iPhone, and 0.5% of the retail price goes to pay the engineer.
Then they'd be making $3.75M for that year of work. Those numbers could be off by 10 fold and still be a competitive salary.
Except that the market is too concentrated and the standards don't exist, which means it's not that easy as things are now.
> Just like any other industry, if a startup can’t afford the free market price of labor, that’s a them problem.
The issue is, is it a free market, or a captured one?
Most startup hiring has always been a scam for the idealistic where people would be better off statistically by just working for a publicly traded tech company that put RSUs in your brokerage account that you could immediately sell (and should) diversify once you are vested.
In my latter years of my career, I’ve been offered “great opportunities” at a startup that paid less in cash for more responsibilities than I was making as a mid level employee (cash + RSUs) at BigTech when I was there.
Of course they promised “equity” that was illiquid and probably would have been worthless.
that looks strange to me to say the least - a company A's leadership leases completely away the company A's IP to a company B while at the same time getting fat employment offers from the same company B. If it were in Russia i'd say it is a bribe/kickback while in US it looks suspiciously like a huge conflict of interests. How no regulatory agency looked into that...
Huge conflict of interest for who? It was a private company who only had a fiduciary responsibility to its investors and the employees themselves had no responsibilities to refuse a better offer from a competitor.
There was a whole stink in 2010 about all of the major tech companies agreeing to not poach other companies’ employees and suppressing wages.
>the employees themselves had no responsibilities to refuse a better offer from a competitor
actually they have such a responsibility - if the offer in any way connected (or may be perceived as such) with a deal in which the employee is representing its current employer. The same reason why the President can't take expensive gifts from foreign powers for example ...
>There was a whole stink in 2010 about all of the major tech companies agreeing to not poach other companies’ employees and suppressing wages.
I am well aware of anti poaching agreements between partners or consulting agencies and clients. I am currently working for a consulting company (full time) and in the past I was an employee at AWS ProServe.
The contract states you can’t solicit employees under that arrangement. But either side’s employees are free to proactively outreach.
I’m not referring to “consulting companies” that are basically doing staff augmentation.
It isn't about poaching. It is about how vigorously you'd be protecting the interests of your company A in a deal with company B when simultaneously negotiating your personal offer with the company B, especially if it is [even if just implicitly] packaged together i.e. "the offer happens only if the deal happens." You don't see a conflict of interests here?
Listen, I think its bullshit what happened to the Windsurf people. And I'm happy that the Figma people didnt get crammed down with some scam ass preference assplay.
But blaming Lina Khan for the crime orgy that started the minute she was forced out is silly.
Go stick that blade where it belongs. I'll help any way I can.
A very self-regulating little arbitrage, because the investors and the monopolies are in the process of merging themselves. This is the part most people seem unwilling to accept: these rich guys are dumb man. When you organize your whole society around rich kids having advantages it only takes a couple of decades before they're all just bad at their jobs.
This mafia capitalism isn't even good for the capitalists! They just can't get it together on a sustainable system!
The under appreciated drag is which is statistically more likely to be talented?
1. Someone from a wealthy / connected family
2. Someone who scrambled to the top of 100,000 other people
Folks can argue good schools, etc. all they want, but proven ability and drive to outcompete others should be a heavy counter argument against nepotism of all sorts.
Suppose that you have an opportunity to play a game. The game is you roll a fair normal six sided die. If it comes up a 6, you get $60B. If it comes up a 5 or 4 you get $30B. If it comes up 3 or less, you get $0.
This is clearly a valuable game! It is worth in expectation $20B. But it also has a 50% chance of being worthless to you.
Someone offers to buy it from you for $20B. You agree, giving up some upside for some downside protection.
But then someone else says that's not allowed. So you play the game and you roll a six and get $60B.
Does that prove the person who made you play it rather than sell it was "right," ex ante?
You raise a valid point about ex ante uncertainty. We can't know future outcomes with certainty, and yes, Figma theoretically could have failed.
But antitrust analysis isn't about predicting exact valuations. It's about market structure and competitive dynamics. The FTC had observable facts: Adobe's dominant market share, Figma's rapid growth trajectory, and a purchase price of 50x revenue (extraordinary even for software).
These factors suggested Adobe saw Figma as a competitive threat worth eliminating, not just a financial investment. That's the key distinction from your dice game; this wasn't pure randomness but observable market dynamics.
You're right that we can't prove the counterfactual. But antitrust law doesn't require certainty, just reasonable probability of competitive harm. The extreme premium Adobe offered was itself evidence they valued removing competition more than acquiring assets.
The outcome validates the analysis, but even if Figma had struggled, preserving the possibility of competition has value beyond any single company's success.
Obviously the die game is a simplified stylized example. Yes, I agree, that chance that Figma stock was worth literally zero (above what was paid) was less than 50%. But the point is that there was obviously risk that Figma would be worth less than $20B, otherwise Figma wouldn't have wanted to take the deal.
But now you are contradicting your initial argument. Here you say that the price offered by Adobe was astronomically high, and therefore an indicator that the offer was not legitimate, but initially you said that the FTC made the right decision because the offer was 3x lower than the IPO price.
No, the argument is that Adobe willing to pay a high price is a good signal that Figma was not a dice roll but actually worth much more than Adobe was willing to pay.
I think it's reasonable to formulate this as two outcomes (Figma independent and Figma bought by Adobe) and each firm's preferences. From Adobe's standpoint, outcome A has huge tail risk (Figma innovates and eats Adobe's business) so paying a lot for outcome B might be ok. From Figma's POV, they aren't really helped by that tail as much as Adobe is hurt by it (either way they're rich, unless they crash out and become poor), so Figma would love to play it safe and sell the tail gamble. Adobe is paying to buy the high tail and low tail from Figma, but Figma probably doesn't care too much about selling the high tail compared to selling the low tail; meanwhile Adobe mainly wants to buy the high tail. I think it's very reasonable for Adobe to value the high tail at much more than Figma values getting rid of the low tail (Adobe is willing to bid up aggressively while Figma is willing to offer down aggressively).
Whether the government saw Adobe's willingness to overpay for Figma as a signal of Adobe's underlying incentives (as in "I acquire Figma to keep my monopoly" and not "I acquire Figma to vertically integrate and make better product for consumer") seems much harder to speculate on. I didn't explain (nor do I think there's an obvious explanation) for why the original deal was at the high price rather than the low price, but I'd imagine Figma would've been generally willing to sell for less than the price Adobe bid given Adobe was probably Figma's best customer for acquiry.
But high IPO prices is evidence against the idea that Adobe was willing to overpay for Figma due to downside risk to Adobe that is not matched by upside benefit to Figma!
I think the flaw here would be to assume that there's such a great chance (roll 1 -3) of it being worthless. Figma, while not being a mature 20+ year old company, had long since established its place in the market.
There’s a lot of people I’ve talked to who didn’t like Lina Khan not because of the Figma thing but because they thought she was having a chilling effect on acquisitions broadly.
The vast majority of startups will never IPO. Acquisition is the only viable exit. That’s because the bar for IPO has risen so high that only massive already incumbent unicorns can reach it. IPO isn’t a way to raise capital to compete. It’s a victory lap if you’ve won already.
Don’t know if this is actually true, that she was having this chilling effect. I am relaying a sentiment I’ve encountered.
Of course the other reason is tech-right echo chamber brain rot. People need to get off Xhitter. (Not a fan of doomer left anti tech brain rot either. There’s more than one kind of brain rot around.)
Yeah, I have heard that sentiment too. I've never heard so much as a second-hand anecdote that someone was on the track of an acquisition but got the vibe their 50 million dollar acquihire plus was going to just be too much trouble under an activist chairwoman though.
It seems to me that the same weaponization of binary tribal thinking in red/blue social stuff has a corollary in "entrepeneur / commie" oversimplification with about as much nuance.
Smart people get emotionally manipulated on every other kind of politics at the behest of the new oligarchs, why not this one?
I agree except the part about the new oligarchs doing the manipulating. I think they are manipulating themselves, sucked into these brain rot machines as much as anyone.
I heard a Thiel interview recently where he ranted about Greta Thunberg and the antichrist and used a bunch of very online Xhitter bubble terms like referring to low efficacy as “low-T” and I was like this guy needs to touch grass. It didn’t even make a lot of sense.
It's never made sense for me (as a gay man) how a gay man could get sucked into the fringe alt right manosphere. That whole ecosystem is antithetical to you
It makes perfect sense if you think about it from Thiel's perspective. Other than legal technicalities like marriage, the consequences of being gay are mainly determined by societal attitudes and not electoral politics. No legal changes that the Republicans would make do anything to stop a powerful billionaire from being openly gay. So it makes perfect sense that he would favor his business interests when he takes sides in politics.
I mean, these people aren't well my guy. It's not a huge stretch to imagine a bunch of repressed self-loathing around one's identity being at or near the core of it.
Thiel grew up in the 90s. Whatever one deems the tolerance situation today, it was worse then.
More like the 80s but true. Also maybe worth remembering that Thiel was outed by Gawker. He didn't come out as gay of his own volition and perhaps never would have.
That's funny in a dark way, especially it being Thiel given that this entire movement/era traces a clear intellectual and emotional lineage to his activism all the way back at least as far as his writing in the student libertarian rag at Stanford in like 94 (and apparently a childhood fixation with Quenta Silmarillien exceeding even my own).
Trapped in his own Intellectual Dark Web one might say.
Yeah, Greta Thurnburg is making the frogs "low-T". What a bunch of fucking losers.
Windsurf getting "bought" such that the employees got nothing is a great recent example of why you want Lina Khan seeing to it that a healthy and well-regulated M&A market is in effect. That's precisely the kind of lowbrow shit you can thank her bought and paid for successors for bringing you the next decade's worth of.
So now you think the government should stop companies from hiring people?
Isn’t that the sane thing we (rightfully) criticized Apple, Google, Adobe and a few other companies for doing in the Jobs era when they had an anti poaching agreement?
> So now you think the government should stop companies from hiring people?
What do you mean "now"? That's a major part of what it means to regulate acquisitions. So yes they should continue to regulate this extremely narrow slice of hiring.
> Isn’t that the same thing
Only if we oversimplify the scenario all the way down to "hiring".
And if we do that, there's thousands of laws that prevent hiring people in all sorts of situations.
This wasn't an acquisition, but it was really close to one. Whether or not the laws cover it right now, expanding acquisition laws into hiring out the core of a company would not be a big expansion. It wouldn't be a sea change in what types of hiring the FTC has control over.
So now you want companies to seek government approval before they can hire a certain number of people from a company? What if Google wanted to hire me and 3 buddies from our startup but didn’t want to hire the secretary or more realistically they only needed the backend developers. But didn’t care about hiring the web developer?
Who exactly does that benefit? Not the employees. Maybe the investors? Do you really want the government to restrict who can be hired from a company or better yet, whether employees can accept better offers from another company? That’s only the other side of the coin of restricting employee movement based on non competes.
There's a neighboring comment that used almost the exact same wording that I already replied to.
In short: No.
> What if Google wanted to hire me and 3 buddies from our startup but didn’t want to hire the secretary or more realistically they only needed the backend developers. But didn’t care about hiring the web developer?
Is your startup like 10 people? Worth much less than a billion dollars? Then it's not big enough to be a problem.
So what laws do you suggest that the government pass that both stop Google from offering me a highly skilled and sought after AI professional (not really, we are speaking hypothetically) or my team and don’t suppress my ability to make as much money as the market will give me?
But if it's the entire team, and that team is the backbone of a company, and acquiring that company would be blocked by the government, all three of those things, then your income is already being suppressed by not allowing acquisitions. Sorry about that, but the extra boost you'd get during monopoly forming would only be temporary anyway. In the long term it's better for both employees and customers to avoid too much consolidation. Extending that rule to stop team buyouts will have almost no effect on the status quo. It's allowing the team buyouts that could potentially change the status quo, and it would be a change for the worse.
So they just give me a job as the leader, then other people want to follow. Is it them illegal for Google to offer other former coworkers a job? Isn’t that kind of like the “Prisoner’s Dilemma”?
So exactly how does a Google “monopoly” (which definitely doesn’t exist in AI if anywhere), harm customers? And would I as a potential employee better off or worse off?
Am I paying more for search today because of the monopoly? Am I paying more for any of the free stuff that Google has because of advertising (that I block anyway)?
In other words, you do want the government to force employees to stay at a company when they could get a better offer?
Isn’t that what we wanted to prevent with outlawing non competes?
The benefit is the same kind as from blocking a very small fraction of acquisitions. If you don't think the existing rules there are kafkaesque, then the small expansion shouldn't be a huge change. If you do, I'm not the person to argue with.
And these rules would very rarely come into effect.
If you don't understand why acquisitions might be blocked and the benefit of it then I'm not going to be the one to explain it.
I'm not here to defend the entire edifice of the FTC having control over acquisitions. I'm here to say that when they have that control, it should also include almost-but-not-quite-acquisitions.
But you aren’t arguing about acquisitions. You are specifically saying that a company shouldn’t be allowed to license IP, shouldn’t be allowed to acquire the company and shouldn’t be allowed to hire the employees or some combination.
You specifically said that in some cases if a company hired employees it should then be prevented from licensing the technology
And still haven’t given a good reason why it shouldn’t.
The “bad” acquisition is usually considered Instagram . But who cares if a toxic social media site acquires another one? Who was harmed?
I'm saying that what google did is effectively an acquisition except it broke the equity and it avoided regulation.
You keep making examples that are less clear-cut, but whatever I agree there are things a company can do that aren't effectively acquisitions. I'm not saying how to write the rule, I'm just saying google is on the wrong side.
> You are specifically saying that a company shouldn’t be allowed to license IP, shouldn’t be allowed to acquire the company and shouldn’t be allowed to hire the employees or some combination.
They're totally allowed to acquire the company... as long as the FTC doesn't say no. And they can do lots of those other things too.
I don't know how you got the impression that I think acquisitions should be blocked more than a fraction of a percent of the time.
Even further, google SHOULD have acquired the company instead of doing what they did.
The FTC caused this issue with over regulation and by creating an environment of fear that every acquisition is going to be scrutinized.
Google had no fiduciary duty to do what’s in the best interest of WindSurf’s investors.
Google had every right to give the WindSurf employees offers to leave. The employees had every right to accept the offers. There is no world where the government should have been involved in that part.
At that point, the Windsurf equity owners had two choices - either not license or license.
Which part should have been illegal? The FTC could have said “Google you can’t both get the employees and license the IP”. Google would have said “fine, we will just hire the talent and have them create something similar”. Windsurf would have been worse off.
Alternatively, Google could license the technology. Then the employees could say I would rather just work for Google. Would you then be okay with enforcing non competes even though they are currently illegal in California?
There is no law that you can come up with that doesn’t make it worse for both the employees and Windsurf.
We actually saw something like that happen between Microsoft and OpenAI during the Altman fiasco. Microsoft had already licensed the technology and Altman was going to go to Microsoft and take OpenAI’s best people with him. Should the government have stepped in then and told Microsoft they can’t hire OpenAI employees?
> The FTC caused this issue with over regulation and by creating an environment of fear that every acquisition is going to be scrutinized.
Ridiculous. They intervene so rarely, even at the peak.
> Which part should have been illegal?
Not my problem to solve. Ever heard of "structuring" though? It's not unsolvable.
> There is no law that you can come up with that doesn’t make it worse for both the employees and Windsurf.
If doing an actual acquisition would have been allowed, that would have been better for them.
If it wouldn't have been allowed, then yes the hypothetical law is worse for them but it's an acceptable loss. Sorry you can't use a workaround to get the benefit of an illegal deal.
You still didn’t answer the question. Do you want to make it illegal for:
1. Google to hire the employees and force the employees to stay at the company and how?
2. Google to be able to hire the employees and then Windsurf not be allowed to license their IP to a company who is willing to give them a bunch of money?
The reason that this shit show happened in the first place is because overzealous lawmakers and regulators put policies in place without thinking through the consequences.
What exact policies and guidelines should they put in place?
Or in Figma/Adobe’s case. What if Adobe just said, Forget it, we will pay all of the developers we want a shit ton of money (less than $20 billion) to rebuild the entire application from scratch and leave the auxiliary staff behind. Would you also outlaw that?
In the current political environment, the best way to get FTC to approve a merger is to bribe the President (see Paramount). The way to make sure it doesn’t get approved is to do something the President doesn’t like. Do you really want to give this government mire power?
> You still didn’t answer the question. Do you want to make it illegal for:
Perhaps telling Google they can do one or the other but not both. Or not both unless they want to treat it like an acquisition.
Again I'm taking it as a given that it's fine to restrict company actions. If you dislike that entire concept then take it up with the people that put FTC in charge of acquisitions, not me. Not every willing transaction should be legal.
> The reason that this shit show happened in the first place is because overzealous lawmakers and regulators put policies in place without thinking through the consequences.
Only if they allow this to succeed. If they slap it down then no company will attempt it again. They'll just file for acquisition.
> What exact policies and guidelines should they put in place?
I refuse. You're asking an unreasonable amount of detail from me.
> Figma/Adobe’s case
If they want to make individual job offers and not try to negotiate group things or talk to figma at all then they can go ahead and try.
I'd be surprised if they didn't already do that.
> In the current political environment, the best way to get FTC to approve a merger is to bribe the President (see Paramount). The way to make sure it doesn’t get approved is to do something the President doesn’t like. Do you really want to give this government mire power?
Even with the risk of corruption I prefer regulating acquisitions to allowing everything.
It's not about restrictions on hiring, you keep repeating that even though no one has advanced that proposal in the whole thread. You have absolutely crushed that strawman argument, congratulations.
It's about the property rights or lack thereof attached to "equity" in a company: a much fuzzier area with much less clear established stare decis: companies very rarely litigate such cases, it's an area that has historically been kept out of the courts for the most part because for the most part it has been in everyone's interests to keep the wheels greased on this (you'll notice old school VCs like Khosla are against fucking around in it in public forums).
Everyone would agree that if a giant public company sold itself to the CEO's cousin for a handful of glass beads and declared the existing shares worthless, that would be flat illegal. At the other end of the spectrum we have startup stock options and RSUs and shit, much less negotiable. But the unwritten contract has pretty much always been roughly "if anyone gets rich, everyone gets something".
If the trend becomes to just dissolve a startup the minute its worth anything and immediately partition it into exactly the pieces a giant company wants and zero out everyone else, this will have a massively destabilizing effect on a historical engine of innovation (see: OGs are against it on Twitter).
And if the Valley can't figure it out in the family? Then we can dust off the law books, because the courts and regulators and maybe legislators will have to get involved.
Stop talking about the government restricting hiring, no one said that.
The government caused the problem in the first place by making it harder for big companies to acquire smaller companies.
> It's about the property rights or lack thereof attached to "equity"
An employer has never had “property rights” to decide where I can and can’t work.
> Everyone would agree that if a giant public company sold itself to the CEO's cousin for a handful of glass beads and declared the existing shares worthless, that would be flat illegal
The CEO while working for the company has a fiduciary responsibility to the company. But doesn’t have the responsibility not to leave if another company offers it more money or if other employees that like the CEO, they are free to reach out to the CEO and leave too.
> At the other end of the spectrum we have startup stock options and RSUs and shit, much less negotiable. But the unwritten contract has pretty much always been roughly "if anyone gets rich, everyone gets something".
“Equity” in startups have always statistically been fools gold between dilution, preferred shares, etc.
> But the unwritten contract has pretty much always been roughly "if anyone gets rich, everyone gets something"*
See previous comments about only the naive or true believers (but I repeat myself they are one in the same) are naive enough to believe in anything promised or implied by startups more than you will get paid X amount in cash for hours you work (and sometimes not even that).
> And if the Valley can't figure it out in the family? Then we can dust off the law books, because the courts and regulators and maybe legislators will have to get involved.
So the solution is for the government to pass more laws to fix the problems that the regulations it already put in place caused?
The property rights in question are the rights of the people who hold equity in the company. The legally unclear part because of inadequate precedent to know how a given case would be adjudicated in a given jurisdiction is what exactly "equity" means in the context of employee ownership in a technology startup (which gets different treatment of e.g. taxes and amortization schedules, "tech" is treated differently by the law in some ways that are crystal clear and in other ways that are less clear).
No one has proposed that anyone be barred from taking an offer of employment (that I've seen and interpreted that way anyways), that would be extremely unpopular with just about everyone.
What people are talking about is whether or not founders and VCs can de facto sell a company in terms of the real assets that people care about without distributing the proceeds to shareholders via a legal fiction that the one company disappeared (was written down or otherwise disposed of) and tada over here some job offers and other compensation appeared in just that amount but for a different group of people.
This is a plot device in the Sorkin film about Facebook. They're in Thiel's office getting the new investment and the numbers guy is like "we're going to get you clean paperwork in Delaware" and Thiel looks up: "So who, exactly, is Eduardo Saverin?" I very much doubt the movie was a terribly accurate portrayal, but that's the TLDR for lay people: one company vanishes, another appears with the same assets, but different ownership.
Trying to make this about the federal government telling people they can't work for Google is bad faith. Stop with that shit.
The founders are employees too. Should they not be allowed to leave a company because they are founders? The entire scenario is that the investors aren’t getting anything because the company isn’t being acquired and the employees are being “poached”.
The founders are making the choice that their equity in the company is worth less (not worthless) than the offer they are getting from their new employee.
In the hypothetical lawsuit the damages would be money, the defendants would be the founders and investors, and the plantiffs would be employees with grants that got written down. No one knows how such a lawsuit would play out because it hasn't happened and looks unlikely to.
For the fucking hard of thinking: it would not be about an injunction against the founders being able to work at Google. It would be about them owing money to former employees.
Okay, so I am founder of the company, I get VC funding. But I’m not “rich” by any means since I only have the play play wealth based on illiquid “equity”. I may not even have control over the company any more after much dilution.
I get an offer from Google where I am now making real money and have liquid RSUs coming. You think other employees should have the right to sue me because I left the company for a better offer?
The investors aren’t getting anything, in this case Google didn’t acquire the company, they hired the employees. Why would the investors be sued because employees left?
No, it really isn't. It's not remotely the FTCs job to regulate that type of thing, and I really don't think you would want it to be. Would you rather have a system where competing companies have to get government approval before extending offers to you? You know who would love that system? Google.
That is not the only form of regulation, and not the form that would be applied here. This would be after the fact, going after companies that try to pull things like this.
But companies should be able to pull things like this. If a company isn't paying market rate I see no problem with a competitor destroying it by hiring away all its best employees.
If a competitor gets too big and is using its money to remove competition before it can be challenged, that's a problem.
In normal competitive situations this rule wouldn't apply. If one company wants the assets and employees of another company they can go ahead and buy it. And any company can offer better jobs as plain old jobs. The negotiation here was not just some high end job openings.
Even this one victory (and it was more than one) is one more than the fucking nothing we're getting on pushback from the SEC to the FDA to the FCC and back again now: this is #CrimeSeason baby (or so its called on Twitter), oligarchs in the front row and all. The last 3 administrations have been soft on FAANG and its going really badly.
The argument that she had the correct agenda, won a few, lost most to a captured judiciary (correct me if I'm mis-characterizing your position) is probably the stupidest thing I've seen on one of the dumbest threads in recent memory.
Can you clarify where I've lost the plot with your argument and restore some of my sorely tested faith in humanity?
> The idea that there's a significant lobby on fucking Hacker News unhappy that a startup IPO'd for a zillion bucks and made everyone rich is twilight zone shit. It makes no sense according to the stated values in the fucking masthead.
Blocking the merger was good. But I'm not convinced the IPO was good. I think trying to be a company that's worth tens of billions of dollars is only going to make Figma worse. I care about the users more than the people that got rich.
I mean the bigger problem with the IPO was that they opened at a 20b valuation and by the end of the day a bunch of investors got richer than anyone who built anything because the investment bankers left 30+ billion in valuation on the table for their buddies
> bankers left 30+ billion in valuation on the table for their buddies
Small float, big hype, litterally designed to pump the stock on the float.
1.2bn was raised - of which only 0.8bn was cashing out existing shareholders - all the other investors got the pump as planned all for the low price of $1.6bn.
Basically the existing shareholders got watered down by ~5% and the value of the shares they still hold are 3x and now liquid, better than they got in any of the vc funding rounds.
> > Number of listings, new potential acquirers for your startup, more diverse office geography, right right right right.
> None of the FTC's business x3
> > If you care about consumer choice, she was right.
> Ok, so this is the FTC's business.
You don't think there's relationship between consumer choice and a large number of acquirers? These are basically equivalent statements, they're both saying "markets remain competitive".
This is an account not yet three weeks old on a rampage of low-effort shouting about why institutions, honesty, integrity, standards and decency are pointless, counterproductive, and stupid.
I think it might be an alt for Peter Thiel himself! We're in the presence of greatness friend, we should just lean back and be enlightened.
Only in the case where both the acquirer and the target have directly competing products, which is why I specifically mentioned that case and said it would be the FTCs business. (And even then sometimes it doesn't. Google bought Waze, which was a direct competitor to Google Maps, but still both products exist.)
And, no, they aren't remotely equivalent statements to each other or to "markets remain competitive." If there are 100 products in a market, and an acquisition reduces that to 99, it will have no effect on the competitiveness of a market, which is why such an acquisition is not typically any of the FTC's business.
No, that's just wrong, if you let Adobe buy up all the design tools then you limit designer's choice to just Adobe. Will they come out with a competing product? Maybe. That's their business. But the potential is there, and Adobe has to stay on its toes and can't coast on it's near-monopoly status. Indeed, it's now also possible Figma will come out with products to compete with Adobe. And just the threat of that has the potential to limit all of the hostile behavior towards consumers Adobe has been up to for years.
Which is all to say that the market remains competitive.
If you don't think it's the FTC's business to decide whether or not that 100 to 99 move is significant, then I don't think you understand. Even if it's insignificant - it's their business to make that call. You can disagree with it, but if you think that isn't their balliwick, you're simply mistaken.
Hypothetical future competing products is a ridiculous standard. By that logic the FTC could block anything because the acquirer could always in some hypothetical future be a competitor.
It's ridiculous to suggest corporations will treat their customers better if they have competition? That if their customers have somewhere else to go they have more negotiating power?
Adobe and Figma are competitors, right now, regardless of whether they have product lines in direct competition, at this moment.
I doubt their executives agree that one another are not a competitive threat. They wouldn't have tried to merge if they weren't playing ball in the same court.
The last time we came down this hard on one of the few diligent, competent, agressive, uncorrupted regulators with a weird mixture of old boys club sexism and tribal spinal reflex gang flag posturing was in 1996 give or take when Rubin, Greenspan, and Summers came after Brooksley Born as the Chairwoman of the Commodity Futures Trading Commission and forced her out via bunch of irregularities and other scandal-worthy maneuver.
Chairwoman Born was right about everything (natch) and we got a modest crisis to prove that almost immediately afterwards with the Russian sovereign debt default and a society-changing crisis in 2008 (same OTC derivatives contracts right down to the flawed VAR methodology).
If we had let Ms. Born do her job as she was so clearly and eminemtly equipped and prepared to do it, you get an alternate history. We're probably sitting here on twenty years of budget surplus, carbon goals getting lined up and knocked down like clockwork, a well-run Internet living up to its potential, and two generations coming of age in Boomer-style optimism and prosperity instead of cynical hopelessness. There's probably no fentanyl crisis to speak of and Putin gets a nervous palsy just thinking about displeasung NATO.
It doesn't prove it. Khan attempted very fiercely to block Amazon's purchase of iRobot and she, along with the EU authorities, succeeded in preventing it and now iRobot is about to file bankruptcy. We don't have the counterfactual and founders (nor regulatory agencies) can see the future.
Someone made a good analogy on twitter that Khan essentially cut off a genius pianist's right hand, the pianist persevered and somehow succeeded in retaining their talent in spite of having one hand, and now Khan is taking credit for the feat. In the same way, the fact that Figma still exists is not proof that she was right.
IPOs are a really tough path, and can significantly alter the business. I'd hesitate to hold up the big one for this year as vindication for her entire approach. The vast majority of growth tech companies are not going to go public, but need to release value for investors and employees, and PE or acquisition is the only path open to them. If you've ever had experience with PE you might not want to deal with that, and getting bought is all that's left if you owe people a big return soon.
Sure, and a counter-argument of the form "acquisitions from such valuation to such valuation were down such percent, we interviewed the following founders and these Corp Dev lawyers spoke on the condition of anonymity..." would be an interesting one. But AFAICT at everything but Goliath scale, M&A was actually up over the period.
So as usual here we are with the epic showdown of Data and Vibes...and in an obvious landslide Vibes takes it home.
It wasn’t the outcome, it was the bad reasoning and the overall desire for interference
Does it really matter if Figma was bought vs IPO? No of course not. Khan just needs a poster child for her overall intervention philosophy.
Pointing at Figma as a success for her overall world view is like the religious who say “oh god saved me from that flood” while ignoring the hundreds who did die. The Almighty wanted them to die? Or…?
If you’re gonna claim the successes you have to claim the failures
> Does it really matter if Figma was bought vs IPO? No of course not.
I think it matters. Look what happened when Adobe acquired Macromedia in 2005. The innovative product (Fireworks) that brought many (but not all) many of the innovations that would later come in Sketch and then Figma was left to slowly die because it competed with their flagship product (Photoshop). That delayed innovation in that market segment by around a decade.
Fireworks was great when I was a young teen and first learning the difference vector graphics could make.
Let’s not forget our beloved Flash, who knows how Macromedia would have handled it and maybe it wouldn’t have had to be removed from browsers under Adobe’s watch due to security issues.
I almost never see anyone mention Macromedia in relation to Flash these days, almost as if history has rewritten it to an Adobe thing.
> who knows how Macromedia would have handled it and maybe it wouldn’t have had to be removed from browsers under Adobe’s watch due to security issues.
Flash always was a dumpsterfire, and so were virtually all browser plugins using native code. There's a reason NPAPI was deprecated eventually.
The exception of course is ActiveX. There was no way to ever make that shitshow even reasonably safe, simply given how its execution model was.
It was kind of fun watching adult men say the word "ActiveX" out loud and in earnest though. DCOM with Apartment Threading just didn't have that same "Power Rangers Bad Guy" energy.
From a security perspective, ActiveX is a relic from days long past, when people could be reasonably trusted - an assumption that broke around the early '00s when "dialer" malware offered a first way to extract funds from victims.
From a developer perspective, I'm still sad that it went away. The old COM/OLE/ActiveX ecosystem was flexible to a degree nothing has never ever been since.
It doesn't matter per se if Figma is bought instead of an IPO. It does matter that Adobe was about to pay about one third the fair market price of Figma, and she successfully stopped this market manipulation.
One way to settle the question of whether Khan is right would be for the government to simply make competing offers in these situations, buy the companies, and shepherd them to IPO, or a buyer with fewer antitrust issues if that's not possible.
If the government is net ahead after a decade or so, then we'd know.
This approach to antitrust wouldn't work in cases like the Apple case, where the power is worth it to the company only because they can misuse it, but it would be a very fair and accounting-transparent remedy for the "startup gets bought by competitor" case.
We've got an awful lot of history on the periods in which serious regulators without perverse incentives attached to revolving door industry jobs competently and diligently refereed markets, and when big business has been successful in achieving what I downthread called "Goldilocks" regulation: just enough friction to new entrants, plenty of pliant former and future employees doing regulation in the interests of the established players.
We've got a lot of history on what happens when technology is acknowledged as a natural monopoly and guided through it's development, evolution, and dissemination through society for the global welfare: that's the entire 20th century friend: the transistor, the Internet, the laser, fucking Velcro.
We're living through a time when that treasure trove of public wealth (paid for by taxpayers) is getting captured up by a caricature of gilded age kleptocracy at the front row of the fucking Inaugeration.
We know what the outcomes are. I don't know why people who hang out on Hacker News are fighting the data on this tooth and nail. Maybe it's because Trump threw her out, maybe it's because they own a bunch of NVIDIA stock and like the status quo, I don't know.
The outcomes are not in fucking dispute in this case or the macro situation.
Adobe killed their Figma competitor (XD), so the reality of the UI design tools niche in the design tools market is that Figma actually has a near monopoly. Sketch still chugs along, but its market share is negligible. Penpot is a neat idealistic community effort that is lightyears behind.
This is one of the reasons why Figma continues to tighten the screws on their userbase, who doesn't like it one bit, but continues to pay.
Now, this is all not to say, that it would've been any better with Adobe's involvement, more like lamenting the fact that Figma lived long enough to become a villain.
Figma has a near monopoly because it built the better product. This is the preferred outcome compared to Adobe broadening their monopoly not by building a better product, but just by acquiring/squashing their competition.
Monopolies aren't illegal. Preventing competition is the thing we want to stop. As far as I can see, Figma doesn't do anything to give themselves an unfair advantage or prevent other players from entering the market.
Figma had 8 funding rounds in 10 years, according to crunchbase. That is an advantage compared to other players on the market that do not receive VC. If it's fair or not, that’s up to everyones own standards.
I think the more common term is to "raise money". But at the end, you receive money that you should spend. With strings attached, of course. That’s the nature of VC.
Should the other players not have also raised VC money if it was such a differentiating advantage? Perhaps they should have sold even more equity than Figma did and raised more money if that would have been the difference maker.
Adobe is in maintenance mode. They aren't willing to compete with figma because they have basically never had to compete with anyone since the 90s. They forgot how
I don't see why the market cap proves whether she is correct or not. You'd have to compare it to the counter-factual of what the value of a Figma subsidiary would be under Adobe today.
This is not obvious at all to me. Instagram (bought for $1B) is probably worth ~700 B of Meta's market cap.
PSA that no regulator simply means the sharkest shark regulates. There is no such thing as no regulator. People will regulate. The question is who and how
It means that markets organize somehow. Even black markets in prison have rules (and for all I know, sensible ones under the circumstances). The drug trade has rules and norms.
Cartels form and collude, the JP Morgans or Goulds of the world see excessive competition next to their neat steel or railroad trusts and decide to organize it. And sometimes this can even be an improvement (those old telephone poles with like 90 separate junctions just got too tall to be safe!)
But on average, the public would like (or should want) a say in how markets are organized, because it is both possible and lucrative to induce market failure. Big Tech is especially good at this (its arguably far more their speciality than technology is).
Markets are inevitable (try to stop them forming if you don't believe me), but market failures are generally not inevitable, they are generally the result of poorly refereed markets.
My definition of this (which apparently I'm now trying to popularize) is "power can never be destroyed, only moved".
If we destroy an entity that has power, the power goes someplace else and in the case of (democratic) government entities, it rarely ends up someplace better for us regular folks.
I think GP is saying that nature abhors a vacuum in human affairs as well as in physics: the question isn't whether or not there's going to be a government or a currency or a regulatory climate.
The question is whether those things are going to be determined at a polling place by voters or in a smoke-filled room by gangsters.
I would have gone with corporation instead of gangster, but yes, exactly.
People so often rail against a government telling them they can't do something but so rarely justify they would be able to do it if the government was destroyed.
But lets call it what it is: when a bunch of made men see a power vacuum and set up an informal clique with its own rules and loyalty tests while protesting "just a merchant nothing to see here"?
Thats like, the entry for gangster on the Wiki for the Sopranos.
That may all be true but I don't see how it relates. Adobe can't prevent figma from going public if it refuses their offer. It's an open market. Nothing stops new competitors from joining.
Only regulators have absolute power in this regard. I'd prefer decentralized power
Preferring decentralized power is like preferring decreasing entropy, who wouldn't want that but it's almost never going to happen, and even local, temporary instances of such are miracles of nature meriting arbitrary study.
It's concerning that you don't see this, but makes no difference to how the world works.
> Big Tech is especially good at this (its arguably far more their speciality than technology is).
Well, yes. But that does seem to gloss over the important part which is how they do it - hiring lobbyists and influencing the official regulators. If the frame is that someone is going to be the most powerful force in the market then sure, but the government setting it to be a particular body by fiat just creates a ripe target for corruption.
The history of the tech industry has been one of where if left to their own devices coders would create a thriving and tolerant software ecosystem and the main thing stopping them has been IP law. And a secondary thing stopping them has been government pressure (there has been a bit of a spasm recently because of the aftereffects of, effectively, systems set up to support things like Operation Choke Point, for example).
Assuming some semblance of the rule of law, Google & friends ultimately can't stop someone competing with them unless the government is active in the space the space too. More formal regulation is probably just going to cement their position further.
Time and again people make the utterly unsubstantiated claim that attack dog regulators like Lina Khan are actually good for big business and bad for the small guy.
Year after year, big business lobbies, bribes, cajoles, blackmails, whatever it takes to get rid of attack dog regulators like Lina Khan.
I'm sorry friend, history does not say what you think it does. History says that good outcomes come from either brutally regulated monopolies (ATT / Western / the Labs), public/private partnerships (DoD funding the Internet, basically every major innovation we coast on today), and busting the fucking chops of mega-trusts (JP Morgan, Gould, steel, railroads, telegraph, it goes on and on).
Why does big business hate aggressive regulation if it's "actually good for them"?
They like a Goldilocks regulation, a little friction to new entrants, a lot of discretion in the hands of pliant former industry people.
If they hate Lina Khan, it's because she's liable to make demands on them without knowing anything about their business. In the worst case, her office turns outright extortionist, as the current administration is bent on demonstrating.
None of that conflicts with the observation that large, well-financed, entrenched players better at navigating regulatory obstacles than small upstarts.
They don't have anything against regulators and they certainly don't have anything against dumb regulators.
They've got a little red laser dot on the forehead of regulators who don't want a payday after a term of "public service".
"Because we poor public servants are always looking for some fat, private sectors payoff down the road. But I'm not looking, and by the time they can pull the strings to force me out, they'll be ruined."
That is one of the possible outcomes right? Producers have an incentive to collude and not compete with one another. They could create a consortium to fix prices, and use tactics such as acquisitions or _dissuasion_ to prevent new, more efficient competitors from undercutting their prices, thus distorting a free market equilibrium.
The consortium creates an oligopoly which prevents mutually beneficial deals that would have otherwise taken place in a regulated competitive free market between consumers and producers.
If there is no regulator, the company with the most money will use its money to prevent any deals that are inconvenient for it from taking place. Often those would be beneficial to the other parties or to the consumers.
Maybe it's not a great choice of words to say here "the large company regulates the space" but it's definitely a problem worth pointing out.
Yes. For example, Apple has complete control over their App Store. It's essentially a small economy in which they are the government, and it's a market they regulate with an iron fist. Because OUR regulators won't.
But they're dictators. There's no democracy, there's no voting, and Apple does whatever it feels is best for them. Just like a dictator would run their country.
There's plenty of mutually beneficial arrangements that Apple unilaterally struck down because they want to maintain their stranglehold on the market.
If you eliminate formal regulators (rules, laws, authoritative bodies), you haven't eliminated regulation or governance. Instead, informal forms of power take over—those who are most forceful, persuasive, or socially connected regulate what happens. This is the "tyranny of structurelessness": when no open, accountable structures exist, structure remains—it just becomes invisible, unaccountable, and often dominated by the "sharkest shark."
So, "no regulator" doesn't mean freedom from regulation; it means the emergence of undemocratic, unchecked power by whoever can grab and wield it.
I find people tend to get it when you raise cases of market activity outside the law: everyone knows the mob buys and sells things but there are still rules.
If I suggest putting your net worth on black at roulette and it lands on black, does that make my advice right?
Khan forced the employees and investors to continue working and gambling on a company they might not have wanted to continue working for or gambling on. It doesn't really matter that the gamble succeeded in this case.
I'm sympathetic to a prohibition on big companies buying their competitors, but a 3x difference over two years seems too low to suggest that antitrust creates more pure business value.
First this is all hindsight now. We don't know the probabilities of this outcome vs. others. Figma's shareholders didn't at the time, which is why they chose to sell. Khan didn't either.
Second, 3x over two years isn't that much. There must be many opportunities in SV for all of Figma's employees and investors that could have given them a much higher return than that with much less risk.
I don't have this data, but one could look at secondary sales in the past two years as a measure of the increased risk and opportunity cost, right?
Any delay of people getting liquid impacts the creation of other startups, both by the Figma people who can now leave and do their own thing and for the companies Figma stakeholders would have invested in . This is super hard to measure but it is the kind of thing markets are good at measuring when they ask shareholders "sell now to Adobe or wait to IPO?"
This seems really good for Figma users, most of all. Most of the value destroyed by the acquisition would have been in the distortion and likely ultimate destruction of a company culture that made an insanely good product.
But those people are capable of going and making new products, and maybe Figma at its current phase is now too boring a thing for their talents, and should be managed by a more boring organization staffed by people who are slightly less able to make another Figma.
Who knows, but I doubt Khan (or any one individual or organization) is in a better position to assess the optimal delivery of what people want than the incentivized distributed intelligence of all the stakeholders and the people and markets around them.
Again, there are other reasons to do this that markets wouldn't quantify.
The lengths people will go to to avoid the facts on this are fucking remarkable. I'll let Opus explain:
"The Bottom Line
A 73% annualized return would:
Easily rank in the top 10-20 best-documented investment returns of all time if sustained for multiple years
Significantly outperform virtually all professional fund managers and legendary investors
Be 7x higher than the long-term stock market average
Turn $10,000 into $30,000 in just 2 years (your 3x example)
Such returns are typically only achieved during:
Early-stage growth of revolutionary companies (like early Apple, Amazon, or Netflix)
Cryptocurrency bull runs
Highly leveraged trades
Exceptional market timing during recovery periods
Small/micro-cap stocks experiencing explosive growth
While spectacular, returns of this magnitude are extremely difficult to sustain and often involve significant risk."
Maybe they thought an IPO wasn’t going to happen because the market would be in bad shape or there would be too much regulation there.
Maybe they were seeing the AI boom on the horizon and wanted the capital out now to deploy there. They wanted to chase AI not hodl some “old” pre-AI thing. A lot of people think AI is going to render the entire process of which Figma has become a key part obsolete. (I don’t.)
Those are two things I can think of to explain this behavior.
Also some people like to get out when they’re ahead. “The world is full of rich people who sold too soon, not rich people who sold too late.” This makes sense if you are generally pessimistic, which many are for various reasons.
I have no idea why they agreed to the deal, one imagines a bunch of competing interests ranging from late D, E, F+ round holders, to founders, to influential employees. By the time a company is selling to a mega-conglomerate (in effect, a holding company) for 20 billion dollars it's pretty hard to un-grind the sausage on how a bunch of competing incentives got resolved.
As a founder? Obviously I hold unless I know something is rotten in Denmark and it's about to collapse like a Michael Siebel sale to Autodesk. Are you kidding? I've got a startup so successful that I'm already a billionaire and my choices are:
- let it ride, be a star, chart my own course
- go work for fucking Adobe lol
Yeah, easy one.
If I'm an early VC or a limited partner with some structural reason to need the cash before some accounting period ends or something? Maybe I want the sale. Maybe I own a bunch of Adobe stock and I want the consolidation. Maybe a lot of things.
Don't know why the deal got agreed to pending regulator approval. If I'm an already richer-than-God founder, or an employee who can either get full value for my shares or get Windsurf'd in some preference shenanigans, or most anyone else involved? Then fuck Adobe.
As is the case with many startups, especially those with a limited product portfolio, it's rare for them to exceed their IPO valuation in the future. So, I think we'll have to wait and see if Figma can continue its growth.
the only thing I will refute is the $60Bn market cap is due to IPO. Once they start reporting earnings, in a year or two once the hype dies down we will find the true value.
a lot of tech darlings have been decimated by the stock market. & Adobe can still buy them once they're public, maybe even cheaper than $20bn.
yep. So perhaps don’t block every potential transaction on flimsy pretense? Icing the transaction market seems like a great way to scare off potential competing acquirers in the name of social engineering.
I don’t know. All I know is that Lina is out of power, and suddenly we see an upswing in M&A. Coincidence, I’m sure.
> Problem is, by the time she got into power, everyone had consolidated so icing the transaction market was pretty much only outcome.
That's the talking point, but it doesn't survive even 30 seconds of thought. Yes, the biggest tech companies are very big -- debatably too big! -- but there are easily hundreds of smaller cap companies that you probably haven't heard of who are big enough to acquire startups. If anything those companies are the bulk of the M&A market, and the FTCs actions shut it all down [1].
The problem with the Khan view of the world (IMO) is that it was so fixated on the killing the whales that it didn't realize it was killing the other fish.
[1] By way of explanation: just by the nature of software economics, if you're big enough to make acquisitions in some niche industry, you probably own that industry (or are at least a duopoly player) and are therefore concerned that the FTC will target you.
What is your argument? That smaller roll ups could not happen and that was bad? Alot of smaller M&A in tech space was bad, it just was not Figma buying Adobe bad.
I think startups exiting via M&A is part of the problem. It creates perverse incentives which is basically fuck profits, squash all competition while lighting money on fire and THEN when you are so embedded, sell the company so original investors get their money back and new owners screw over everyone knowing there tunneling out of your really thick walls is going to be extremely difficult.
In a model where company had to turn a profit and investors would slowly make their money back, it would probably be net win.
> Alot of smaller M&A in tech space was bad, it just was not Figma buying Adobe bad.
Yeah, you're gonna have to defend that assertion.
> I think startups exiting via M&A is part of the problem. It creates perverse incentives which is basically fuck profits, squash all competition while lighting money on fire and THEN when you are so embedded, screw over everyone knowing there tunneling out of your really thick walls is going to be extremely difficult.
I hate to burst your bubble, but the chances of a small startup getting acquired while "lighting money on fire" is basically zero. You have a particularly narrow-focused lens on startups that is driven by a few high profile stories. When you're on that sort of YOLO rocket ship, you're not looking for acquisition -- if it happens, something went wrong.
So yes, part of my argument is that smaller roll ups could not happen, and that market looks nothing like what you're describing.
I'm not a Khan fan, like, at all, but by the time you're at the point where the FTC is getting involved in your M&A, you've crossed the threshold of success; all the signals to future startups about your path being promising have been sent.
In fact, if future competition is contingent on successful M&A activity, that’s a sign of such deep organizational rot that you either have to radically transform management or ride the company down.
Not everything needs to last and companies that can’t radically transform their management culture to enable innovation and competition deserve to wane until they’re in a steady-state or they go under to allow for a new competitor to rise.
I disagree. A lot of smaller acquisitions went away during the Khan reign, and from what I was hearing it wasn’t coincidental.
Basically the random and aggressive nature of it was having a chilling effect on all M&A. Why would you go thorough the hassle of a small acquisition (as a buyer) if you knew there was a even a 10% chance that the FTC was going to take an interest?
Scrutiny scaled with the size of the buyer. When a top-five tech company is the buyer, it doesn’t really matter how small the purchased company is. Many of the most concerning acquisitions were small… Instagram had 13 employees when Facebook bought it.
When a huge company can easily acquire basically any small promising competitor, that is exactly what Khan (and many others of both parties) consider a problem. Chilling those sorts of deals was indeed the point.
But if the buyer was, say, the 312th largest tech company in the U.S., the chance of FTC intervention was essentially zero. If buyers in mid-size range were pointing at Khan to explain an M&A slow-down, I personally would not take them at their word.
Maybe, but it doesn't take a lot of scrutiny to scare the crap out of you if you're a major player in some niche industry with a few hundred million in ARR. Which is most public companies.
That's the perverse thing about this stuff: the biggest players are probably the least sensitive to the regulatory burden.
> it doesn't take a lot of scrutiny to scare the crap out of you if you're a major player in some niche industry
This "scare" characterization isn't how anybody thinks in reality. Everything is a cost benefit analysis, the risk that you'll come under FTC scrutiny is going to be a factor weighed against the potential gains of the acquisition. Companies understand their own place in the market relative to their size and dominance, the overwhelming majority of companies know they basically have nothing to fear from the FTC ever.
Not even a little. The biggest players are the most sensitive to this kind of thing. Imagine an independent Instagram and Whatsapp running around. That's a fucking nightmare for Mark.
It is precisely the companies that have lost the internal capacity to innovate (Meta) that have the most to lose and the companies that were going extremely well already (Instagram had a bunch of suitors and could have chosen to punch out later in the process, I heard this from Krieger in person) who have the most to gain.
The losers here are people who can buy and hold FAANG as a basket and just sit back and let the market transfer all wealth to pensioners. The winners are founders, employees, new startups, consumers, cities with more offices in them, that's a partial list.
Figma's market capitalization as of the close on Friday is 59 billion and change. Adobe offered 20 billion.
Because the shares were sold to the public and now trade at three times what the absolute ceiling on their value would have been, and because everything from early options to later stage RSU equity comp structures will now convert at the full market valuation, the preference ladder and ratchets and all the other ways you can get Windsurf'd as an early employee (sometimes even a founder!) don't kick in, so the rank-and-file equity holder is rich now too.
Future founders now have another well-heeled public suitor.
If you even remotely believe in Hacker News style "tech startups make people rich and this is good" stuff, then this is a grand-slam home run win by any measure.
Maybe time to re-evaluate what you think of Lina Khan's policy agenda in light of data on the outcomes? It's of course possible there is some other data point you have in mind where it went poorly and you keep your opinion. But if that opinion was of the bland "regulation is bad for tech startup people trying to get rich" variety, seems maybe time for a re-think?
I agree with your general point, but Khan was excessively trigger happy in a way that highlights exceptions to your observation. E.g. blocking Meta acquisition of Within was nonsense that did nothing to validate the concept of VR fitness as a promising category (anytime soon)
Her point is that m&a isn’t the best thing for the economy or founders. Unchecked m&a creates cannibal capitalism where one mega zombie firm scoops up all competition.
Yet there are plenty of examples of monopoly or near monopoly businesses getting their butts handed to them by startups.
Yahoo, BlackBerry, Kodak, Nokia, Sears.
So it’s clearly not “once you have a monopoly it’s game over for competition”. Markets aren’t stagnant, and as they change it provides opportunities for new competitors to do that “new thing” better than the monopolies.
And how many businesses do you estimate have been killed or eliminated because of unchecked m&a? Expanding the data set to include non-tech industries indicates strongly that it's not always the case that a big monopoly will eventually fail. Healthcare for example is filled with instances of bigger companies acquiring smaller ones and killing the competition to their product, a quick Google search will show you that.
With the exception of yahoo (which is still a large company I should note), None of those examples were killed by a start up competitor. They were killed by foundational technology shifts that were orthogonal to the industry. Yahoo, is the closest example with google, but kind of proves Kahns point in that a competitor they tried to buy—-google—- refused to be acquired and then innovated them out of the market. Imagine how much worse the world would have been if yahoo bought google and mothballed it. Blackberry and Kodak were both put out of business by apple which was a computer and software company not a phone or camera company. Sears was bought buy Edward Lampert, an private equity bro that fancied himself the next Warren Buffet but in the end gutted it by selling it for parts to keep the cash for himself
This is very wrong because monopolies destroy the very competitive and innovative landscape that is necessary to unseat them, and in the process impose massive social harm in the form of higher prices, worse products or services, increased concentration of wealth, reduced employee compensation, political corruption.
America experienced uncheck monopolies during the Gilded Age. Most thought that rapid industrialization, economic growth, and technological advances would have resulted in enough competition to create an economic utopia. Instead, even while the United States experienced a surge in wealth and prosperity, the underlying reality of political corruption, social inequality, and labor unrest created a nasty, brutish existence that was only solved when the Trust Busting Roosevelt's transformed America by breaking up the monopolies.
If you like free market capitalism you can't be in favor of monopolies, and if you dont want monopolies you need STRONG enforcement of antitrust M&A regulation. We are well past a correction since Regan stopped antitrust enforcement. I would argue that all of our political chaos since the 1980's can be traced primarily back to that single decision.
Lina claims she let the vast majority of deals through. I wonder what the data shows.
>While her aggressive stance led to intense criticism from corners of the tech industry, she defended her approach by saying that only a tiny percentage of deals received “a second look”
Except the majority of the Figma IPO was captured by banks due to it's severe pop. So while everyone made a lot of money, the overwhelming majority went to the underwriters [0].
The founding team at Figma would have gotten a similar amount much sooner if the acquisition was let thru OR if the underwriters didn't screw them over by underpricing at $33.
The IPO "pop" is not captured by banks: it's captured by the banks customers that pre-buy at the IPO price.
Basically, before an IPO, the underwriters take the company on a "roadshow" in which they pitch the IPO to potential buyers.
There's a hierarchy of these: the best are very large buyers that place large orders and trade seldom. Pensions, sovereign wealth funds, etc.
Those buyers then make offers ("I'll buy 50MM at $100"), which the bank uses to set the IPO price. The bank then gives them an allocation.
If you're a high (10MM+) net worth individual that banks with one of the underwriters, you can often get an allocation in an IPO. The richer you are, the more of an allocation you can get.
When an IPO pops, it's these people that get the benefit.
The benefit for the company is that the stock is owned by prime people the bank selected: you crucially _don't_ want to just sell to the highest bidder if they are going to dump the stock immediately after the pop (or that's the theory, at least). They have stable shareholders with a vision aligned with management.
The benefit to the bank is that they get to reward their customers with access to profitable trades--but the bank itself does not profit.
It’s just a bulk discount: everyday folks simply can’t be relied upon to buy hundreds of millions of dollars the stuff and that’s what the company is selling. Little fish can buy in, but only if the big fish provide liquidity in the first place! In other words: someone needs to be paid to sell it and big buyers need to be incentivized to buy it.
Ultimately the IPO price is driven by supply and demand with a limited supply: price will go down (a bit) when the lockout period ends and more supply comes online.
Saying "big buyers need to be incentivized to buy it" is just another way of saying it's undemocratic. The democratic version would be that there are no big buyers and your IPO gets however much money it gets from small investors and that's it. There don't need to be any companies with a $45 billion IPO.
I feel like complaining about things being "undemocratic" is like complaining about a software system's architecture that "it's not microservices". Not everything needs to be - and some things would be actively harmed by making them "democratic". I wouldn't want drug approval to be a democratic process.
Raising capital can be done "democratically" if the founders want to. They can use direct listing. IPO is an option, not an obligation.
Not everything, sure. But this one more than most, needs to be democratic. If you don't see the wealth inequality today in which the 1% own 50% of the worlds wealth, and you don't see where this is inevitably going to lead, then I don't know what to say.
I'm pretty critical of how late capitalism is shaping up (I pretty routinely get called a leftist radical here on Hacker News which is increasingly Thiel-Aligned Psycho News).
With that said, lots of options exist for a company like Figma doing a public listing: when you're the belle of the ball you can list how you want. Google did a pretty unconventional Dutch Auction thing IIRC.
In this instance the Figma folks decided they wanted an IPO pop and had the underwriters set it up that way. They were paying some premium (to institutional investors) to get one of many intangibles that are attached to that (like a bunch of press about how hot the stock is).
In a world where it was a no-brainer that this was going to be another mediocre Adobe product line rent seeking from here to the horizon, I'm pretty OK with how this turned out.
It makes no sense in the digital age. It costs almost nothing to solicit demand curves. And you can still do wasteful roadshows and presentations for special buyers.
It is, it is yet another of the constructions that increases inequality and makes rich people richer.
Yes, an ipo is volatile, it should be! You are literally pricing a company.
Sigh, regardless, Thisnis again one of these ways where free markets are being smashed by monopolistic behavior - you can only be a part of the game if you already have enough.
I thought IPOs don‘t generally pop though this one has?
You can buy VTI which takes about 7% allocation in every IPO, but I heard there is research by some folks at Harvard and practiced by dimensional fund advisors‘ funds that buying IPOs ~two years later is slightly better?
I don't know why you're getting downvoted. You clearly read Smith and the downvoters clearly didn't. An Inquiry Into the Nature and Causes of The Wealth of Nations is like an anti-rentier pamphlet in most places.
Adam Smith meant free from rentiers (unearned income) when talking about "free markets". The term was appropriated by the neoliberals to mean free from government and ignored the original meaning.
This is actually a funny thing for risk mgmt because a trader will say "I want a bajillion shares in this IPO", risk notice it and say "a bajillion!?" not realising that ask for 10x more than you think you'll get allocated.
You also sometimes need to tactically trade with worse brokers so they will feel nicer during an IPO.
An auction for IPO price is much easier to manipulate and can lead to much volatility. Pre-allocating to the entities that are not expected to sell quickly or participate in pump-and-dumps (pension funds, etc.) is considered a better long term strategy for the company, as the sister comment says.
Yes. But Google being Google it got top notch planning advice from world class auction experts that Goldman pulled in to advise them on the IPO.
Most companies without such expert advice could step into some pitfalls. Just a guess, I am not an expert, but if my company were doing an IPO I would prefer it not to play financial games to eke out a percent of IPO price and instead focus on long term price stability to become a solid stock. My 2c.
Figma's stock quadripled in price from 33 to whatever it is now. Not saying it's good or bad, just that those gains must have been nice with effort akin to staring spreadsheets a while and babbling in meetings.
Likely nothing once the stock is actually trading with some history. But for initial placement wall-street-bets action could be very disruptive.
The company wants to avoid sharp drops after the IPO, as those encourage employees to get out ASAP, which increases the volatility and discourages large, stable investors.
Price discovery is impossible to do except on the market. You can call up everyone you know and ask them, but there are limits to forecasting.
We all knew the Switch 2 MSRP, but we had to wait for launch to see the eBay Buy it Now price.
In this case, the banks are Best Buy. They sold out quickly! Other market players are eBay sellers: the ones that knew what they were doing made a killing selling to consumers.
People like it when an IPO pops. It's a good news story and it makes all the banks who participated happy. If it was priced perfectly it'd get reported as the stock was flat, if it's a bit underpriced then you get headlines as the hot new stock that's taking off
So blocking a sale at a $20B valuation so the company can IPO at a $19.3B valuation 3 years later (a loss of $700M in value over 3 years) is a success?
Yes? Not everything is about capital owners and their profits. There is a lot of importance in the competition in the market and customers having choice of best products around. Figma competing with adobe is one of the examples.
Even from capital point of view everyone is now forced to make their bet - either on adobe or figma, so it’s more efficient capital allocation too.
because it means they stayed independent and didnt get absorbed by a major megacorp that is already notorious for trying to corner the market of an entire industry and then over-charging
They were independent the whole time and it wasn't considered a success. I suppose IPO is an indicator they might stay independent longer. Now that they are in the public markets even Adobe can buy a few shares. I just don't feel like the IPO event has brought any particular benefits to the consumer and Khan is incorrectly looking at post IPO stock price bounce as some kind of financial indicator that it was a better deal for the company.
I am trying to explore the ways in which the IPO, in particular, separate from the continued operation of the company, is evidence that blocking M&A is good. I have seen nothing from you supporting Khan's position that the IPO is vindication for blocking M&A.
Her particular claim was that it was "a great reminder that letting startups grow into independently successful businesses, rather than be bought up by existing giants, can generate enormous value.” However, the IPO price was $700M less than the value the company was at three years ago, which, given opportunity costs and inflation, would not seem to be an indicator of enormous value being generated.
The current market cap of Figma is around 60B if I read it correctly. Yes, not all of it was IPOd, but from purely this perspective it was hugely successful. But then it’s also unfair to compare this market cap as is, because I would expect Figma as separate entity will grow better than Adobe as a whole. Meaning that people who’ll hold Figma stocks right now have a chance to have better returns in a future.
There is a third option. (According to some LLM that will remain unnamed Vungle, Wrike, and Acquia are textbook cases of direct VC‑backed startups being bought out by private equity without an IPO or corporate acquisition. Not verified.)
That's true, but PE is negligible in tech. And if all you can rely on for exit is private equity then you'll end up with a tech scene as dynamic as the European one…
Figma is a web app. Web apps are fundamentally a hyper-competitive market because literally anyone can just throw something up on the internet if they think there is a need for it. The risk here of Adobe overcharging for it is rather low - someone would build a cheap clone.
People keep coming up with theories that companies are about to corner the market then over-charge, but the theories vastly outnumber the cases where it ever happens in practice. It is almost always that the biggest companies in the market are just more competitive (lower prices or higher quality) than all the others.
That is not what would happen. Figma has built a huge moat through its brand by now, and most customers would continue to use it; some of them probably already have an Adobe subscription anyway, so Adobe would naturally try to make it easier or more integrated for these customers.
A clone would need to start from scratch and compete against a huge corporation with virtually unlimited funds.
> It is almost always that the biggest companies in the market are just more competitive (lower prices or higher quality) than all the others.
That is almost always not what is happening. The big players extinguish any would-be competition early by buying them or throwing sticks into their wheels. They can afford to strategically make a loss in a given area to underbid the competition by overcharging in others, or relying on synergies. There are numerous examples where small teams built highly qualitative alternatives to corpo stuff, but had to compete against the network effects and brand names instead.
1. Figma actually lost money because their acquisition price was higher than their shares sold in the IPO.
2. Yes, Figma luckily IPOed in an extremely hot market
Getting a bit lucky doesn't mean this was a success overall. The conclusion has many more years to go before it gets written. Either way, I don't like the over reach by Lina Khan.
What do you mean over reach? It's the FTC's job to prevent consumer market consolidation. Adobe is already too big and they already abuse that to the detriment of consumers. Buying Figma would make that even worse.
A company exists primarily to make things for consumers and the FTC ensures they do that fairly. The IPO, stock price and everything else is secondary.
It's not arbitrary, there are many reasons to block the merger and they were explained in depth when the decision was made.
Also, the EU and UK also made it clear they were against the merger. In fact, if you look at most reporting, the EU and UK seem to be the main reason they gave up, presumably because they know the US FTC has no teeth, even with a competent chair.
Even if EU and UK wanted to block the deal, it doesn't make it the right thing to do. Free market.
I don't have a popular opinion on HN. I don't think Google should be broken up because new technology has made Google search much less needed. I don't think Apple should relinquish control over its app store because it's Apple's platform and they should do what they want. I don't think Adobe should be stopped from buying Figma because even if Adobe buys it, maybe some rich ex-employees might quit and make another competitor or make an open source alternative. Who knows.
People on HN wants the government to weaken tech companies but not when it's the tech company they're working in.
Without regulations (which are laws) Dominant companies would just send gangsters to break up rival businesses. They still do that today, but through different strategies e.g. price dumping, where they operate at a loss in order to squash competition, then proceed to hike up prices and extort as much value as possible.
For someone who believes in free market, how is it acceptable to have consolidated monopolies? The market is free when there is competition. If there is no competition there is no freedom. Of course I know that for many "free market defenders" "competition is for losers" (was it Peter Thiel?), and ultimately nobody cares of the abstract value of freedom.
Monopolies are natural in highly technical industries. But monopolies don't last forever. New technologies wipe out monopolies all the time. ChatGPT is disrupting Google search monopoly. Solar/EV is disrupting oil. Tools like V0 is disrupting Figma. ChatGPT itself is disrupting iOS and Android. The list goes on and on and on.
You are mixing industry and company. LLMs are overtaking Google search (I.e., internet search which is a monopoly), but it doesn't have to be chatGPT (I.e. openAI).
In any case, it's irrelevant they are not eternal (especially if we go from monopoly to monopoly), the point stands: if you have a monopoly you don't have freedom and free market doesn't work at all.
My point is that is is the right thing to do and multiple countries' regulators agree. Monopolies have proven themselves to be bad and consolidation is how they are created. The "free market" (as if there is such a thing) does not take care of this, because it's not profitable to compete with such a powerful incumbent. Any attempt to compete would require insane capex and have a higher price tag for consumers, who would likely have to pay it not instead of but alongside the current incumbent's price, which very few would accept. If instead, you intervene and block the merger, the company can (and is incentivised to) grow and branch out, competing with the one that tried to acquire it.
Obviously this is a YC forum and many people have a startup bias, but I'm nowhere near that scene. Many startups do even worse things than some of the big guys, because they aspire to become them. The "burn investor money to get market share at a loss, kill all competition, become a monopoly, then enshittify and make infinite money" strategy wouldn't be nearly as effective if we had proper antitrust enforcement.
They lost money (sort-of) because the market cap was $700M less at IPO. The amount of shares sold in IPO is irrelevant.
I said sort-of because the economics of this is more complicated. Investors lose their preferences when they sell in an IPO, so this is probably better for common stock holders.
I don’t think 19.3 B is their current market cap, it’s only what was sold at the IPo. Anyway, 19.3 instead of 20 would have been no big deal IMO
Adobe certainly lost money, because they have had to compete against the better product, so have been able to charge less for their own offering. And will presumably continue to do so until further notice.
Any employees who would have been swiftly laid off after the acquisition should certainly be glad for this outcome. They still have jobs, and if there are layoffs after the IPO it will be less dramatic. If they had equity, they probably got a much better deal in an IPO, especially if they sold some of it off after the “pop”.
Figma raised $1.2B in their IPO. Total shares listed != money raised, not by a long shot. Most shares are just to give liquidity to existing shareholders of the company.
Why would Figma have sold to Adobe if they were not paying a premium, assuming they’d grow?
I can understand you looking at the headline valuation but as an independent company traded with lots of potential to grow with AI tools their stock will probably double… a quick Google appears to suggest a 250% uplift from the IPO price so the company would potentially have added $58bn (the figure I’ve seen quoted) to Adobe’s bottom line.
The IPO only sold a few percentage of their shares. Even if we assume they sold all of them at opening price, by close the company and employees still hold like 80% of their shares that are worth triple what Adobe would have paid. Besides, antitrust is also about consumers, not JUST about businesses. We will all benefit immensely from real competition instead of having Adobe continue to dominate the market. We're talking about Adobe FFS, they have some crazy prices and shitty dark patterns around trials & cancellations.
We'll see but post-IPO their valuation is $58b, so it's not clearly wrong
But also as you said this is 3 years later, which is a long time in the tech business and all sorts of things have changed, positive and negative... so she's not clearly right either...
IPO valuation is pretty much always set to undervalue so it gets a good pop(1). The market cap after 90 days of trading (generally speaking when insiders lock-up provisions expire and there is no longer a limit on the number of shares that can be sold) is a much better estimate of the actual value of the company. We don't have that yet, but right now the stock is ~3x the valuation that Adobe was going to buy at. Every equity owner is currently booking this as a win. We'll see what the price is when the lock-out provisions end, but right now definitely the shareholders are glad that they didn't merge.
I know that because if the metric you cite was something that the investors and managers cared about, they could have done other things to boost it (see footnote 1). They didn't, ergo they don't consider that metric to be a useful gauge of the company value. It sure looks like you tried to find the worst performing metric to claim that there was a loss, when so far this has been a major win for the shareholders(2).
1: If you don't want this and want to IPO at the highest valuation, you do a direct listing like Spotify did, or a SPAC reverse merger like Trump Media did. But there are reasons that the vast majority of companies choose to do a traditional IPO. For most companies, this is a one-time transaction that will make the managers very very rich, and they want to get the best guidance on navigating it- and are willing to pay handsomely for that guidance, since this is the only time in their lives they will be CEO for a major company that is starting to list. So they follow the IPO/greenshoes/pop route.
2: The most important nuance on that statement is that it took them a year and a half to extract that extra value by doing an IPO, and now they are exposed to market risk. We will have to see what the market conditions are like in another few months when the lock-ups expire.
I’m not especially in favor of all of Khan’s actions but this was an accretive acquisition prospect for Adobe in a way that makes it worth more to them vs as a standalone company. Think how Urchin Analytics was worth a lot to Google but less by itself.
Also, Adobe was massively overpaying, arguably even if you consider that. Even if you assume it was due to seeing Figma as a huge competitive threat the stock nosedived due to the acquisition price.
You do not understand how IPOs work. They only sold a small number of shares (about $1.2B) in the IPO. That’s why it’s called an “initial offering” of shares.
Investors can feel free to hold onto their remaining shares and sell whenever they want, outside of a window following the IPO where they can’t.
More companies going public, earlier is better for markets and society.
Having companies stay private growing from 0 to 100B value allows VC bros to capture all the growth and then unload onto the public via IPO or selling to a larger BigTech firm.
> More companies going public, earlier is better for markets and society.
I would disagree. Japan is a good example of a market where there are a lot of small public companies and they're largely held by the founders. There is not enough share holder pressure and these small public companies are often barely profitable and run poorly. I am sure there are other markets that are similar to Japan where there are publicly traded companies without enough buyers or liquidity or transparency, etc.
I wouldn't automatically say this is bad. If the money that would end up being more profits percolates throughout society, employees, communities etc., and even the founders themselves (as opposed to concentrated capital), it is actually fine and could produce a healthier society. On the other hand, I grant you that it might (also) feed corruption. But then, I wouldn't bet on concentrated capital not being corrupt as well.
Japan does not have a growing stock market index or economy. So Japan with aging population is not a good example. It does not grow in real terms. It's just an old peoples country at this point and for the future. Nikkei performed bad for decades
If you mean specifically the case of VC companies, this is true. I think the opposite is the case when we’re talking about “naturally grown” companies that didn’t take on serial investor money.
What a stupid comment at the end of the article. The vindication is of having the company exist in the market in such a way as to encourage competition.
My experience with mergers and acquisitions is that it's akin to keeping a warm body on life support. When I worked at a company that did a lot of M&A I was sitting around like, "Why couldn't you have just built that?" When I worked at a company that was recently acquired and went through the merger process I was like, "wow I see why you bozos would've never built this yourselves." That isn't to say there aren't companies that do them well or there aren't places where it makes sense in an ultra-competitive landscape but I'm curious - when was the last time anyone really considered tech an ultra competitive landscape?
Post-2015 other than large language models this industry has mostly been riding on intellectual property consolidation. That's basically Lina's point; nobody actually benefits from this - not customers, not share holders, not the American people. The over practice of M&A leaves a small pool of winners who are not the kind of people that post on or read this forum.
If you mean the ones transacting in derivatives, no, they don't. The US market isn't India where the size of the secondary market was bigger than the primary market. If you mean that financial markets drive real markets, that's also wrong. While yes, certain products need a infusion of cash to get to market, that's not the same as having a company acquire the possibility of a new product and just sit on it.
Buying a company for its customer base is rarely good for the customers, though. That's the main point, I think. Why should society allow someone to take control productive entity simply so they can extract more value from it? There needs to be some value for the customer or the public as a whole for that to be a good thing.
A "company" is a legal framework that we, society, has decided is allowed to exist. That also means that we are allowed to put any requirements and restrictions on it that we like. The health of our society is what matters, not the wealth of any particular founder.
"your company" is an abstract idea in a social framework forming the interactions of many other people. Many decisions are delegated to you by that framework, but it is not a fundamental absolute.
I accept we live in a society which decides at some arbitrary point that my property becomes the collective’s. However I philosophically disagree with this present state of affairs
Ownership is a useful framework for sure, but if it comes at the expense of destroying competition, I think we can agree that's not healthy for the economy and society as a whole.
If companies get large enough, you no longer have a free market. You simply have a company so dominate and powerful, they can undercut any new company or product. Not on merit or offering a better product. Purely based on size and its entrenched position.
Let's say company A is monopolizing a market. New company B finds a way to make company A's product providing exactly the same value, except half as expensive. A healthy market would reward company B and consumers both by allowing that innovation to spread, providing a return for those that invented it and a cheaper product for consumers, leading to greater prosperity for society. However, in the market you speak of, company A can simply use their orders of magnitude more wealth to undercut company B for a time until they go bust.
What incentive is there to innovate, to improve, in a market that doesn't reward it?
M&A deals are analyzed pretty closely and there (usually) has to be a convincing argument that it is economically or strategically accretive to the acquirer. It's easy to call them all morons from afar, but I think it just highlights how difficult it is to pull off successfully. And when it is successful, it's always an obvious no-brainer in retrospect.
Anecdotally, I know someone that spent two years intentionally sabotaging an M&A deal that would replace his internal product and team in a company. He and his colleagues were successful and everyone thinks the acquirer was a dumbass for doing it, but with more knowledge about the misaligned incentives it starts to become more clear.
I wonder if a simpler solution to all this regulartion would be something like imposing a tax (fee?) when larger companies acquire smaller companies? So something like, "For every order of magnitude difference between the acquirer and the aquiree, there will be a 100% tax on the acquisition price paid to the US Federal government."
So this would basically encourage companies to either have their own IPO (no fee at all) or be acquired (merged really) by a company of equivalent size. If you are acquired by a much larger company, that company will have to pay a (logarithmicaly) large fee relative to the acquisition price. If they really want it, no problem, but it will be "cheaper" for a more correctly sized company to acquire them.
Seems like the regulation works well when it is applied. Why is there a need for a simpler solution? Why try to replace it with a 'simpler' tax with none of the human consideration about how the m/a could lead to less competition.
Like if this regulation was replaced in favor of this tax, a big company merging with another big company would be considered fine when obviously big company mergers can be just as concerning as larger companies buying smaller ones
>In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, "I don't see the use of this; let us clear it away." To which the more intelligent type of reformer will do well to answer: "If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."
Then the companies will just poach all the good employees they want and “license” the IP if they care about it from the shell of the former company. We see that now.
I agree with taxing large companies more, however the log fee could also hinder the sale of companies that are legit only interesting enough for large companies to buy, preventing certain startups from being able to successfully sell.
I haven’t given this much thought, but my gut feeling is that it should be OK for a big company to acquire a smaller one if both sides agree and it’s not blatant anti-trust material (as with Meta acquiring Instagram).
That if Amazon acquired it, this would enable it to horizontally integrate and take control of yet another market? This, eventually, woudl lead to lower prices for consumers...
The context of the conversation is one of a horizontal monopoly, in a market that's near saturation, operated by a megacorporation that could afford to ignore profits or losses indefinitely, in the specific industry of robot vaccuums. So maybe the question is "why on earth would someone think supply and demand does apply here?"
I believe he’s asking why the parent poster was suggesting monopolistic consolidation would be good for the consumer, contrary to what all theory and experience would suggest.
*shrug* I gave him the argument baseline argument commonly known because it claims that costs become lower (and thus the merged entity claims to pass lower costs to the consumer) that normally flies at the FTC.
That Amazon wasn't acquiring it for it's business acumen and was actually acquiring it for some secondary purpose (i.e. market consolidation, data extraction)
Aren’t they basically the same now, unchecked in power? They’re able to muscle into anything using their money and incumbent strength. They can use existing products to sell new ones. They can copy products and give them away. They can wage legal wars.
Personally, I think it’s unacceptable to have any business worth 4T as a single company. It’s not good for competition and for customers in the long term. But today’s anti competitive tactics are different from the simpler monopolistic tactics of the past. We need all new regulations to deal with it.
Figma being credible competition to Adobe was the reason the merger was blocked. If Figma was less like Figma, and was a pretty bad business, Adobe would be less interested in acquiring them, and regulators would be even less interested in blocking it.
If you arrest everybody who "looks guilty", you'll eventually end up arresting a criminal. That isn't a reason to celebrate.
I think the FTC was spot on with the Adobe-Figma merger, but there were quite a few other mergers they either prevented, tried to prevent, or were regretful about not preventing, where that was a very bad decision.
Ultimately I think the model we have is broken precisely because of what you describe: the FTC can’t “get it right” every time and many bad mergers will slip through the cracks.
I think a dramatic redesign of the M&A system needs to occur.
For example, I think a merger/acquisition ban for companies of a medium to large size could be an effective design of our corporate system. Most medium to large sized companies make acquisitions and mergers out of convenience and a desire to thin out competition rather than any sort of business need.
A company like Apple or Google or perhaps even a much smaller one should be disallowed from acquiring companies or being a part of a merger from the standpoint that they are sufficiently large as an entity.
Examples like the Apple acquisition of DarkSky and Beats or Google’s purchase of Nest represent companies who clearly have sufficient resources to build a competitor and new entrant to the market internally, but out of the economics of the arguably lazy M&A shortcut they are allowed to buy competitors and remove choice from the market to the detriment of both customers and the labor market.
In short, we’ve just accepted the base assumption that companies are allowed to buy each other at all and that entire concept is worth questioning.
> Khan’s critics are more likely to see Figma’s success as coming despite regulatory scrutiny, not because of it. For example, Wedbush Securities analyst Dan Ives told Business Insider, “Figma is a massive success, but it’s because of the company’s innovative growth and not due to the FTC and [Khan].”
That would be a great point if there were any indication at all that’s what Khan was implying. It’s either an intentionally disingenuous reading of her statements, or else an unintentionally dim comprehension of them…from an analyst…
It’s also not a great sign that Business Insider thought this was the best way to end this article. At the very least, how about interrogating whether or not their “innovative growth” might have something to do with how healthy regulatory systems might work to facilitate such things? Or whether that innovative growth could have continued apace under Adobe’s management?
I suppose I am being too credulous, and it’s more likely the same widely shared ideological bent that celebrates free market dynamism with each success, and decries oppressive regulations with each misstep. A culture that sees virtue in offshoring profits while simultaneously using them to eliminate competition, erode consumer protections, lobby for preferential tax credits, and generally skirt any/all obligations to the society which provided them with the opportunities, infrastructure, finance markets, skilled workforce, and well-qualified consumers that are all prerequisites to “innovative growth”.
On the other hand, now you see companies that don’t want to deal with government blocking acquisitions do they just get all of the people they want from startups and leave the rest of the employees high and dry and the investors worse off.
Unlike Figma, companies rarely want the startup’s product and usually end up either abandoning it or making it a part of their own offerings by getting their new hires to write it from scratch.
Even when they do need the acquiring companies IP, they license the IP and then poach the employees.
Microsoft almost did that too with OpenAI during the Altman fiasco.
There is another side to this coin: Figma's gain here is Adboe's loss. It doesn't make sense to use market-caps of specific companies as yardsticks of consumer welfare, which is the ultimate measure which antitrust actions seek to maximize.
The tradeoffs of allowing or preventing the merger are more abstract and counterfactual. We cannot know for sure what the world in which Adobe successfully acquired Figma would look like. Its natural to imagine concerns of Adobe simply killing, enshittifying or failing to improve the product - all things that still may happen under Figma's new corporate structure. Also consider the potential integrations with and improvements to Photoshop that have been missed.
That all being said I think Figma is an excellent product for the price and I have no fondness towards Adobe (though I've never really been a customer) and I'm glad that Figma exits as its own delightful product.
We can’t know what would have happened exactly, but can be certain there would have been less competition if Adobe had acquired Figma.
We can’t know for sure whether increased competition is going to lead to a better outcome here, but we can say with a high level of certainty that more competition usually leads to better outcomes.
The fact that this also turned out to be fantastic for investors is just icing on the cake. Increased competition in markets is a worthy goal in itself.
Fantastic for investors in Figma specifically, not so fantastic for investors in Adobe. My point is that the IPO price and subsequent price increase are not themselves proof (or even relevant) that preventing the merger was a good thing.
There most likely would have been fewer firms if the merger went through (though it could be possible that more competitors enter the market in that alternate timeline). Idk if that constitutes less competition necessarily, and competition understood as number of firms or something similar certainly doesn't always lead to better outcomes.
In the cases of "natural monopolies", consumer welfare is maximized when one firm is able to realize all the economies of scale because the benefits of mass production are so large that goods/services can only be produced at the lowest cost with sufficient consolidation. Utilities like electricity and water are often used as examples of natural monopolies.
You did say usually in fairness and I'd agree that increased competition usually leads to better outcomes. And we usually see multiple firms competing in any given industry without antitrust intervention.
It’s not proof that blocking the merger was good, but it does undermine many of the arguments against blocking it.
I’m all for the government getting out of the way of business, but we’ve seen a large amount of consolidation in many software categories.
Adobe’s market share is pretty extreme already in the creative software space, and I think it is reasonable for the government to step in to try to prevent further consolidation.
I agree with you that it’s really unknowable whether blocking or not blocking was a better choice. But if we only made decisions based on knowing the outcome, we’d never do anything.
As others have said, this is classic selection-effect. Lina Khan isn't coming out and telling people about
- the companies that died because acquiring them was too much of a hassle
- the companies that died or never got funded / started because the investors couldn't see and exit path
- the companies that got acquired piecemeal (Windsurf, Inflection), leaving the early employees with NOTHING simply to avoid the ire of anti-trust hawks at the FTC. This has irreversibly damaged the SV bargain - early startup employees work hard in case of an acquisition, they get rich.
So Lina Khan can keep patting her own back but there's a reason founders, early-stage startup employees and investors disagree.
> the companies that died because acquiring them was too much of a hassle
So it was a shitty non-viable business
> the companies that died or never got funded / started because the investors couldn't see and exit path
More shitty non-viable business. Creating a company only to sell it and screw over your customers is evil.
Maybe those founders should try to make real businesses, instead of playing glorified rollette.
> the companies that got acquired piecemeal (Windsurf, Inflection), leaving the early employees with NOTHING simply to avoid the ire of anti-trust hawks at the FTC
Plain-old loop hole exploitation. Simple anit-competetive stealth aquihire that isn't called so. My conclusion is that the market needs more regulations.
Does your ideal market only contain 5 or mega-corps that control every aspect of our lives?
Everyone in this thread who posts some variation of "wow love it how the government gets to decide if you get to sell your startup or how the market should work" should be handcuffed to their chair and forced to answer these 3 questions:
1. is there any role for gov't antitrust in your view of modern capitalism?
2. if there is a role, why is Adobe x Figma not the perfect example for enforcement?
3. if your answer is "Adobe clearly isn't a monopoly, look at the existence of Figma as evidence," why are you dumb?
if the establishment lets that happen it would be incredible for the US imo. But weren't there also pushes for her to get fired even if Harris got elected? Of course not as strong or immediate as it happened with Trump, but the Lobbies weren't happy either way...
Lmao you cannot be serious. Lina Khan is right about m&a but if you don't understand how absurd the current price of FIG is you should never comment on anything economics-related ever again.
If a big company in dominant position is allowed to gobble up any and all upstart competitors that's bad for competition, and it is the FTC's job to preserve competition.
It sounds like you are actually upset at Congress, which created FTC and gave it the power to decide if you can sell your startup. FTC is just doing the job prescribed by Congress.
I do love it. Companies don't exist solely to enrich their founders, they exist to provide a benefit to society. There needs to be a balance, of course, but if allowing a sale does not benefit society, then we should not allow it.
> your startup
You're under the misconception that companies "belong" to individuals. Companies are legal frameworks that society has decided upon. We could legally decide that M&A just isn't allowed, ever, if we wanted to. (I don't think that would be a good idea, but I hope you see my point.)
Reductionist. Your phrasing it like the onky options are full central planning and libertarianism. Theyre both wrong. You need the free market to do what it is capable of, and regulate it when its isnt. The free market was going to let monopolies form. We have all already agreed thats bad. Khan's policies just updated that to the tech sphere
Actually, the owners not being on the hook when payroll comes due and the business is out of cash is exactly the protection that society has extended to incorporated businesses. But I'd be happy to horse trade unregulated m&a activity for owners, boardmembers and executives having full liability exposure, financial and criminal.
Lina Khan's obsession with "big is bad", especially her preexisting prejudice of Big Tech should have disqualified her from any position well before she took the wheel.
How many times did the FTC fail in court under her watch? More than I can count on two hands.
Meanwhile local and state utility and cable tv monopolies continue to _flourish_ without so much as a peep.
> especially her preexisting prejudice of Big Tech should have disqualified her from any position well before she took the wheel.
The purpose of the FTC is literally to take regulatory action to prevent unfair competition. Your argument is that you shouldn't appoint a commissioner on the basis that they think large tech companies are engaging in anti-competitive behaviour?? Note that this position isn't playing dictator; the FTC is subject to judicial oversight.
> Meanwhile local and state utility and cable tv monopolies continue to _flourish_ without so much as a peep.
How do we know this isn't just your preexisting prejudice of cable companies? Maybe you've just got an obsession with "big [cable] is bad"? On a serious note – it seems that you _do_ agree with antitrust regulation, just not against Facebook/Amazon for some reason (and only against Comcast)??
Doesn't have to be a perfect success rate... how about just something other than abysmal failure rate?
Asserting a sloganized refrain is not very convincing. Make a real argument. Here are some counterpoints to "big is bad" Neobrandeisianism:
-Scale enables better economics for certain businesses which consumers and other businesses then benefit from.
-Large size allows additional speculative cutting edge R&D funding which the whole world benefits from even if it never pays off.
-Being big on its own is almost never a cheat code to permanent monopoly / monopsony lock-in, especially in the technology business. That comes from actual anti-competitive behavior or regulatory capture (which ARE the parts that should be regulated, rather than targeting or preventing size for its own sake).
The S&P point is more than a bit overstated and it also doesn't really matter? The subset of the S&P that's performing well will naturally get weighted higher over time, until the performance changes. It doesn't really matter if the S&P is driven by 5 enormous companies or 500 equally-sized ones. Whatever works at the moment is what gets rewarded with capital -- that's the point of the system and it's been more effective than any alternatives. Besides, it'd be poor investing practice to be literally all-in on the S&P.
Big is bad? She went up against Amazon which is literally one company that delivered on lowering costs to consumers. She doesn’t understand the fact that there are NATURAL monopolies outside of utilities. You would know this if your training is more than a couple of intro level courses in economics.
And why is it that no one is talking about the biggest vertical and horizontal roll ups in all of corporate America in healthcare? Interesting.
FTC under her blocked Kroger/Albertsons, blocked Tapestry/Capri, ended non-competes, enacted click to cancel, made major strides on right to repair, etc. in addition to all the “prejudice against big tech” which are the titans of industry right now…
Big doesn't necessarily mean that consumers will be worse off than small. Just like having a dictator doesn't neccesarily mean that citizens will be worse off then in a democracy. What it does mean in both cases is that if the powerful entity decides to abuse their power for their own gain, it's very difficult (albeit not entirely impossible) to do anything about it. It's therefore better in the long-run to preempt this and bias towards smaller entities that are each less powerful.
Under Khan, the FTC has abandoned the standard of consumer harm, and now just blocks mergers based on vibes. I really liked this article criticizing her approach:
I stopped reading when they defended Albertsons and Kroger merger. Can anyone defend the consolidation of grocery stores with a straight face? Walmart has obliterated any competition and it has destroyed local food sources everywhere. They can do it at scale that no one can compete with. If the only solution is to further consolidate then we might as well just hand over the government to Walmart.
And yet, groceries have never been cheaper. So the question becomes which do you want: consumer benefits, or your aesthetic preferences regarding how big a company should be?
Should jobs be a factor as well? I see a lot of job loss in small town Iowa and Nebraska. I don't live there and people there have definitely voted with their wallets.
Food plus quality price index in Japan and France look better to me despite the lack of Walmarts.
And, I read some things about price collusion of the major grocers during the pandemic that makes me concerned.
I will say, thanks for being a human and discussing this as a human. Too many bots on HN lately.
I don’t get the downvotes. He’s just stating his opinion. Lina Khan had zero real-world experience. She wrote ONE widely circulated opinion piece in law school. It contained barely any rigorous economic analysis. This is akin to giving authority to some 21-yo philosophy major to direct the entire direction of US AI policies.
I am not a big Sam Altman fan but this is not a good comp. Sam is an insider in SV and one of the biggest at that. He knows everyone. You are basically saying Sam didn’t know anything about AI yet he is one of OpenAI’s founding members. Unlike Elon, at least Sam knows a thing or two about actual software dev.
Her opinion should not be taken seriously on the matter. It's not just the empirically terrible track record she had as a regulator and the baffling cases she brought to bear (imo proof of your point that she had an overgeneralized bias). It's also that she was demonstrably inexperienced at the time she was selected! It was clearly performative political appointment, which the Biden administration was pretty egregious about (and so have both Trump administrations, this is not a political point).
The essay (literally, a homework assignment she did at law school) for which she became famous that criticizes Amazon for being big is so chock full of errors, misconstructions and faulty logic, that it's an indictment of some really poor political habits and instincts that the US is prone to. That due diligence in vetting her as a rigorous and informed thinker on the topic failed is an unequivocal failure.
>The essay (literally, a homework assignment she did at law school) for which she became famous that criticizes Amazon for being big is so chock full of errors, misconstructions and faulty logic, that it's an indictment of some really poor political habits and instincts that the US is prone to.
She got boosted by an insurgent group of law professors who spearhead whats called the Neobrandeis moment. Their theory is that anti-trust should be preemptively enforced against size for its own sake.
This is the article she wrote for her law review as a law student which put her on their radar and they started calling her a "rising star" etc etc, which snowballed into the performative appointment by the Biden admin.
A lot beyond the scope of the time I have to comment here. Read it with an open mind, knowledge of tech business, knowledge of how things unfolded since it was published and see for yourself.
But some short hand:
-Assumes vertical integration is necessarily abusive
-Assumes lowering price is necessarily a setup for anti-competitive practices. This one’s particularly ironic because lowering prices is definitely a first-order good for consumers and businesses that buy those goods. Bezos’ famous saying was “your margin is my opportunity” —- would you rather the standard continue to be massive retailer markup profit that goes straight to retail corps?
-Vague scare tactic claims that expanding into media production etc will somehow (yadda yadda, Step 2: ???) lead to monopolies in every category they enter.
The TLDR of the problem with Neobrandeis is it forms a very opinionated paranoid notion that size can only lead to bad things and no good things. It is a lazy dodge around the traditional responsibility of regulators to identify and regulate actual anti-competitive behavior when it actually happens
By constraining companies from using any form of size or integration-related advantage, it lowers the pressure to actually be competitive and innovative for everyone else.
I’m not saying everything should be unconditionally allowed, there’s a balance to strike. But when you just have a blunt “anti-size” hammer, you’re gonna do collateral damage to a healthy competitive ecosystem in a damaging way.
> It is a lazy dodge around the traditional responsibility of regulators to identify and regulate actual anti-competitive behavior when it actually happens
Traditional since the ‘70s, when Chicago school jackasses got their way and all but destroyed antitrust enforcement, in practice.
A shift back would be great. Let’s get a little more traditional.
We’ve seen this TV show before, but nobody paid attention. The magnificent 7 are essentially the ITT/LTV/Litton of the 1960s reborn. GE is the other one of more recent memory.
Massive diversified entities get bureaucratic, unwieldy and ineffective over time.
What gets me about this Lina Khan hero worshipping is that she has ZERO real-world experience. It’d be one thing if she crafted a worthy law career in fighting big corp. She never put in any hard work. She essentially an influencer.
I think the Figma IPO proves Khan was right. $60B market cap today vs the $20B Adobe offered in 2023. There was some criticism about regulatory overreach when the deal got blocked. Now Figma employees are rich, the design tools market stays competitive, and we have another major independent tech company instead of just another Adobe product line. This is exactly why we need regulators willing to tell Big Tech "no" sometimes. Competition creates more value than consolidation.
It absolutely proves that she was right. If you care about market cap? She was right. If you care about employee comp? She was right. If you care about consumer choice, she was right. Number of listings, new potential acquirers for your startup, more diverse office geography, right right right right.
The idea that there's a significant lobby on fucking Hacker News unhappy that a startup IPO'd for a zillion bucks and made everyone rich is twilight zone shit. It makes no sense according to the stated values in the fucking masthead.
I think you're hitting the real divide here. Some people are so ideologically opposed to any regulatory intervention that they can't admit when it works, even when the evidence is staring them in the face. Also notable [0]: "[...] in any given year, we see up to 3,000 merger filings that get reported to us. Around 2% of those actually get a second look by the government, so you have 98% of all deals that, for the most part, are going through. Around 2% of those actually get a second look by the government, so you have 98% of all deals that, for the most part, are going through." The FTC wasn't blocking everything, just the deals that would entrench monopolies.
[0] https://techcrunch.com/2024/06/15/ftc-chair-lina-khan-on-sta...
> Some people are so ideologically opposed to any regulatory intervention that they can't admit when it works, even when the evidence is staring them in the face.
We have a problem where regulators are bad at their jobs most of the time, and then people develop the heuristic that all regulation is bad.
You need some rules to price major externalities. Not minor externalities, because regulatory overhead and enforcement are themselves externalities and it doesn't do any good to burn $1 in overhead to prevent $0.90 in some other cost. But you want a ban on leaded gasoline.
And you need antitrust rules, because "the market is more efficient" is fundamentally predicated on competitive markets. Real competition is the sine qua non of that actually working. Most government inefficiency is because the government is a monopoly, and private monopolies are just as bad.
The problem is politics breaks everyone's brains. One party says "regulation good" and the other side says "regulation bad" before either of them considers what the regulation actually does. And then you have one party promoting illiterate nonsense like price controls or justifying busybodies who want to micromanage things they don't even understand or trusting the government with mass surveillance data just because they're not a private company, and on the other side you have people with no objections to tying arrangements or companies with double-digit market share buying even more of their competitors.
"Everything should be made as simple as possible but no simpler." That last bit turns out to be kind of important.
> We have a problem where regulators are bad at their jobs most of the time, and then people develop the heuristic that all regulation is bad.
No, we have a problem where 95% of regulations work so well that no one even remembers that they exist (child labor, etc). A media environment that reports on outliers for clicks and corporations that want to dump industrial waste in rivers.
> No, we have a problem where 95% of regulations work so well that no one even remembers that they exist (child labor, etc).
This is quite false. There are a few regulations that have a high cost/benefit ratio (e.g. ban leaded gasoline), and a few that are completely upside down (e.g. DMCA 1201), and then there are the vast majority which are the regulatory bureaucrat equivalent of busy work and are neutral at best. Positions exist to make new regulations, so they make new regulations.
But each new one has overhead, and then we get cost disease and high cost of living and increased market consolidation because regulatory compliance is a fixed cost that large corporations can bear more easily than smaller companies, and the complexity is used to disguise corruption. All of that is legitimately bad.
90% of them are completely worthless, and it's a significant problem that we have an apparatus structured to perpetually accumulate new ones without ever going back and cleaning house to remove the ones that can't be justified.
> There are a few regulations that have a high cost/benefit ratio (e.g. ban leaded gasoline),
I think you mean to say that it had a very low cost/benefit. Otherwise, citation seriously needed.
Right winger says problem is government. Left winger says problem is corporations. Repeat ad nauseum. Yes both can be bad.
95% of regulations and 95% of companies work so fantastically that nobody realizes they exist. Sure.
But re: regulation, that 5% tends to be in the really really important stuff.
How’s housing…and healthcare… and higher education…and the national debt…in the US going?
All of those things make up vastly more than 5% of the economy and are arguably all broken in the US because of poorly designed regulation.
I think assuming most regulation is “good” is an extremely dangerous proposition given regulation is extremely difficult to change or overturn once in place.
It’s important to also remember every regulation requires enforcement at gunpoint. You cannot choose to not follow them.
Your whole comment is good but I want to signal boost the most important point you made.
Private cartels are just bad governments with even less accountability or incentive to be efficient. Take the worst DMV office in the world and put it in charge of something way more important than license plates.
> Private cartels are just bad governments with even less accountability or incentive to be efficient.
It's kind of six of one, half a dozen of the other. You can't vote out a monopolist, but unless there is a law against competing with them, there is a threshold for how bad they can get before somebody actually does. The problem is that threshold can be way past the point of anywhere you want to be.
Whereas governments can get even worse because if you resist their unreasonableness they declare you a criminal and resort to violence and you can't go to the police because they are the police. Voting can mitigate this, but there are governments without democracy, democratic governments that are structurally insulated from accountability in practice (see US incumbency rate and Congress abdicating its role to unelected regulatory bureaucrats), and even in a pure direct democracy you still have two wolves and a sheep voting on what's for dinner.
What you want is neither of these things.
> but unless there is a law against competing with them
Ah, but that is why the monopoly uses its considerable resources to lobby passing laws that at least make it more difficult for someone to compete with them.
And then we're back to "the government should be restrained from passing that sort of economic regulation because otherwise that's what happens".
Yeah I think you're right. It's a sad commentary on the times when a group of people so far above average in caring about outcomes and data just go completely lizard brain in a way that comes out of their own paychecks.
Some people are so ideologically opposed to any regulatory intervention
These are people who are ideologically opposed to any regulatory intervention? How can such an extreme position even begin to make sense? This is like letting boxers (or MMA fighters) fight in the ring without a referee, isn't it? As it is, there are lax rules that are getting even more relaxed by the day and even those lax rules aren't enforced consistently, for big businesses and those with money.
> big businesses and those with money
There are obviously the people in this cohort and there are also the people who think they will be in this cohort, who think they will be the victors in a cartel-like world.
Heck, before layoffs and the threat of AI started concentrating even more power into tech leadership there were plenty of tech folks along for the ride as the high paid, in demand workforce benefiting from the above.
Yeah, many people on HN act like temporarily embarrassed monopolists, ala Steinbeck [1]
[1] https://margins.app/america-and-americans-and-select/w/f395d...
So now the monopolies are just hiring away all of the people they want from the startup and leaving the company as a shell of its former self - leaving both investors and the employees left behind high and dry.
> So now the monopolies are just hiring away all of the people they want from the startup and leaving the company as a shell of its former self
I thought they were dumping everyone at the moment. Unless you’re an AI researcher.
And notice who gets hired…
That means if there are 10 developer - 7 working on the product and 3 working on the fundamental AI problem, those 7 aren’t going to be left (the company didn’t want the product anyway) and the 3 researchers are going to be hired.
Something similar happened with Google and Windsurf. So who benefited from the anti acquisition mood of the previous FTC? Not most of the employees who could have made more just working for a public company in the first place and not even the investors.
Google accomplished the same thing with less red tape and didn’t have to hire the people they didn’t want.
> So now the monopolies are just hiring away all of the people they want from the startup and leaving the company as a shell of its former self - leaving both investors and the employees left behind high and dry.
If this was a viable strategy then they would have just done it regardless, right?
Meanwhile the solution to that is to break up the monopolies to begin with. You don't have trillion dollar companies monopolizing the labor pool if you don't have trillion dollar companies.
Yes because you don’t like companies being able to pay people more money?
Companies get money from workers (i.e. customers), pay some back to workers (employees), and keep the rest as profit (or waste it on some kind of bureaucratic inefficiency). Workers can get more money by either paying less as customers or getting paid more as employees.
Monopolies screw them on both ends. Customers pay more because there are fewer suppliers, and then employees make less because there is less competition for hiring which also makes it easier for the large employers to coordinate non-poaching agreements.
The fact is though in this scenario Google paid the employees more and in what tech area is Google a “monopoly”?
The fact that Google did “poach” employees means that there wasn’t an agreement not to.
In a market where there are only a small handful of incumbents and then a bunch of precarious cash-strapped startups, the incumbents collude with each other so that they only have to outbid the startups. The startups, meanwhile, are at a disadvantage because e.g. the incumbents control search engine rankings or app distribution channels, which lowers their competitiveness and therefore the amount they can afford pay to employees in competition with the incumbents. The incumbents are then the high bidder even while offering something less than they would have had to in the alternative.
The startups in question weren’t building apps or advertising on Google. The entire reason most startups exist is to get acquired or acquire hired.
Maybe that has something to do with the incumbents (and the laws) making it hard for them to build a sustainable independent new business.
So in what world are startups going to have the funding or the infrastructure to have warehouses worldwide to compete with Amazon or servers to compete with AWS?
Or in Google’s case the infrastructure to design custom processors with the demand to actually buy enough slots from TSMC to make it affordable?
You can’t make laws to undue scale efficiencies. A startup isn’t going to make a phone in their garage to compete with Apple no matter what magically thinking they have about the government passing laws.
Most startups can’t even pay the wages of a mid level employee at BigTech company that has been out of school for three years.
Just like any other industry, if a startup can’t afford the free market price of labor, that’s a them problem.
> So in what world are startups going to have the funding or the infrastructure to have warehouses worldwide to compete with Amazon or servers to compete with AWS?
In a competitive market you don't have that. Instead of a massive conglomerate having a warehouse in every region, Alice, Bob and Carol each have a warehouse near New York, Dan, Erin and Frank have one near Houston, etc., and then a dozen independent aggregators each negotiate with a warehouse in each region to store goods for anyone who wants to offer fast delivery everywhere.
Meanwhile doing that, whether you're Amazon or not, is inefficient for anything that doesn't need to be delivered on short notice. If you have a recurring subscription to get a box of toiletries every month, it doesn't matter if it arrives on the 17th because they mailed it from a local warehouse on the 16th or a centralized warehouse on the 10th, and delivery companies offer discounts if you palletize shipments based on region even if they come from a central location, which removes the cost of having local warehouses for those regions.
> Or in Google’s case the infrastructure to design custom processors with the demand to actually buy enough slots from TSMC to make it affordable?
If there is aggregate demand for those processors then you sell them to the other people who want them regardless of whether they're within the same corporation, and then they don't have to be.
> You can’t make laws to undue scale efficiencies. A startup isn’t going to make a phone in their garage to compete with Apple no matter what magically thinking they have about the government passing laws.
The defect is in expecting one entity to make the entire phone.
One company makes a screen, one makes a battery, one designs a processor, another fabs it, another makes memory, another makes the OS (or it's open source), another lays out the system board to integrate the various components, another does final assembly, etc.
When you don't require the whole thing to be done under the same umbrella it doesn't take a trillion dollar company to do any given piece.
> Most startups can’t even pay the wages of a mid level employee at BigTech company that has been out of school for three years.
Suppose phone components were easily available as a fungible commodity, and had standardized interfaces so that integrating them was only a modest amount of work, i.e. a year of effort for a full-time engineer. Then you get a phone which sells as an also-ran -- a million units a year for three years, less than 0.5% of Apple's sales volume. The phone sells for $250, less than the cheapest new iPhone, and 0.5% of the retail price goes to pay the engineer.
Then they'd be making $3.75M for that year of work. Those numbers could be off by 10 fold and still be a competitive salary.
Except that the market is too concentrated and the standards don't exist, which means it's not that easy as things are now.
> Just like any other industry, if a startup can’t afford the free market price of labor, that’s a them problem.
The issue is, is it a free market, or a captured one?
If it keeps up, it's only a matter of time before startups stop being able to hire top talent.
Most startup hiring has always been a scam for the idealistic where people would be better off statistically by just working for a publicly traded tech company that put RSUs in your brokerage account that you could immediately sell (and should) diversify once you are vested.
In my latter years of my career, I’ve been offered “great opportunities” at a startup that paid less in cash for more responsibilities than I was making as a mid level employee (cash + RSUs) at BigTech when I was there.
Of course they promised “equity” that was illiquid and probably would have been worthless.
Any evidence of that?
Google and Windsurf
https://techcrunch.com/2025/08/01/more-details-emerge-on-how...
Amazon
https://www.politico.com/news/2024/07/13/big-techs-poaching-...
Microsoft and Inflection
https://finance.yahoo.com/news/big-ai-reverse-acqui-hire-150...
Microsoft almost pulled it off with OpenAI during the Altman fiasco.
>Google and Windsurf >https://techcrunch.com/2025/08/01/more-details-emerge-on-how...
that looks strange to me to say the least - a company A's leadership leases completely away the company A's IP to a company B while at the same time getting fat employment offers from the same company B. If it were in Russia i'd say it is a bribe/kickback while in US it looks suspiciously like a huge conflict of interests. How no regulatory agency looked into that...
Huge conflict of interest for who? It was a private company who only had a fiduciary responsibility to its investors and the employees themselves had no responsibilities to refuse a better offer from a competitor.
There was a whole stink in 2010 about all of the major tech companies agreeing to not poach other companies’ employees and suppressing wages.
>the employees themselves had no responsibilities to refuse a better offer from a competitor
actually they have such a responsibility - if the offer in any way connected (or may be perceived as such) with a deal in which the employee is representing its current employer. The same reason why the President can't take expensive gifts from foreign powers for example ...
>There was a whole stink in 2010 about all of the major tech companies agreeing to not poach other companies’ employees and suppressing wages.
that has no relation to the current discussion.
I am well aware of anti poaching agreements between partners or consulting agencies and clients. I am currently working for a consulting company (full time) and in the past I was an employee at AWS ProServe.
The contract states you can’t solicit employees under that arrangement. But either side’s employees are free to proactively outreach.
I’m not referring to “consulting companies” that are basically doing staff augmentation.
Neither is the case here
It isn't about poaching. It is about how vigorously you'd be protecting the interests of your company A in a deal with company B when simultaneously negotiating your personal offer with the company B, especially if it is [even if just implicitly] packaged together i.e. "the offer happens only if the deal happens." You don't see a conflict of interests here?
There is no evidence that any of these companies had contracts with the acquiring companies before reaching out to the employees.
Listen, I think its bullshit what happened to the Windsurf people. And I'm happy that the Figma people didnt get crammed down with some scam ass preference assplay.
But blaming Lina Khan for the crime orgy that started the minute she was forced out is silly.
Go stick that blade where it belongs. I'll help any way I can.
https://youtu.be/pDaELkYEC_g
I’m sure the employees who Google hired don’t feel at all “crammed”.
The only reason they took this route instead of an acquisition is because of the current regulator environment.
But the current VP was a huge fan of Khan.
Probably talking about character.ai and a few similar cases. It's not the trend GP is making it out to be.
People in government think otherwise
https://www.politico.com/news/2024/07/13/big-techs-poaching-...
A very self-regulating little arbitrage, because the investors and the monopolies are in the process of merging themselves. This is the part most people seem unwilling to accept: these rich guys are dumb man. When you organize your whole society around rich kids having advantages it only takes a couple of decades before they're all just bad at their jobs.
This mafia capitalism isn't even good for the capitalists! They just can't get it together on a sustainable system!
The under appreciated drag is which is statistically more likely to be talented?
1. Someone from a wealthy / connected family
2. Someone who scrambled to the top of 100,000 other people
Folks can argue good schools, etc. all they want, but proven ability and drive to outcompete others should be a heavy counter argument against nepotism of all sorts.
Suppose that you have an opportunity to play a game. The game is you roll a fair normal six sided die. If it comes up a 6, you get $60B. If it comes up a 5 or 4 you get $30B. If it comes up 3 or less, you get $0.
This is clearly a valuable game! It is worth in expectation $20B. But it also has a 50% chance of being worthless to you.
Someone offers to buy it from you for $20B. You agree, giving up some upside for some downside protection.
But then someone else says that's not allowed. So you play the game and you roll a six and get $60B.
Does that prove the person who made you play it rather than sell it was "right," ex ante?
You raise a valid point about ex ante uncertainty. We can't know future outcomes with certainty, and yes, Figma theoretically could have failed. But antitrust analysis isn't about predicting exact valuations. It's about market structure and competitive dynamics. The FTC had observable facts: Adobe's dominant market share, Figma's rapid growth trajectory, and a purchase price of 50x revenue (extraordinary even for software). These factors suggested Adobe saw Figma as a competitive threat worth eliminating, not just a financial investment. That's the key distinction from your dice game; this wasn't pure randomness but observable market dynamics. You're right that we can't prove the counterfactual. But antitrust law doesn't require certainty, just reasonable probability of competitive harm. The extreme premium Adobe offered was itself evidence they valued removing competition more than acquiring assets. The outcome validates the analysis, but even if Figma had struggled, preserving the possibility of competition has value beyond any single company's success.
Obviously the die game is a simplified stylized example. Yes, I agree, that chance that Figma stock was worth literally zero (above what was paid) was less than 50%. But the point is that there was obviously risk that Figma would be worth less than $20B, otherwise Figma wouldn't have wanted to take the deal.
But now you are contradicting your initial argument. Here you say that the price offered by Adobe was astronomically high, and therefore an indicator that the offer was not legitimate, but initially you said that the FTC made the right decision because the offer was 3x lower than the IPO price.
No, the argument is that Adobe willing to pay a high price is a good signal that Figma was not a dice roll but actually worth much more than Adobe was willing to pay.
If it was known that Figma was worth more than Adobe was willing to pay, then why did Figma take the deal?
I think it's reasonable to formulate this as two outcomes (Figma independent and Figma bought by Adobe) and each firm's preferences. From Adobe's standpoint, outcome A has huge tail risk (Figma innovates and eats Adobe's business) so paying a lot for outcome B might be ok. From Figma's POV, they aren't really helped by that tail as much as Adobe is hurt by it (either way they're rich, unless they crash out and become poor), so Figma would love to play it safe and sell the tail gamble. Adobe is paying to buy the high tail and low tail from Figma, but Figma probably doesn't care too much about selling the high tail compared to selling the low tail; meanwhile Adobe mainly wants to buy the high tail. I think it's very reasonable for Adobe to value the high tail at much more than Figma values getting rid of the low tail (Adobe is willing to bid up aggressively while Figma is willing to offer down aggressively).
Whether the government saw Adobe's willingness to overpay for Figma as a signal of Adobe's underlying incentives (as in "I acquire Figma to keep my monopoly" and not "I acquire Figma to vertically integrate and make better product for consumer") seems much harder to speculate on. I didn't explain (nor do I think there's an obvious explanation) for why the original deal was at the high price rather than the low price, but I'd imagine Figma would've been generally willing to sell for less than the price Adobe bid given Adobe was probably Figma's best customer for acquiry.
But high IPO prices is evidence against the idea that Adobe was willing to overpay for Figma due to downside risk to Adobe that is not matched by upside benefit to Figma!
I think the flaw here would be to assume that there's such a great chance (roll 1 -3) of it being worthless. Figma, while not being a mature 20+ year old company, had long since established its place in the market.
There’s a lot of people I’ve talked to who didn’t like Lina Khan not because of the Figma thing but because they thought she was having a chilling effect on acquisitions broadly.
The vast majority of startups will never IPO. Acquisition is the only viable exit. That’s because the bar for IPO has risen so high that only massive already incumbent unicorns can reach it. IPO isn’t a way to raise capital to compete. It’s a victory lap if you’ve won already.
Don’t know if this is actually true, that she was having this chilling effect. I am relaying a sentiment I’ve encountered.
Of course the other reason is tech-right echo chamber brain rot. People need to get off Xhitter. (Not a fan of doomer left anti tech brain rot either. There’s more than one kind of brain rot around.)
> The vast majority of startups will never IPO. Acquisition is the only viable exit.
Or you could run the business profitably and not exit at all.
Hard to raise money with that plan. The VC world wants the 10x. Difference between SME and Startup.
Yeah, I have heard that sentiment too. I've never heard so much as a second-hand anecdote that someone was on the track of an acquisition but got the vibe their 50 million dollar acquihire plus was going to just be too much trouble under an activist chairwoman though.
It seems to me that the same weaponization of binary tribal thinking in red/blue social stuff has a corollary in "entrepeneur / commie" oversimplification with about as much nuance.
Smart people get emotionally manipulated on every other kind of politics at the behest of the new oligarchs, why not this one?
I agree except the part about the new oligarchs doing the manipulating. I think they are manipulating themselves, sucked into these brain rot machines as much as anyone.
I heard a Thiel interview recently where he ranted about Greta Thunberg and the antichrist and used a bunch of very online Xhitter bubble terms like referring to low efficacy as “low-T” and I was like this guy needs to touch grass. It didn’t even make a lot of sense.
It's never made sense for me (as a gay man) how a gay man could get sucked into the fringe alt right manosphere. That whole ecosystem is antithetical to you
It makes perfect sense if you think about it from Thiel's perspective. Other than legal technicalities like marriage, the consequences of being gay are mainly determined by societal attitudes and not electoral politics. No legal changes that the Republicans would make do anything to stop a powerful billionaire from being openly gay. So it makes perfect sense that he would favor his business interests when he takes sides in politics.
I mean, these people aren't well my guy. It's not a huge stretch to imagine a bunch of repressed self-loathing around one's identity being at or near the core of it.
Thiel grew up in the 90s. Whatever one deems the tolerance situation today, it was worse then.
More like the 80s but true. Also maybe worth remembering that Thiel was outed by Gawker. He didn't come out as gay of his own volition and perhaps never would have.
I’m still waiting on him to pull a Milo Yiannopoulos and no longer be gay. His flirting with “libertarianism” already gives him a solid track record.
That's funny in a dark way, especially it being Thiel given that this entire movement/era traces a clear intellectual and emotional lineage to his activism all the way back at least as far as his writing in the student libertarian rag at Stanford in like 94 (and apparently a childhood fixation with Quenta Silmarillien exceeding even my own).
Trapped in his own Intellectual Dark Web one might say.
Yeah, Greta Thurnburg is making the frogs "low-T". What a bunch of fucking losers.
It just happened with Windsurf and Google.
Windsurf getting "bought" such that the employees got nothing is a great recent example of why you want Lina Khan seeing to it that a healthy and well-regulated M&A market is in effect. That's precisely the kind of lowbrow shit you can thank her bought and paid for successors for bringing you the next decade's worth of.
So now you think the government should stop companies from hiring people?
Isn’t that the sane thing we (rightfully) criticized Apple, Google, Adobe and a few other companies for doing in the Jobs era when they had an anti poaching agreement?
> So now you think the government should stop companies from hiring people?
What do you mean "now"? That's a major part of what it means to regulate acquisitions. So yes they should continue to regulate this extremely narrow slice of hiring.
> Isn’t that the same thing
Only if we oversimplify the scenario all the way down to "hiring".
And if we do that, there's thousands of laws that prevent hiring people in all sorts of situations.
It wasn’t an acquisition - Google offered the employees they wanted a shit ton of cash to leave.
What laws keep companies from hiring people they want to hire who are legally allowed to work in the country?
This is exactly what Google did, it hired employees.
This wasn't an acquisition, but it was really close to one. Whether or not the laws cover it right now, expanding acquisition laws into hiring out the core of a company would not be a big expansion. It wouldn't be a sea change in what types of hiring the FTC has control over.
So now you want companies to seek government approval before they can hire a certain number of people from a company? What if Google wanted to hire me and 3 buddies from our startup but didn’t want to hire the secretary or more realistically they only needed the backend developers. But didn’t care about hiring the web developer?
Who exactly does that benefit? Not the employees. Maybe the investors? Do you really want the government to restrict who can be hired from a company or better yet, whether employees can accept better offers from another company? That’s only the other side of the coin of restricting employee movement based on non competes.
> seek government approval before
There's a neighboring comment that used almost the exact same wording that I already replied to.
In short: No.
> What if Google wanted to hire me and 3 buddies from our startup but didn’t want to hire the secretary or more realistically they only needed the backend developers. But didn’t care about hiring the web developer?
Is your startup like 10 people? Worth much less than a billion dollars? Then it's not big enough to be a problem.
So what laws do you suggest that the government pass that both stop Google from offering me a highly skilled and sought after AI professional (not really, we are speaking hypothetically) or my team and don’t suppress my ability to make as much money as the market will give me?
They can give just you a job at any time.
But if it's the entire team, and that team is the backbone of a company, and acquiring that company would be blocked by the government, all three of those things, then your income is already being suppressed by not allowing acquisitions. Sorry about that, but the extra boost you'd get during monopoly forming would only be temporary anyway. In the long term it's better for both employees and customers to avoid too much consolidation. Extending that rule to stop team buyouts will have almost no effect on the status quo. It's allowing the team buyouts that could potentially change the status quo, and it would be a change for the worse.
So they just give me a job as the leader, then other people want to follow. Is it them illegal for Google to offer other former coworkers a job? Isn’t that kind of like the “Prisoner’s Dilemma”?
So exactly how does a Google “monopoly” (which definitely doesn’t exist in AI if anywhere), harm customers? And would I as a potential employee better off or worse off?
Am I paying more for search today because of the monopoly? Am I paying more for any of the free stuff that Google has because of advertising (that I block anyway)?
In other words, you do want the government to force employees to stay at a company when they could get a better offer?
Isn’t that what we wanted to prevent with outlawing non competes?
Just offering normal jobs would generally be fine, doing a big group deal that also comes with IP licensing would generally not be fine.
I'm not going to try to give you the exact line.
> In other words, you do want the government to force employees to stay at a company when they could get a better offer?
> Isn’t that what we wanted to prevent with outlawing non competes?
That's way too general. You could use that same argument to say acquisitions should never be blocked.
So the law is now that they can’t license the technology to companies that higher former employees?
You don’t see what kind of Kafkaesque mess these proposed laws are creating?
Who are we benefiting again?
The benefit is the same kind as from blocking a very small fraction of acquisitions. If you don't think the existing rules there are kafkaesque, then the small expansion shouldn't be a huge change. If you do, I'm not the person to argue with.
And these rules would very rarely come into effect.
It’s the same for who? The employees? The company that is not allowed to make money by licensing it technology?
If you don't understand why acquisitions might be blocked and the benefit of it then I'm not going to be the one to explain it.
I'm not here to defend the entire edifice of the FTC having control over acquisitions. I'm here to say that when they have that control, it should also include almost-but-not-quite-acquisitions.
But you aren’t arguing about acquisitions. You are specifically saying that a company shouldn’t be allowed to license IP, shouldn’t be allowed to acquire the company and shouldn’t be allowed to hire the employees or some combination.
You specifically said that in some cases if a company hired employees it should then be prevented from licensing the technology
And still haven’t given a good reason why it shouldn’t.
The “bad” acquisition is usually considered Instagram . But who cares if a toxic social media site acquires another one? Who was harmed?
I'm saying that what google did is effectively an acquisition except it broke the equity and it avoided regulation.
You keep making examples that are less clear-cut, but whatever I agree there are things a company can do that aren't effectively acquisitions. I'm not saying how to write the rule, I'm just saying google is on the wrong side.
> You are specifically saying that a company shouldn’t be allowed to license IP, shouldn’t be allowed to acquire the company and shouldn’t be allowed to hire the employees or some combination.
They're totally allowed to acquire the company... as long as the FTC doesn't say no. And they can do lots of those other things too.
I don't know how you got the impression that I think acquisitions should be blocked more than a fraction of a percent of the time.
Even further, google SHOULD have acquired the company instead of doing what they did.
The FTC caused this issue with over regulation and by creating an environment of fear that every acquisition is going to be scrutinized.
Google had no fiduciary duty to do what’s in the best interest of WindSurf’s investors.
Google had every right to give the WindSurf employees offers to leave. The employees had every right to accept the offers. There is no world where the government should have been involved in that part.
At that point, the Windsurf equity owners had two choices - either not license or license.
Which part should have been illegal? The FTC could have said “Google you can’t both get the employees and license the IP”. Google would have said “fine, we will just hire the talent and have them create something similar”. Windsurf would have been worse off.
Alternatively, Google could license the technology. Then the employees could say I would rather just work for Google. Would you then be okay with enforcing non competes even though they are currently illegal in California?
There is no law that you can come up with that doesn’t make it worse for both the employees and Windsurf.
We actually saw something like that happen between Microsoft and OpenAI during the Altman fiasco. Microsoft had already licensed the technology and Altman was going to go to Microsoft and take OpenAI’s best people with him. Should the government have stepped in then and told Microsoft they can’t hire OpenAI employees?
> The FTC caused this issue with over regulation and by creating an environment of fear that every acquisition is going to be scrutinized.
Ridiculous. They intervene so rarely, even at the peak.
> Which part should have been illegal?
Not my problem to solve. Ever heard of "structuring" though? It's not unsolvable.
> There is no law that you can come up with that doesn’t make it worse for both the employees and Windsurf.
If doing an actual acquisition would have been allowed, that would have been better for them.
If it wouldn't have been allowed, then yes the hypothetical law is worse for them but it's an acceptable loss. Sorry you can't use a workaround to get the benefit of an illegal deal.
You still didn’t answer the question. Do you want to make it illegal for:
1. Google to hire the employees and force the employees to stay at the company and how?
2. Google to be able to hire the employees and then Windsurf not be allowed to license their IP to a company who is willing to give them a bunch of money?
The reason that this shit show happened in the first place is because overzealous lawmakers and regulators put policies in place without thinking through the consequences.
What exact policies and guidelines should they put in place?
Or in Figma/Adobe’s case. What if Adobe just said, Forget it, we will pay all of the developers we want a shit ton of money (less than $20 billion) to rebuild the entire application from scratch and leave the auxiliary staff behind. Would you also outlaw that?
In the current political environment, the best way to get FTC to approve a merger is to bribe the President (see Paramount). The way to make sure it doesn’t get approved is to do something the President doesn’t like. Do you really want to give this government mire power?
> You still didn’t answer the question. Do you want to make it illegal for:
Perhaps telling Google they can do one or the other but not both. Or not both unless they want to treat it like an acquisition.
Again I'm taking it as a given that it's fine to restrict company actions. If you dislike that entire concept then take it up with the people that put FTC in charge of acquisitions, not me. Not every willing transaction should be legal.
> The reason that this shit show happened in the first place is because overzealous lawmakers and regulators put policies in place without thinking through the consequences.
Only if they allow this to succeed. If they slap it down then no company will attempt it again. They'll just file for acquisition.
> What exact policies and guidelines should they put in place?
I refuse. You're asking an unreasonable amount of detail from me.
> Figma/Adobe’s case
If they want to make individual job offers and not try to negotiate group things or talk to figma at all then they can go ahead and try.
I'd be surprised if they didn't already do that.
> In the current political environment, the best way to get FTC to approve a merger is to bribe the President (see Paramount). The way to make sure it doesn’t get approved is to do something the President doesn’t like. Do you really want to give this government mire power?
Even with the risk of corruption I prefer regulating acquisitions to allowing everything.
It's not about restrictions on hiring, you keep repeating that even though no one has advanced that proposal in the whole thread. You have absolutely crushed that strawman argument, congratulations.
It's about the property rights or lack thereof attached to "equity" in a company: a much fuzzier area with much less clear established stare decis: companies very rarely litigate such cases, it's an area that has historically been kept out of the courts for the most part because for the most part it has been in everyone's interests to keep the wheels greased on this (you'll notice old school VCs like Khosla are against fucking around in it in public forums).
Everyone would agree that if a giant public company sold itself to the CEO's cousin for a handful of glass beads and declared the existing shares worthless, that would be flat illegal. At the other end of the spectrum we have startup stock options and RSUs and shit, much less negotiable. But the unwritten contract has pretty much always been roughly "if anyone gets rich, everyone gets something".
If the trend becomes to just dissolve a startup the minute its worth anything and immediately partition it into exactly the pieces a giant company wants and zero out everyone else, this will have a massively destabilizing effect on a historical engine of innovation (see: OGs are against it on Twitter).
And if the Valley can't figure it out in the family? Then we can dust off the law books, because the courts and regulators and maybe legislators will have to get involved.
Stop talking about the government restricting hiring, no one said that.
The government caused the problem in the first place by making it harder for big companies to acquire smaller companies.
> It's about the property rights or lack thereof attached to "equity"
An employer has never had “property rights” to decide where I can and can’t work.
> Everyone would agree that if a giant public company sold itself to the CEO's cousin for a handful of glass beads and declared the existing shares worthless, that would be flat illegal
The CEO while working for the company has a fiduciary responsibility to the company. But doesn’t have the responsibility not to leave if another company offers it more money or if other employees that like the CEO, they are free to reach out to the CEO and leave too.
> At the other end of the spectrum we have startup stock options and RSUs and shit, much less negotiable. But the unwritten contract has pretty much always been roughly "if anyone gets rich, everyone gets something".
“Equity” in startups have always statistically been fools gold between dilution, preferred shares, etc.
> But the unwritten contract has pretty much always been roughly "if anyone gets rich, everyone gets something"*
See previous comments about only the naive or true believers (but I repeat myself they are one in the same) are naive enough to believe in anything promised or implied by startups more than you will get paid X amount in cash for hours you work (and sometimes not even that).
> And if the Valley can't figure it out in the family? Then we can dust off the law books, because the courts and regulators and maybe legislators will have to get involved.
So the solution is for the government to pass more laws to fix the problems that the regulations it already put in place caused?
The property rights in question are the rights of the people who hold equity in the company. The legally unclear part because of inadequate precedent to know how a given case would be adjudicated in a given jurisdiction is what exactly "equity" means in the context of employee ownership in a technology startup (which gets different treatment of e.g. taxes and amortization schedules, "tech" is treated differently by the law in some ways that are crystal clear and in other ways that are less clear).
No one has proposed that anyone be barred from taking an offer of employment (that I've seen and interpreted that way anyways), that would be extremely unpopular with just about everyone.
What people are talking about is whether or not founders and VCs can de facto sell a company in terms of the real assets that people care about without distributing the proceeds to shareholders via a legal fiction that the one company disappeared (was written down or otherwise disposed of) and tada over here some job offers and other compensation appeared in just that amount but for a different group of people.
This is a plot device in the Sorkin film about Facebook. They're in Thiel's office getting the new investment and the numbers guy is like "we're going to get you clean paperwork in Delaware" and Thiel looks up: "So who, exactly, is Eduardo Saverin?" I very much doubt the movie was a terribly accurate portrayal, but that's the TLDR for lay people: one company vanishes, another appears with the same assets, but different ownership.
Trying to make this about the federal government telling people they can't work for Google is bad faith. Stop with that shit.
The founders are employees too. Should they not be allowed to leave a company because they are founders? The entire scenario is that the investors aren’t getting anything because the company isn’t being acquired and the employees are being “poached”.
The founders are making the choice that their equity in the company is worth less (not worthless) than the offer they are getting from their new employee.
In the hypothetical lawsuit the damages would be money, the defendants would be the founders and investors, and the plantiffs would be employees with grants that got written down. No one knows how such a lawsuit would play out because it hasn't happened and looks unlikely to.
For the fucking hard of thinking: it would not be about an injunction against the founders being able to work at Google. It would be about them owing money to former employees.
Enough with this, it's trolling at this point.
Okay, so I am founder of the company, I get VC funding. But I’m not “rich” by any means since I only have the play play wealth based on illiquid “equity”. I may not even have control over the company any more after much dilution.
I get an offer from Google where I am now making real money and have liquid RSUs coming. You think other employees should have the right to sue me because I left the company for a better offer?
The investors aren’t getting anything, in this case Google didn’t acquire the company, they hired the employees. Why would the investors be sued because employees left?
No, it really isn't. It's not remotely the FTCs job to regulate that type of thing, and I really don't think you would want it to be. Would you rather have a system where competing companies have to get government approval before extending offers to you? You know who would love that system? Google.
> have to get government approval before
That is not the only form of regulation, and not the form that would be applied here. This would be after the fact, going after companies that try to pull things like this.
But companies should be able to pull things like this. If a company isn't paying market rate I see no problem with a competitor destroying it by hiring away all its best employees.
If a competitor gets too big and is using its money to remove competition before it can be challenged, that's a problem.
In normal competitive situations this rule wouldn't apply. If one company wants the assets and employees of another company they can go ahead and buy it. And any company can offer better jobs as plain old jobs. The negotiation here was not just some high end job openings.
There was no world where Windsurf was going to challenge Google and the same is true for the examples.
These were regular old job offers. At any time, any of the employees could have stayed at Windsurf instead of taking a lot more money from Google.
Google didn’t want the “assets”. Google wanted the people. Even then they only wanted the best people.
> These were regular old job offers.
They were not.
> Google didn’t want the “assets”.
They paid 2.4 billion in licensing fees. Or something like that, looks like part of that was special structured not a regular old job offer money.
You think Google could have but didn't acquire Windsurf, and instead hired away the top talent and discarded the rest because of regulatory scrutiny?
Is there any proof of this at all?
Having criticized a lot of her tenure (and still do!), Lina's problem was never whether she was right or not.
It's that she was incredibly ineffective.
Of course she was right. That's what made her practical ineffectiveness so problematic.
She was often 100% right on what should be done but could only achieve 0-10% of it.
I'd rather have someone who is 70% right on what should be done, but can achieve almost all of it, as some previous FTC chairs were.
Why do you think she was ineffective?
Even this one victory (and it was more than one) is one more than the fucking nothing we're getting on pushback from the SEC to the FDA to the FCC and back again now: this is #CrimeSeason baby (or so its called on Twitter), oligarchs in the front row and all. The last 3 administrations have been soft on FAANG and its going really badly.
The argument that she had the correct agenda, won a few, lost most to a captured judiciary (correct me if I'm mis-characterizing your position) is probably the stupidest thing I've seen on one of the dumbest threads in recent memory.
Can you clarify where I've lost the plot with your argument and restore some of my sorely tested faith in humanity?
> The idea that there's a significant lobby on fucking Hacker News unhappy that a startup IPO'd for a zillion bucks and made everyone rich is twilight zone shit. It makes no sense according to the stated values in the fucking masthead.
Blocking the merger was good. But I'm not convinced the IPO was good. I think trying to be a company that's worth tens of billions of dollars is only going to make Figma worse. I care about the users more than the people that got rich.
I mean the bigger problem with the IPO was that they opened at a 20b valuation and by the end of the day a bunch of investors got richer than anyone who built anything because the investment bankers left 30+ billion in valuation on the table for their buddies
> bankers left 30+ billion in valuation on the table for their buddies
Small float, big hype, litterally designed to pump the stock on the float.
1.2bn was raised - of which only 0.8bn was cashing out existing shareholders - all the other investors got the pump as planned all for the low price of $1.6bn.
Basically the existing shareholders got watered down by ~5% and the value of the shares they still hold are 3x and now liquid, better than they got in any of the vc funding rounds.
> If you care about market cap? She was right.
None of the FTC's business
> If you care about employee comp? She was right.
None of the FTC's business
> Number of listings, new potential acquirers for your startup, more diverse office geography, right right right right.
None of the FTC's business x3
> If you care about consumer choice, she was right.
Ok, so this is the FTC's business. But does Figma compete with Adobe in any major areas? I'm not aware of any major Adobe products like that.
> > Number of listings, new potential acquirers for your startup, more diverse office geography, right right right right.
> None of the FTC's business x3
> > If you care about consumer choice, she was right.
> Ok, so this is the FTC's business.
You don't think there's relationship between consumer choice and a large number of acquirers? These are basically equivalent statements, they're both saying "markets remain competitive".
This is an account not yet three weeks old on a rampage of low-effort shouting about why institutions, honesty, integrity, standards and decency are pointless, counterproductive, and stupid.
I think it might be an alt for Peter Thiel himself! We're in the presence of greatness friend, we should just lean back and be enlightened.
Only in the case where both the acquirer and the target have directly competing products, which is why I specifically mentioned that case and said it would be the FTCs business. (And even then sometimes it doesn't. Google bought Waze, which was a direct competitor to Google Maps, but still both products exist.)
And, no, they aren't remotely equivalent statements to each other or to "markets remain competitive." If there are 100 products in a market, and an acquisition reduces that to 99, it will have no effect on the competitiveness of a market, which is why such an acquisition is not typically any of the FTC's business.
No, that's just wrong, if you let Adobe buy up all the design tools then you limit designer's choice to just Adobe. Will they come out with a competing product? Maybe. That's their business. But the potential is there, and Adobe has to stay on its toes and can't coast on it's near-monopoly status. Indeed, it's now also possible Figma will come out with products to compete with Adobe. And just the threat of that has the potential to limit all of the hostile behavior towards consumers Adobe has been up to for years.
Which is all to say that the market remains competitive.
If you don't think it's the FTC's business to decide whether or not that 100 to 99 move is significant, then I don't think you understand. Even if it's insignificant - it's their business to make that call. You can disagree with it, but if you think that isn't their balliwick, you're simply mistaken.
Hypothetical future competing products is a ridiculous standard. By that logic the FTC could block anything because the acquirer could always in some hypothetical future be a competitor.
It's ridiculous to suggest corporations will treat their customers better if they have competition? That if their customers have somewhere else to go they have more negotiating power?
Adobe and Figma are competitors, right now, regardless of whether they have product lines in direct competition, at this moment.
No they aren't. Having product lines in direct competition is the fundamental definition of being a competing business.
I doubt their executives agree that one another are not a competitive threat. They wouldn't have tried to merge if they weren't playing ball in the same court.
The lashing she gets around here is disturbing.
The last time we came down this hard on one of the few diligent, competent, agressive, uncorrupted regulators with a weird mixture of old boys club sexism and tribal spinal reflex gang flag posturing was in 1996 give or take when Rubin, Greenspan, and Summers came after Brooksley Born as the Chairwoman of the Commodity Futures Trading Commission and forced her out via bunch of irregularities and other scandal-worthy maneuver.
Chairwoman Born was right about everything (natch) and we got a modest crisis to prove that almost immediately afterwards with the Russian sovereign debt default and a society-changing crisis in 2008 (same OTC derivatives contracts right down to the flawed VAR methodology).
If we had let Ms. Born do her job as she was so clearly and eminemtly equipped and prepared to do it, you get an alternate history. We're probably sitting here on twenty years of budget surplus, carbon goals getting lined up and knocked down like clockwork, a well-run Internet living up to its potential, and two generations coming of age in Boomer-style optimism and prosperity instead of cynical hopelessness. There's probably no fentanyl crisis to speak of and Putin gets a nervous palsy just thinking about displeasung NATO.
God knows what the price will be this time.
But what if you care about Adobe? Booooo Hooooo!!! ;( /s
It doesn't prove it. Khan attempted very fiercely to block Amazon's purchase of iRobot and she, along with the EU authorities, succeeded in preventing it and now iRobot is about to file bankruptcy. We don't have the counterfactual and founders (nor regulatory agencies) can see the future.
Someone made a good analogy on twitter that Khan essentially cut off a genius pianist's right hand, the pianist persevered and somehow succeeded in retaining their talent in spite of having one hand, and now Khan is taking credit for the feat. In the same way, the fact that Figma still exists is not proof that she was right.
IPOs are a really tough path, and can significantly alter the business. I'd hesitate to hold up the big one for this year as vindication for her entire approach. The vast majority of growth tech companies are not going to go public, but need to release value for investors and employees, and PE or acquisition is the only path open to them. If you've ever had experience with PE you might not want to deal with that, and getting bought is all that's left if you owe people a big return soon.
Sure, and a counter-argument of the form "acquisitions from such valuation to such valuation were down such percent, we interviewed the following founders and these Corp Dev lawyers spoke on the condition of anonymity..." would be an interesting one. But AFAICT at everything but Goliath scale, M&A was actually up over the period.
So as usual here we are with the epic showdown of Data and Vibes...and in an obvious landslide Vibes takes it home.
It wasn’t the outcome, it was the bad reasoning and the overall desire for interference
Does it really matter if Figma was bought vs IPO? No of course not. Khan just needs a poster child for her overall intervention philosophy.
Pointing at Figma as a success for her overall world view is like the religious who say “oh god saved me from that flood” while ignoring the hundreds who did die. The Almighty wanted them to die? Or…?
If you’re gonna claim the successes you have to claim the failures
> Does it really matter if Figma was bought vs IPO? No of course not.
I think it matters. Look what happened when Adobe acquired Macromedia in 2005. The innovative product (Fireworks) that brought many (but not all) many of the innovations that would later come in Sketch and then Figma was left to slowly die because it competed with their flagship product (Photoshop). That delayed innovation in that market segment by around a decade.
Fireworks was great when I was a young teen and first learning the difference vector graphics could make.
Let’s not forget our beloved Flash, who knows how Macromedia would have handled it and maybe it wouldn’t have had to be removed from browsers under Adobe’s watch due to security issues.
I almost never see anyone mention Macromedia in relation to Flash these days, almost as if history has rewritten it to an Adobe thing.
> who knows how Macromedia would have handled it and maybe it wouldn’t have had to be removed from browsers under Adobe’s watch due to security issues.
Flash always was a dumpsterfire, and so were virtually all browser plugins using native code. There's a reason NPAPI was deprecated eventually.
The exception of course is ActiveX. There was no way to ever make that shitshow even reasonably safe, simply given how its execution model was.
It was kind of fun watching adult men say the word "ActiveX" out loud and in earnest though. DCOM with Apartment Threading just didn't have that same "Power Rangers Bad Guy" energy.
From a security perspective, ActiveX is a relic from days long past, when people could be reasonably trusted - an assumption that broke around the early '00s when "dialer" malware offered a first way to extract funds from victims.
From a developer perspective, I'm still sad that it went away. The old COM/OLE/ActiveX ecosystem was flexible to a degree nothing has never ever been since.
It doesn't matter per se if Figma is bought instead of an IPO. It does matter that Adobe was about to pay about one third the fair market price of Figma, and she successfully stopped this market manipulation.
If there are no failures how can you claim them?
What failures, exactly?
What failures? Tech has been Godzilla stomping every conceivable obstacle to total world domination. Its like half the fucking stock market.
Someone caught a shooting star in the palm of their hand one time and this happened.
What are you talking about?
One way to settle the question of whether Khan is right would be for the government to simply make competing offers in these situations, buy the companies, and shepherd them to IPO, or a buyer with fewer antitrust issues if that's not possible.
If the government is net ahead after a decade or so, then we'd know.
This approach to antitrust wouldn't work in cases like the Apple case, where the power is worth it to the company only because they can misuse it, but it would be a very fair and accounting-transparent remedy for the "startup gets bought by competitor" case.
This is a terrible idea. The government should not be in the business of buying large pre-IPO companies.
There is no need to bikeshed a new solution here. Antitrust law solves this just fine, as exemplified by this case.
We've got an awful lot of history on the periods in which serious regulators without perverse incentives attached to revolving door industry jobs competently and diligently refereed markets, and when big business has been successful in achieving what I downthread called "Goldilocks" regulation: just enough friction to new entrants, plenty of pliant former and future employees doing regulation in the interests of the established players.
We've got a lot of history on what happens when technology is acknowledged as a natural monopoly and guided through it's development, evolution, and dissemination through society for the global welfare: that's the entire 20th century friend: the transistor, the Internet, the laser, fucking Velcro.
We're living through a time when that treasure trove of public wealth (paid for by taxpayers) is getting captured up by a caricature of gilded age kleptocracy at the front row of the fucking Inaugeration.
We know what the outcomes are. I don't know why people who hang out on Hacker News are fighting the data on this tooth and nail. Maybe it's because Trump threw her out, maybe it's because they own a bunch of NVIDIA stock and like the status quo, I don't know.
The outcomes are not in fucking dispute in this case or the macro situation.
Terrible terrible idea with incredible potential for corruption and theft of public funds.
> design tools market stays competitive
Adobe killed their Figma competitor (XD), so the reality of the UI design tools niche in the design tools market is that Figma actually has a near monopoly. Sketch still chugs along, but its market share is negligible. Penpot is a neat idealistic community effort that is lightyears behind.
This is one of the reasons why Figma continues to tighten the screws on their userbase, who doesn't like it one bit, but continues to pay.
Now, this is all not to say, that it would've been any better with Adobe's involvement, more like lamenting the fact that Figma lived long enough to become a villain.
Figma has a near monopoly because it built the better product. This is the preferred outcome compared to Adobe broadening their monopoly not by building a better product, but just by acquiring/squashing their competition.
Monopolies aren't illegal. Preventing competition is the thing we want to stop. As far as I can see, Figma doesn't do anything to give themselves an unfair advantage or prevent other players from entering the market.
Figma had 8 funding rounds in 10 years, according to crunchbase. That is an advantage compared to other players on the market that do not receive VC. If it's fair or not, that’s up to everyones own standards.
It’s fair, because they earned it by building the best offering on the market.
Fairness doesn’t mean everyone gets funded regardless of their quality.
You do not "receive" VC, you sell shares (and control). You write as if it's some sort of grant that Figma uniquely got access to.
I think the more common term is to "raise money". But at the end, you receive money that you should spend. With strings attached, of course. That’s the nature of VC.
Yes but that's pretty common and in no way an unfair advantage.
Should the other players not have also raised VC money if it was such a differentiating advantage? Perhaps they should have sold even more equity than Figma did and raised more money if that would have been the difference maker.
Figma is also a company that starts with an "F". Whether thats fair or not is up to everyone's standards.
Adobe is in maintenance mode. They aren't willing to compete with figma because they have basically never had to compete with anyone since the 90s. They forgot how
Adobe would have killed one product regardless. If they had been allowed to acquire Figma, they might have killed the better one.
I don't see why the market cap proves whether she is correct or not. You'd have to compare it to the counter-factual of what the value of a Figma subsidiary would be under Adobe today.
This is not obvious at all to me. Instagram (bought for $1B) is probably worth ~700 B of Meta's market cap.
PSA that no regulator simply means the sharkest shark regulates. There is no such thing as no regulator. People will regulate. The question is who and how
What does this mean? If there is no regulator, someone else will use force to prevent voluntary mutually beneficial deals from taking place?
It means that markets organize somehow. Even black markets in prison have rules (and for all I know, sensible ones under the circumstances). The drug trade has rules and norms.
Cartels form and collude, the JP Morgans or Goulds of the world see excessive competition next to their neat steel or railroad trusts and decide to organize it. And sometimes this can even be an improvement (those old telephone poles with like 90 separate junctions just got too tall to be safe!)
But on average, the public would like (or should want) a say in how markets are organized, because it is both possible and lucrative to induce market failure. Big Tech is especially good at this (its arguably far more their speciality than technology is).
Markets are inevitable (try to stop them forming if you don't believe me), but market failures are generally not inevitable, they are generally the result of poorly refereed markets.
My definition of this (which apparently I'm now trying to popularize) is "power can never be destroyed, only moved".
If we destroy an entity that has power, the power goes someplace else and in the case of (democratic) government entities, it rarely ends up someplace better for us regular folks.
I'm not sure what you're saying. Are you arguing that breaking up monopolies takes power away from consumers?
I think GP is saying that nature abhors a vacuum in human affairs as well as in physics: the question isn't whether or not there's going to be a government or a currency or a regulatory climate.
The question is whether those things are going to be determined at a polling place by voters or in a smoke-filled room by gangsters.
I would have gone with corporation instead of gangster, but yes, exactly.
People so often rail against a government telling them they can't do something but so rarely justify they would be able to do it if the government was destroyed.
Who said I had anything against gangsters? ;)
But lets call it what it is: when a bunch of made men see a power vacuum and set up an informal clique with its own rules and loyalty tests while protesting "just a merchant nothing to see here"?
Thats like, the entry for gangster on the Wiki for the Sopranos.
That may all be true but I don't see how it relates. Adobe can't prevent figma from going public if it refuses their offer. It's an open market. Nothing stops new competitors from joining.
Only regulators have absolute power in this regard. I'd prefer decentralized power
Preferring decentralized power is like preferring decreasing entropy, who wouldn't want that but it's almost never going to happen, and even local, temporary instances of such are miracles of nature meriting arbitrary study.
It's concerning that you don't see this, but makes no difference to how the world works.
> Big Tech is especially good at this (its arguably far more their speciality than technology is).
Well, yes. But that does seem to gloss over the important part which is how they do it - hiring lobbyists and influencing the official regulators. If the frame is that someone is going to be the most powerful force in the market then sure, but the government setting it to be a particular body by fiat just creates a ripe target for corruption.
The history of the tech industry has been one of where if left to their own devices coders would create a thriving and tolerant software ecosystem and the main thing stopping them has been IP law. And a secondary thing stopping them has been government pressure (there has been a bit of a spasm recently because of the aftereffects of, effectively, systems set up to support things like Operation Choke Point, for example).
Assuming some semblance of the rule of law, Google & friends ultimately can't stop someone competing with them unless the government is active in the space the space too. More formal regulation is probably just going to cement their position further.
Time and again people make the utterly unsubstantiated claim that attack dog regulators like Lina Khan are actually good for big business and bad for the small guy.
Year after year, big business lobbies, bribes, cajoles, blackmails, whatever it takes to get rid of attack dog regulators like Lina Khan.
I'm sorry friend, history does not say what you think it does. History says that good outcomes come from either brutally regulated monopolies (ATT / Western / the Labs), public/private partnerships (DoD funding the Internet, basically every major innovation we coast on today), and busting the fucking chops of mega-trusts (JP Morgan, Gould, steel, railroads, telegraph, it goes on and on).
Why does big business hate aggressive regulation if it's "actually good for them"?
They like a Goldilocks regulation, a little friction to new entrants, a lot of discretion in the hands of pliant former industry people.
They hate Lina Khan.
If they hate Lina Khan, it's because she's liable to make demands on them without knowing anything about their business. In the worst case, her office turns outright extortionist, as the current administration is bent on demonstrating.
None of that conflicts with the observation that large, well-financed, entrenched players better at navigating regulatory obstacles than small upstarts.
False, wrong, mistaken, and other balderdash.
They don't have anything against regulators and they certainly don't have anything against dumb regulators.
They've got a little red laser dot on the forehead of regulators who don't want a payday after a term of "public service".
"Because we poor public servants are always looking for some fat, private sectors payoff down the road. But I'm not looking, and by the time they can pull the strings to force me out, they'll be ruined."
- Chrisjen Avasarala
https://youtu.be/yBFJGz5P_G8
That is one of the possible outcomes right? Producers have an incentive to collude and not compete with one another. They could create a consortium to fix prices, and use tactics such as acquisitions or _dissuasion_ to prevent new, more efficient competitors from undercutting their prices, thus distorting a free market equilibrium.
The consortium creates an oligopoly which prevents mutually beneficial deals that would have otherwise taken place in a regulated competitive free market between consumers and producers.
If there is no regulator, the company with the most money will use its money to prevent any deals that are inconvenient for it from taking place. Often those would be beneficial to the other parties or to the consumers.
Maybe it's not a great choice of words to say here "the large company regulates the space" but it's definitely a problem worth pointing out.
Yes. For example, Apple has complete control over their App Store. It's essentially a small economy in which they are the government, and it's a market they regulate with an iron fist. Because OUR regulators won't.
But they're dictators. There's no democracy, there's no voting, and Apple does whatever it feels is best for them. Just like a dictator would run their country.
There's plenty of mutually beneficial arrangements that Apple unilaterally struck down because they want to maintain their stranglehold on the market.
I think that's what the comment meant. Take it metaphorically
I cannot understanding your argument at all.
If you eliminate formal regulators (rules, laws, authoritative bodies), you haven't eliminated regulation or governance. Instead, informal forms of power take over—those who are most forceful, persuasive, or socially connected regulate what happens. This is the "tyranny of structurelessness": when no open, accountable structures exist, structure remains—it just becomes invisible, unaccountable, and often dominated by the "sharkest shark."
So, "no regulator" doesn't mean freedom from regulation; it means the emergence of undemocratic, unchecked power by whoever can grab and wield it.
I find people tend to get it when you raise cases of market activity outside the law: everyone knows the mob buys and sells things but there are still rules.
> This is exactly why we need regulators willing to tell Big Tech "no" sometimes.
At some point, "Big Tech" is really "Big Finance" in disguise.
If I suggest putting your net worth on black at roulette and it lands on black, does that make my advice right?
Khan forced the employees and investors to continue working and gambling on a company they might not have wanted to continue working for or gambling on. It doesn't really matter that the gamble succeeded in this case.
I'm pretty sure no employee wants to work for Adobe.
I'm sympathetic to a prohibition on big companies buying their competitors, but a 3x difference over two years seems too low to suggest that antitrust creates more pure business value.
First this is all hindsight now. We don't know the probabilities of this outcome vs. others. Figma's shareholders didn't at the time, which is why they chose to sell. Khan didn't either.
Second, 3x over two years isn't that much. There must be many opportunities in SV for all of Figma's employees and investors that could have given them a much higher return than that with much less risk.
I don't have this data, but one could look at secondary sales in the past two years as a measure of the increased risk and opportunity cost, right?
Any delay of people getting liquid impacts the creation of other startups, both by the Figma people who can now leave and do their own thing and for the companies Figma stakeholders would have invested in . This is super hard to measure but it is the kind of thing markets are good at measuring when they ask shareholders "sell now to Adobe or wait to IPO?"
This seems really good for Figma users, most of all. Most of the value destroyed by the acquisition would have been in the distortion and likely ultimate destruction of a company culture that made an insanely good product.
But those people are capable of going and making new products, and maybe Figma at its current phase is now too boring a thing for their talents, and should be managed by a more boring organization staffed by people who are slightly less able to make another Figma.
Who knows, but I doubt Khan (or any one individual or organization) is in a better position to assess the optimal delivery of what people want than the incentivized distributed intelligence of all the stakeholders and the people and markets around them.
Again, there are other reasons to do this that markets wouldn't quantify.
The lengths people will go to to avoid the facts on this are fucking remarkable. I'll let Opus explain:
"The Bottom Line
A 73% annualized return would:
Such returns are typically only achieved during: While spectacular, returns of this magnitude are extremely difficult to sustain and often involve significant risk."Then why did shareholders choose to sell?
In choosing to sell they decided the risk wasn't worth the reward.
If you were in their position, would you have sold or held?
Maybe they thought an IPO wasn’t going to happen because the market would be in bad shape or there would be too much regulation there.
Maybe they were seeing the AI boom on the horizon and wanted the capital out now to deploy there. They wanted to chase AI not hodl some “old” pre-AI thing. A lot of people think AI is going to render the entire process of which Figma has become a key part obsolete. (I don’t.)
Those are two things I can think of to explain this behavior.
Also some people like to get out when they’re ahead. “The world is full of rich people who sold too soon, not rich people who sold too late.” This makes sense if you are generally pessimistic, which many are for various reasons.
The shareholders chose to sell because it was a decent/OK deal for everyone other than the users of the software/society at large.
I have no idea why they agreed to the deal, one imagines a bunch of competing interests ranging from late D, E, F+ round holders, to founders, to influential employees. By the time a company is selling to a mega-conglomerate (in effect, a holding company) for 20 billion dollars it's pretty hard to un-grind the sausage on how a bunch of competing incentives got resolved.
As a founder? Obviously I hold unless I know something is rotten in Denmark and it's about to collapse like a Michael Siebel sale to Autodesk. Are you kidding? I've got a startup so successful that I'm already a billionaire and my choices are:
- let it ride, be a star, chart my own course - go work for fucking Adobe lol
Yeah, easy one.
If I'm an early VC or a limited partner with some structural reason to need the cash before some accounting period ends or something? Maybe I want the sale. Maybe I own a bunch of Adobe stock and I want the consolidation. Maybe a lot of things.
Don't know why the deal got agreed to pending regulator approval. If I'm an already richer-than-God founder, or an employee who can either get full value for my shares or get Windsurf'd in some preference shenanigans, or most anyone else involved? Then fuck Adobe.
On the flip side Khan was wrong about iRobot. The results were layoffs at iRobot and now Roombas are made by a Chinese ODM.
As is the case with many startups, especially those with a limited product portfolio, it's rare for them to exceed their IPO valuation in the future. So, I think we'll have to wait and see if Figma can continue its growth.
the only thing I will refute is the $60Bn market cap is due to IPO. Once they start reporting earnings, in a year or two once the hype dies down we will find the true value.
a lot of tech darlings have been decimated by the stock market. & Adobe can still buy them once they're public, maybe even cheaper than $20bn.
It's 43 already. Let's look at their first quarterly call.
founders would ultimately benefit from “a world in which you have six or seven or eight potential suitors” rather than “just one or two.”
Real talk Lina
Or in this case, none?
The point is that Figma is now another one of these suitors.
yep. So perhaps don’t block every potential transaction on flimsy pretense? Icing the transaction market seems like a great way to scare off potential competing acquirers in the name of social engineering.
I don’t know. All I know is that Lina is out of power, and suddenly we see an upswing in M&A. Coincidence, I’m sure.
Problem is, by the time she got into power, everyone had consolidated so icing the transaction market was pretty much only outcome.
Lina Khan was entering a market that was deeply flawed thanks to decades of bad policy.
> Problem is, by the time she got into power, everyone had consolidated so icing the transaction market was pretty much only outcome.
That's the talking point, but it doesn't survive even 30 seconds of thought. Yes, the biggest tech companies are very big -- debatably too big! -- but there are easily hundreds of smaller cap companies that you probably haven't heard of who are big enough to acquire startups. If anything those companies are the bulk of the M&A market, and the FTCs actions shut it all down [1].
The problem with the Khan view of the world (IMO) is that it was so fixated on the killing the whales that it didn't realize it was killing the other fish.
[1] By way of explanation: just by the nature of software economics, if you're big enough to make acquisitions in some niche industry, you probably own that industry (or are at least a duopoly player) and are therefore concerned that the FTC will target you.
What is your argument? That smaller roll ups could not happen and that was bad? Alot of smaller M&A in tech space was bad, it just was not Figma buying Adobe bad.
I think startups exiting via M&A is part of the problem. It creates perverse incentives which is basically fuck profits, squash all competition while lighting money on fire and THEN when you are so embedded, sell the company so original investors get their money back and new owners screw over everyone knowing there tunneling out of your really thick walls is going to be extremely difficult.
In a model where company had to turn a profit and investors would slowly make their money back, it would probably be net win.
> Alot of smaller M&A in tech space was bad, it just was not Figma buying Adobe bad.
Yeah, you're gonna have to defend that assertion.
> I think startups exiting via M&A is part of the problem. It creates perverse incentives which is basically fuck profits, squash all competition while lighting money on fire and THEN when you are so embedded, screw over everyone knowing there tunneling out of your really thick walls is going to be extremely difficult.
I hate to burst your bubble, but the chances of a small startup getting acquired while "lighting money on fire" is basically zero. You have a particularly narrow-focused lens on startups that is driven by a few high profile stories. When you're on that sort of YOLO rocket ship, you're not looking for acquisition -- if it happens, something went wrong.
So yes, part of my argument is that smaller roll ups could not happen, and that market looks nothing like what you're describing.
I'm not a Khan fan, like, at all, but by the time you're at the point where the FTC is getting involved in your M&A, you've crossed the threshold of success; all the signals to future startups about your path being promising have been sent.
In fact, if future competition is contingent on successful M&A activity, that’s a sign of such deep organizational rot that you either have to radically transform management or ride the company down.
Not everything needs to last and companies that can’t radically transform their management culture to enable innovation and competition deserve to wane until they’re in a steady-state or they go under to allow for a new competitor to rise.
I disagree. A lot of smaller acquisitions went away during the Khan reign, and from what I was hearing it wasn’t coincidental.
Basically the random and aggressive nature of it was having a chilling effect on all M&A. Why would you go thorough the hassle of a small acquisition (as a buyer) if you knew there was a even a 10% chance that the FTC was going to take an interest?
Scrutiny scaled with the size of the buyer. When a top-five tech company is the buyer, it doesn’t really matter how small the purchased company is. Many of the most concerning acquisitions were small… Instagram had 13 employees when Facebook bought it.
When a huge company can easily acquire basically any small promising competitor, that is exactly what Khan (and many others of both parties) consider a problem. Chilling those sorts of deals was indeed the point.
But if the buyer was, say, the 312th largest tech company in the U.S., the chance of FTC intervention was essentially zero. If buyers in mid-size range were pointing at Khan to explain an M&A slow-down, I personally would not take them at their word.
> Scrutiny scaled with the size of the buyer.
Maybe, but it doesn't take a lot of scrutiny to scare the crap out of you if you're a major player in some niche industry with a few hundred million in ARR. Which is most public companies.
That's the perverse thing about this stuff: the biggest players are probably the least sensitive to the regulatory burden.
> it doesn't take a lot of scrutiny to scare the crap out of you if you're a major player in some niche industry
This "scare" characterization isn't how anybody thinks in reality. Everything is a cost benefit analysis, the risk that you'll come under FTC scrutiny is going to be a factor weighed against the potential gains of the acquisition. Companies understand their own place in the market relative to their size and dominance, the overwhelming majority of companies know they basically have nothing to fear from the FTC ever.
Not even a little. The biggest players are the most sensitive to this kind of thing. Imagine an independent Instagram and Whatsapp running around. That's a fucking nightmare for Mark.
It is precisely the companies that have lost the internal capacity to innovate (Meta) that have the most to lose and the companies that were going extremely well already (Instagram had a bunch of suitors and could have chosen to punch out later in the process, I heard this from Krieger in person) who have the most to gain.
The losers here are people who can buy and hold FAANG as a basket and just sit back and let the market transfer all wealth to pensioners. The winners are founders, employees, new startups, consumers, cities with more offices in them, that's a partial list.
> Many of the most concerning acquisitions were small… Instagram had 13 employees when Facebook bought it.
Instagram was bought for $1B. Whether they had 13 or 1300 employees, a $1B acquisition isn’t small in an anti-trust sense.
Do you have a source for these claims? Specifically smaller M/As being skipped or killed.
Figma's market capitalization as of the close on Friday is 59 billion and change. Adobe offered 20 billion.
Because the shares were sold to the public and now trade at three times what the absolute ceiling on their value would have been, and because everything from early options to later stage RSU equity comp structures will now convert at the full market valuation, the preference ladder and ratchets and all the other ways you can get Windsurf'd as an early employee (sometimes even a founder!) don't kick in, so the rank-and-file equity holder is rich now too.
Future founders now have another well-heeled public suitor.
If you even remotely believe in Hacker News style "tech startups make people rich and this is good" stuff, then this is a grand-slam home run win by any measure.
Maybe time to re-evaluate what you think of Lina Khan's policy agenda in light of data on the outcomes? It's of course possible there is some other data point you have in mind where it went poorly and you keep your opinion. But if that opinion was of the bland "regulation is bad for tech startup people trying to get rich" variety, seems maybe time for a re-think?
I agree with your general point, but Khan was excessively trigger happy in a way that highlights exceptions to your observation. E.g. blocking Meta acquisition of Within was nonsense that did nothing to validate the concept of VR fitness as a promising category (anytime soon)
Edit: Within, not Withings
Just because VR fitness was a flop hardly proves your point. Most people expected that to happen.
Her point is that m&a isn’t the best thing for the economy or founders. Unchecked m&a creates cannibal capitalism where one mega zombie firm scoops up all competition.
An interesting read on this kinda thing in South Korea: https://www.reddal.com/insights/growing-korean-smes-and-star...
Possibly interestingly, it would have been good for _customers_ of VMware if their acquisition by Broadcom had been blocked.
The VMware shareholder's value though probably went up from that deal.
Yet there are plenty of examples of monopoly or near monopoly businesses getting their butts handed to them by startups.
Yahoo, BlackBerry, Kodak, Nokia, Sears.
So it’s clearly not “once you have a monopoly it’s game over for competition”. Markets aren’t stagnant, and as they change it provides opportunities for new competitors to do that “new thing” better than the monopolies.
And how many businesses do you estimate have been killed or eliminated because of unchecked m&a? Expanding the data set to include non-tech industries indicates strongly that it's not always the case that a big monopoly will eventually fail. Healthcare for example is filled with instances of bigger companies acquiring smaller ones and killing the competition to their product, a quick Google search will show you that.
Can you give me a specific example? Last I checked no insurer has more than 30% market share.
With the exception of yahoo (which is still a large company I should note), None of those examples were killed by a start up competitor. They were killed by foundational technology shifts that were orthogonal to the industry. Yahoo, is the closest example with google, but kind of proves Kahns point in that a competitor they tried to buy—-google—- refused to be acquired and then innovated them out of the market. Imagine how much worse the world would have been if yahoo bought google and mothballed it. Blackberry and Kodak were both put out of business by apple which was a computer and software company not a phone or camera company. Sears was bought buy Edward Lampert, an private equity bro that fancied himself the next Warren Buffet but in the end gutted it by selling it for parts to keep the cash for himself
> They were killed by foundational technology shifts that were orthogonal to the industry.
That's the point. Markets aren't stagnant. When changes happen, monopolies are susceptible to being unseated.
This is very wrong because monopolies destroy the very competitive and innovative landscape that is necessary to unseat them, and in the process impose massive social harm in the form of higher prices, worse products or services, increased concentration of wealth, reduced employee compensation, political corruption.
America experienced uncheck monopolies during the Gilded Age. Most thought that rapid industrialization, economic growth, and technological advances would have resulted in enough competition to create an economic utopia. Instead, even while the United States experienced a surge in wealth and prosperity, the underlying reality of political corruption, social inequality, and labor unrest created a nasty, brutish existence that was only solved when the Trust Busting Roosevelt's transformed America by breaking up the monopolies.
If you like free market capitalism you can't be in favor of monopolies, and if you dont want monopolies you need STRONG enforcement of antitrust M&A regulation. We are well past a correction since Regan stopped antitrust enforcement. I would argue that all of our political chaos since the 1980's can be traced primarily back to that single decision.
Lina claims she let the vast majority of deals through. I wonder what the data shows.
>While her aggressive stance led to intense criticism from corners of the tech industry, she defended her approach by saying that only a tiny percentage of deals received “a second look”
Even if "a tiny percentage" is 1%, that's a huge amount more than a normal FTC.
Except the majority of the Figma IPO was captured by banks due to it's severe pop. So while everyone made a lot of money, the overwhelming majority went to the underwriters [0].
The founding team at Figma would have gotten a similar amount much sooner if the acquisition was let thru OR if the underwriters didn't screw them over by underpricing at $33.
[0] - https://pitchbook.com/news/articles/figma-ipo-pop-spotlight-...
The IPO "pop" is not captured by banks: it's captured by the banks customers that pre-buy at the IPO price.
Basically, before an IPO, the underwriters take the company on a "roadshow" in which they pitch the IPO to potential buyers.
There's a hierarchy of these: the best are very large buyers that place large orders and trade seldom. Pensions, sovereign wealth funds, etc.
Those buyers then make offers ("I'll buy 50MM at $100"), which the bank uses to set the IPO price. The bank then gives them an allocation.
If you're a high (10MM+) net worth individual that banks with one of the underwriters, you can often get an allocation in an IPO. The richer you are, the more of an allocation you can get.
When an IPO pops, it's these people that get the benefit.
The benefit for the company is that the stock is owned by prime people the bank selected: you crucially _don't_ want to just sell to the highest bidder if they are going to dump the stock immediately after the pop (or that's the theory, at least). They have stable shareholders with a vision aligned with management.
The benefit to the bank is that they get to reward their customers with access to profitable trades--but the bank itself does not profit.
Seems undemocratic. Everyday folks can’t buy even though they would want to
Capital and Finance was never democratic. And I doubt it ever will. It’s literally those with more money have more power.
It’s just a bulk discount: everyday folks simply can’t be relied upon to buy hundreds of millions of dollars the stuff and that’s what the company is selling. Little fish can buy in, but only if the big fish provide liquidity in the first place! In other words: someone needs to be paid to sell it and big buyers need to be incentivized to buy it.
Ultimately the IPO price is driven by supply and demand with a limited supply: price will go down (a bit) when the lockout period ends and more supply comes online.
Saying "big buyers need to be incentivized to buy it" is just another way of saying it's undemocratic. The democratic version would be that there are no big buyers and your IPO gets however much money it gets from small investors and that's it. There don't need to be any companies with a $45 billion IPO.
I feel like complaining about things being "undemocratic" is like complaining about a software system's architecture that "it's not microservices". Not everything needs to be - and some things would be actively harmed by making them "democratic". I wouldn't want drug approval to be a democratic process.
Raising capital can be done "democratically" if the founders want to. They can use direct listing. IPO is an option, not an obligation.
> Not everything needs to be
Not everything, sure. But this one more than most, needs to be democratic. If you don't see the wealth inequality today in which the 1% own 50% of the worlds wealth, and you don't see where this is inevitably going to lead, then I don't know what to say.
Stay woke at r/latestagecapitalism
I'm pretty critical of how late capitalism is shaping up (I pretty routinely get called a leftist radical here on Hacker News which is increasingly Thiel-Aligned Psycho News).
With that said, lots of options exist for a company like Figma doing a public listing: when you're the belle of the ball you can list how you want. Google did a pretty unconventional Dutch Auction thing IIRC.
In this instance the Figma folks decided they wanted an IPO pop and had the underwriters set it up that way. They were paying some premium (to institutional investors) to get one of many intangibles that are attached to that (like a bunch of press about how hot the stock is).
In a world where it was a no-brainer that this was going to be another mediocre Adobe product line rent seeking from here to the horizon, I'm pretty OK with how this turned out.
And when Google did it, it was considered a disaster
Because when Google did it, it was a disaster?
https://www.cnbc.com/2014/08/18/pisani-googles-ipo-was-a-dis...
And “rent seeking” isn’t “The company is selling a product or service they make in a manner I don’t agree with”
> democratic version would be that there are no big buyers and your IPO gets however much money it gets from small investors and that's it
…you need money to be a small investor.
It makes no sense in the digital age. It costs almost nothing to solicit demand curves. And you can still do wasteful roadshows and presentations for special buyers.
Why can't a bunch of little fish provide the liquidity? Especially since they can provide more without the bulk discount?
It is, it is yet another of the constructions that increases inequality and makes rich people richer.
Yes, an ipo is volatile, it should be! You are literally pricing a company.
Sigh, regardless, Thisnis again one of these ways where free markets are being smashed by monopolistic behavior - you can only be a part of the game if you already have enough.
I thought IPOs don‘t generally pop though this one has?
You can buy VTI which takes about 7% allocation in every IPO, but I heard there is research by some folks at Harvard and practiced by dimensional fund advisors‘ funds that buying IPOs ~two years later is slightly better?
It is undemocratic, but it is capitalistic.
Even Adam Smith would argue that monopolies are bad - the fact that you are deacriminated upon to buy capital is the direct opposite of capitalism.
I don't know why you're getting downvoted. You clearly read Smith and the downvoters clearly didn't. An Inquiry Into the Nature and Causes of The Wealth of Nations is like an anti-rentier pamphlet in most places.
Ignore the haters, keep being right about books.
Adam Smith meant free from rentiers (unearned income) when talking about "free markets". The term was appropriated by the neoliberals to mean free from government and ignored the original meaning.
Not all IPOs pop
What makes it undemocratic?
What do you propose? A speculative free-for-all like with crypto meme coins?
This is actually a funny thing for risk mgmt because a trader will say "I want a bajillion shares in this IPO", risk notice it and say "a bajillion!?" not realising that ask for 10x more than you think you'll get allocated.
You also sometimes need to tactically trade with worse brokers so they will feel nicer during an IPO.
Why don’t more IPOs do an auction to set the price? Trying to determine the “right” price ahead of time seems like a really bad way to do things.
An auction for IPO price is much easier to manipulate and can lead to much volatility. Pre-allocating to the entities that are not expected to sell quickly or participate in pump-and-dumps (pension funds, etc.) is considered a better long term strategy for the company, as the sister comment says.
Didn't Google solve this with their dutch auction?
Yes. But Google being Google it got top notch planning advice from world class auction experts that Goldman pulled in to advise them on the IPO.
Most companies without such expert advice could step into some pitfalls. Just a guess, I am not an expert, but if my company were doing an IPO I would prefer it not to play financial games to eke out a percent of IPO price and instead focus on long term price stability to become a solid stock. My 2c.
Figma's stock quadripled in price from 33 to whatever it is now. Not saying it's good or bad, just that those gains must have been nice with effort akin to staring spreadsheets a while and babbling in meetings.
What makes an auction easier to manipulate or more volatile than a stock traded on the market?
Likely nothing once the stock is actually trading with some history. But for initial placement wall-street-bets action could be very disruptive.
The company wants to avoid sharp drops after the IPO, as those encourage employees to get out ASAP, which increases the volatility and discourages large, stable investors.
Price discovery is impossible to do except on the market. You can call up everyone you know and ask them, but there are limits to forecasting.
We all knew the Switch 2 MSRP, but we had to wait for launch to see the eBay Buy it Now price.
In this case, the banks are Best Buy. They sold out quickly! Other market players are eBay sellers: the ones that knew what they were doing made a killing selling to consumers.
People like it when an IPO pops. It's a good news story and it makes all the banks who participated happy. If it was priced perfectly it'd get reported as the stock was flat, if it's a bit underpriced then you get headlines as the hot new stock that's taking off
Are headlines really worth billions of dollars?
I think Altman or Musk might think they are. At least they are sometimes.
So blocking a sale at a $20B valuation so the company can IPO at a $19.3B valuation 3 years later (a loss of $700M in value over 3 years) is a success?
Yes? Not everything is about capital owners and their profits. There is a lot of importance in the competition in the market and customers having choice of best products around. Figma competing with adobe is one of the examples.
Even from capital point of view everyone is now forced to make their bet - either on adobe or figma, so it’s more efficient capital allocation too.
But how is the IPO a sign of success in that case?
because it means they stayed independent and didnt get absorbed by a major megacorp that is already notorious for trying to corner the market of an entire industry and then over-charging
They were independent the whole time and it wasn't considered a success. I suppose IPO is an indicator they might stay independent longer. Now that they are in the public markets even Adobe can buy a few shares. I just don't feel like the IPO event has brought any particular benefits to the consumer and Khan is incorrectly looking at post IPO stock price bounce as some kind of financial indicator that it was a better deal for the company.
[flagged]
They are following, they just understand it better than you do.
I am trying to explore the ways in which the IPO, in particular, separate from the continued operation of the company, is evidence that blocking M&A is good. I have seen nothing from you supporting Khan's position that the IPO is vindication for blocking M&A.
Her particular claim was that it was "a great reminder that letting startups grow into independently successful businesses, rather than be bought up by existing giants, can generate enormous value.” However, the IPO price was $700M less than the value the company was at three years ago, which, given opportunity costs and inflation, would not seem to be an indicator of enormous value being generated.
The current market cap of Figma is around 60B if I read it correctly. Yes, not all of it was IPOd, but from purely this perspective it was hugely successful. But then it’s also unfair to compare this market cap as is, because I would expect Figma as separate entity will grow better than Adobe as a whole. Meaning that people who’ll hold Figma stocks right now have a chance to have better returns in a future.
The amount of money in the pockets of the owners (no matter who they are) is not what antitrust is about.
That’s unrelated to the IPO.
How? A VC-backed company must have an exit path for its investors at some point, and this exit is either:
- sell the company to a bigger player, reinforcing their dominant position (often close to monopolistic in tech).
- go to IPO, keeping the company independence and fighting power concentration.
There is a third option. (According to some LLM that will remain unnamed Vungle, Wrike, and Acquia are textbook cases of direct VC‑backed startups being bought out by private equity without an IPO or corporate acquisition. Not verified.)
That's true, but PE is negligible in tech. And if all you can rely on for exit is private equity then you'll end up with a tech scene as dynamic as the European one…
Figma is a web app. Web apps are fundamentally a hyper-competitive market because literally anyone can just throw something up on the internet if they think there is a need for it. The risk here of Adobe overcharging for it is rather low - someone would build a cheap clone.
People keep coming up with theories that companies are about to corner the market then over-charge, but the theories vastly outnumber the cases where it ever happens in practice. It is almost always that the biggest companies in the market are just more competitive (lower prices or higher quality) than all the others.
That is not what would happen. Figma has built a huge moat through its brand by now, and most customers would continue to use it; some of them probably already have an Adobe subscription anyway, so Adobe would naturally try to make it easier or more integrated for these customers.
A clone would need to start from scratch and compete against a huge corporation with virtually unlimited funds.
> It is almost always that the biggest companies in the market are just more competitive (lower prices or higher quality) than all the others.
That is almost always not what is happening. The big players extinguish any would-be competition early by buying them or throwing sticks into their wheels. They can afford to strategically make a loss in a given area to underbid the competition by overcharging in others, or relying on synergies. There are numerous examples where small teams built highly qualitative alternatives to corpo stuff, but had to compete against the network effects and brand names instead.
1. Figma actually lost money because their acquisition price was higher than their shares sold in the IPO.
2. Yes, Figma luckily IPOed in an extremely hot market
Getting a bit lucky doesn't mean this was a success overall. The conclusion has many more years to go before it gets written. Either way, I don't like the over reach by Lina Khan.
What do you mean over reach? It's the FTC's job to prevent consumer market consolidation. Adobe is already too big and they already abuse that to the detriment of consumers. Buying Figma would make that even worse.
A company exists primarily to make things for consumers and the FTC ensures they do that fairly. The IPO, stock price and everything else is secondary.
It's not arbitrary, there are many reasons to block the merger and they were explained in depth when the decision was made.
Also, the EU and UK also made it clear they were against the merger. In fact, if you look at most reporting, the EU and UK seem to be the main reason they gave up, presumably because they know the US FTC has no teeth, even with a competent chair.
Even if EU and UK wanted to block the deal, it doesn't make it the right thing to do. Free market.
I don't have a popular opinion on HN. I don't think Google should be broken up because new technology has made Google search much less needed. I don't think Apple should relinquish control over its app store because it's Apple's platform and they should do what they want. I don't think Adobe should be stopped from buying Figma because even if Adobe buys it, maybe some rich ex-employees might quit and make another competitor or make an open source alternative. Who knows.
People on HN wants the government to weaken tech companies but not when it's the tech company they're working in.
> Free market
Free market requires maintenance. Laissez-faire is a lie and always has been.
If you let all the companies consolidate into mega monopolies who have a stranglehold on the market, where is the free market?
Without regulations (which are laws) Dominant companies would just send gangsters to break up rival businesses. They still do that today, but through different strategies e.g. price dumping, where they operate at a loss in order to squash competition, then proceed to hike up prices and extort as much value as possible.
For someone who believes in free market, how is it acceptable to have consolidated monopolies? The market is free when there is competition. If there is no competition there is no freedom. Of course I know that for many "free market defenders" "competition is for losers" (was it Peter Thiel?), and ultimately nobody cares of the abstract value of freedom.
Monopolies are natural in highly technical industries. But monopolies don't last forever. New technologies wipe out monopolies all the time. ChatGPT is disrupting Google search monopoly. Solar/EV is disrupting oil. Tools like V0 is disrupting Figma. ChatGPT itself is disrupting iOS and Android. The list goes on and on and on.
You are mixing industry and company. LLMs are overtaking Google search (I.e., internet search which is a monopoly), but it doesn't have to be chatGPT (I.e. openAI).
In any case, it's irrelevant they are not eternal (especially if we go from monopoly to monopoly), the point stands: if you have a monopoly you don't have freedom and free market doesn't work at all.
“Solar/EV is disrupting oil” — where exactly has solar/EVs disrupted oil without the benefit of (wise, IMO) government intervention and subsidies?
My point is that is is the right thing to do and multiple countries' regulators agree. Monopolies have proven themselves to be bad and consolidation is how they are created. The "free market" (as if there is such a thing) does not take care of this, because it's not profitable to compete with such a powerful incumbent. Any attempt to compete would require insane capex and have a higher price tag for consumers, who would likely have to pay it not instead of but alongside the current incumbent's price, which very few would accept. If instead, you intervene and block the merger, the company can (and is incentivised to) grow and branch out, competing with the one that tried to acquire it.
Obviously this is a YC forum and many people have a startup bias, but I'm nowhere near that scene. Many startups do even worse things than some of the big guys, because they aspire to become them. The "burn investor money to get market share at a loss, kill all competition, become a monopoly, then enshittify and make infinite money" strategy wouldn't be nearly as effective if we had proper antitrust enforcement.
I, too, think we should just let rich people do whatever they want!
They lost money (sort-of) because the market cap was $700M less at IPO. The amount of shares sold in IPO is irrelevant.
I said sort-of because the economics of this is more complicated. Investors lose their preferences when they sell in an IPO, so this is probably better for common stock holders.
Who is “they”, who lost money?
I don’t think 19.3 B is their current market cap, it’s only what was sold at the IPo. Anyway, 19.3 instead of 20 would have been no big deal IMO
Adobe certainly lost money, because they have had to compete against the better product, so have been able to charge less for their own offering. And will presumably continue to do so until further notice.
Any employees who would have been swiftly laid off after the acquisition should certainly be glad for this outcome. They still have jobs, and if there are layoffs after the IPO it will be less dramatic. If they had equity, they probably got a much better deal in an IPO, especially if they sold some of it off after the “pop”.
Remember when HP bought palm and them proceeded to lay off the entire palm staff and kill all the palm products?
The market works best with competion. It's better for the workers, the customers, society and innovation in general.
A giant monopoly buying potential competitors is bad for everyone other than owners of that giant monopoly.
Yep, and because HP did that, we now have no mobile smartphones. If only the government would have prevented that!!
Caplan said it best. The market is great at doing good things that sound bad. The government is great at doing bad things that sound good.
Imagine a world in which Internet Explorer is the only browser around. That's what would happen without government intervention.
Regulations are literally the only thing slowing down the corporate dystopian future.
The idea that government regulation created chrome is so bizarre I simply have to discard your comment out of hand
Its market cap is about $58b right now. Tripled in three years!
But the company only sold the shares at $19.3B.
But they also only sold a very small number of shares at that valuation, vs all of them at $20B to Adobe.
this is the answer
Right, which gave them 19B (ish) to play with and they are an independent competitor to Adobe.
Mergers trigger layoffs
Figma raised $1.2B in their IPO. Total shares listed != money raised, not by a long shot. Most shares are just to give liquidity to existing shareholders of the company.
The employees will have to wait 180 days (at least that's the standard) before selling any shares, so they usually feel the effects of a "bounce".
If they have to issue shares the higher valuation is significant
Why would Figma have sold to Adobe if they were not paying a premium, assuming they’d grow?
I can understand you looking at the headline valuation but as an independent company traded with lots of potential to grow with AI tools their stock will probably double… a quick Google appears to suggest a 250% uplift from the IPO price so the company would potentially have added $58bn (the figure I’ve seen quoted) to Adobe’s bottom line.
Lina Khan was right at least on this merger!
Yeah, because now it's not owned by Adobe, who are tanking their own stock price.
Figma actually IPO'd at $27B (not $19.3B) and is now trading at over $40B market cap, representing a significant premium over Adobe's $20B offer.
The IPO only sold a few percentage of their shares. Even if we assume they sold all of them at opening price, by close the company and employees still hold like 80% of their shares that are worth triple what Adobe would have paid. Besides, antitrust is also about consumers, not JUST about businesses. We will all benefit immensely from real competition instead of having Adobe continue to dominate the market. We're talking about Adobe FFS, they have some crazy prices and shitty dark patterns around trials & cancellations.
Yes, otherwise we get no “free market” and everyone looses a good graphics tool as an option.
We'll see but post-IPO their valuation is $58b, so it's not clearly wrong
But also as you said this is 3 years later, which is a long time in the tech business and all sorts of things have changed, positive and negative... so she's not clearly right either...
IPO valuation is pretty much always set to undervalue so it gets a good pop(1). The market cap after 90 days of trading (generally speaking when insiders lock-up provisions expire and there is no longer a limit on the number of shares that can be sold) is a much better estimate of the actual value of the company. We don't have that yet, but right now the stock is ~3x the valuation that Adobe was going to buy at. Every equity owner is currently booking this as a win. We'll see what the price is when the lock-out provisions end, but right now definitely the shareholders are glad that they didn't merge.
I know that because if the metric you cite was something that the investors and managers cared about, they could have done other things to boost it (see footnote 1). They didn't, ergo they don't consider that metric to be a useful gauge of the company value. It sure looks like you tried to find the worst performing metric to claim that there was a loss, when so far this has been a major win for the shareholders(2).
1: If you don't want this and want to IPO at the highest valuation, you do a direct listing like Spotify did, or a SPAC reverse merger like Trump Media did. But there are reasons that the vast majority of companies choose to do a traditional IPO. For most companies, this is a one-time transaction that will make the managers very very rich, and they want to get the best guidance on navigating it- and are willing to pay handsomely for that guidance, since this is the only time in their lives they will be CEO for a major company that is starting to list. So they follow the IPO/greenshoes/pop route.
2: The most important nuance on that statement is that it took them a year and a half to extract that extra value by doing an IPO, and now they are exposed to market risk. We will have to see what the market conditions are like in another few months when the lock-ups expire.
I’m not especially in favor of all of Khan’s actions but this was an accretive acquisition prospect for Adobe in a way that makes it worth more to them vs as a standalone company. Think how Urchin Analytics was worth a lot to Google but less by itself.
Also, Adobe was massively overpaying, arguably even if you consider that. Even if you assume it was due to seeing Figma as a huge competitive threat the stock nosedived due to the acquisition price.
You do not understand how IPOs work. They only sold a small number of shares (about $1.2B) in the IPO. That’s why it’s called an “initial offering” of shares.
Investors can feel free to hold onto their remaining shares and sell whenever they want, outside of a window following the IPO where they can’t.
Yes, more competition is a success.
Clearly yes
More companies going public, earlier is better for markets and society.
Having companies stay private growing from 0 to 100B value allows VC bros to capture all the growth and then unload onto the public via IPO or selling to a larger BigTech firm.
> More companies going public, earlier is better for markets and society.
I would disagree. Japan is a good example of a market where there are a lot of small public companies and they're largely held by the founders. There is not enough share holder pressure and these small public companies are often barely profitable and run poorly. I am sure there are other markets that are similar to Japan where there are publicly traded companies without enough buyers or liquidity or transparency, etc.
I wouldn't automatically say this is bad. If the money that would end up being more profits percolates throughout society, employees, communities etc., and even the founders themselves (as opposed to concentrated capital), it is actually fine and could produce a healthier society. On the other hand, I grant you that it might (also) feed corruption. But then, I wouldn't bet on concentrated capital not being corrupt as well.
Japan does not have a growing stock market index or economy. So Japan with aging population is not a good example. It does not grow in real terms. It's just an old peoples country at this point and for the future. Nikkei performed bad for decades
If you mean specifically the case of VC companies, this is true. I think the opposite is the case when we’re talking about “naturally grown” companies that didn’t take on serial investor money.
> then unload onto the public via IPO
this implies they're unloading at a valuation that is higher than it is worth. If so, why do "the public" make the purchase?
Have you met retail investors? Meme stocks. 0DTE options. NFTs. ICOs.
It’s called FOMO.
What a stupid comment at the end of the article. The vindication is of having the company exist in the market in such a way as to encourage competition.
"Figma is a massive success [...] because of the company’s innovative growth"
Given that this sell side analyst defines success as growth, this seems rather like a tautology.
My experience with mergers and acquisitions is that it's akin to keeping a warm body on life support. When I worked at a company that did a lot of M&A I was sitting around like, "Why couldn't you have just built that?" When I worked at a company that was recently acquired and went through the merger process I was like, "wow I see why you bozos would've never built this yourselves." That isn't to say there aren't companies that do them well or there aren't places where it makes sense in an ultra-competitive landscape but I'm curious - when was the last time anyone really considered tech an ultra competitive landscape?
Post-2015 other than large language models this industry has mostly been riding on intellectual property consolidation. That's basically Lina's point; nobody actually benefits from this - not customers, not share holders, not the American people. The over practice of M&A leaves a small pool of winners who are not the kind of people that post on or read this forum.
The only ones that benefit are the executives from temporary boosts of revenue numbers hitting targets for their bonus payouts.
>nobody actually benefits from this
The secondary market drives the primary market.
If you mean the ones transacting in derivatives, no, they don't. The US market isn't India where the size of the secondary market was bigger than the primary market. If you mean that financial markets drive real markets, that's also wrong. While yes, certain products need a infusion of cash to get to market, that's not the same as having a company acquire the possibility of a new product and just sit on it.
You could just look up what primary and secondary markets meant without speculating and chiming in with irrelevant takes.
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Buying a company for its customer base is rarely good for the customers, though. That's the main point, I think. Why should society allow someone to take control productive entity simply so they can extract more value from it? There needs to be some value for the customer or the public as a whole for that to be a good thing.
If I build a company I should be able to sell it to whoever I want for any reason. It’s my company
A "company" is a legal framework that we, society, has decided is allowed to exist. That also means that we are allowed to put any requirements and restrictions on it that we like. The health of our society is what matters, not the wealth of any particular founder.
Yes and in our democracy I can advocate for stronger property rights including over ownership of companies
Yes, but a lot of society will advocate against that.
"your company" is an abstract idea in a social framework forming the interactions of many other people. Many decisions are delegated to you by that framework, but it is not a fundamental absolute.
I accept we live in a society which decides at some arbitrary point that my property becomes the collective’s. However I philosophically disagree with this present state of affairs
Ownership is a useful framework for sure, but if it comes at the expense of destroying competition, I think we can agree that's not healthy for the economy and society as a whole.
I disagree with the concept of “monopoly” or rent seeking in a free market. And the only way a market becomes non-free is with government regulation
The world has never, ever seen a free market, and probably never will.
The idea that completely unencumbered markets would actually give good outcomes for society is a complete fantasy.
It appears to me that wherever we allow market forces to exist we get better results
If companies get large enough, you no longer have a free market. You simply have a company so dominate and powerful, they can undercut any new company or product. Not on merit or offering a better product. Purely based on size and its entrenched position.
Let's say company A is monopolizing a market. New company B finds a way to make company A's product providing exactly the same value, except half as expensive. A healthy market would reward company B and consumers both by allowing that innovation to spread, providing a return for those that invented it and a cheaper product for consumers, leading to greater prosperity for society. However, in the market you speak of, company A can simply use their orders of magnitude more wealth to undercut company B for a time until they go bust.
What incentive is there to innovate, to improve, in a market that doesn't reward it?
Not for no reason at all, just not economical or innovative or supporting the customers.
It is all a dog and pony show now to chase the investors while centralize and concentrate wealthy in the hands of very few.
Edit: do think we ought to promote using Penpot type of alternative to proprietary counter part.
M&A deals are analyzed pretty closely and there (usually) has to be a convincing argument that it is economically or strategically accretive to the acquirer. It's easy to call them all morons from afar, but I think it just highlights how difficult it is to pull off successfully. And when it is successful, it's always an obvious no-brainer in retrospect.
Anecdotally, I know someone that spent two years intentionally sabotaging an M&A deal that would replace his internal product and team in a company. He and his colleagues were successful and everyone thinks the acquirer was a dumbass for doing it, but with more knowledge about the misaligned incentives it starts to become more clear.
Adobe XD, C#, Microsoft Teams…
Instagram, Whatsapp, LinkedIn...
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In context, Lina Khan didn't have authority to regulate non-American entities.
I wonder if a simpler solution to all this regulartion would be something like imposing a tax (fee?) when larger companies acquire smaller companies? So something like, "For every order of magnitude difference between the acquirer and the aquiree, there will be a 100% tax on the acquisition price paid to the US Federal government."
So this would basically encourage companies to either have their own IPO (no fee at all) or be acquired (merged really) by a company of equivalent size. If you are acquired by a much larger company, that company will have to pay a (logarithmicaly) large fee relative to the acquisition price. If they really want it, no problem, but it will be "cheaper" for a more correctly sized company to acquire them.
Seems like the regulation works well when it is applied. Why is there a need for a simpler solution? Why try to replace it with a 'simpler' tax with none of the human consideration about how the m/a could lead to less competition.
Like if this regulation was replaced in favor of this tax, a big company merging with another big company would be considered fine when obviously big company mergers can be just as concerning as larger companies buying smaller ones
Chesterton's Fence:
>In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, "I don't see the use of this; let us clear it away." To which the more intelligent type of reformer will do well to answer: "If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."
Then the companies will just poach all the good employees they want and “license” the IP if they care about it from the shell of the former company. We see that now.
I agree with taxing large companies more, however the log fee could also hinder the sale of companies that are legit only interesting enough for large companies to buy, preventing certain startups from being able to successfully sell.
I haven’t given this much thought, but my gut feeling is that it should be OK for a big company to acquire a smaller one if both sides agree and it’s not blatant anti-trust material (as with Meta acquiring Instagram).
I think merging with equal-sized competitors is sometimes just as bad for competition as acquiring smaller competitors.
What problem does this solve? Then my small company is less likely to receive acquisition offers which is bad for me!
How is that simpler? I am already confused
So what is iRobot’s bankruptcy evidence of?
The fact that Chinese dominance in the world of atoms made its position untenable.
Evidence that you can only coast for so long on patents. Eventually you have to get back to work and provide value to customers.
And also that the patents matter only if your competitors are actually bound by them. If not (China) then there is zero value in them.
That if Amazon acquired it, this would enable it to horizontally integrate and take control of yet another market? This, eventually, woudl lead to lower prices for consumers...
> This, eventually, woudl lead to lower prices for consumers...
What incentive would Amazon have to drop prices after vertical integration is done?
Economies of scope are the common claim.
No, that's what lowers Amazon's costs.
Why would Amazon, having lowered their costs, pass that savings on to the consumer when they could simply profit more?
Are you asking about supply and demand?
The context of the conversation is one of a horizontal monopoly, in a market that's near saturation, operated by a megacorporation that could afford to ignore profits or losses indefinitely, in the specific industry of robot vaccuums. So maybe the question is "why on earth would someone think supply and demand does apply here?"
I believe he’s asking why the parent poster was suggesting monopolistic consolidation would be good for the consumer, contrary to what all theory and experience would suggest.
*shrug* I gave him the argument baseline argument commonly known because it claims that costs become lower (and thus the merged entity claims to pass lower costs to the consumer) that normally flies at the FTC.
With respect to Amazon? Give us all a break.
This is sarcasm, right? The “eventually,” the ellipses, and the underlying ridiculousness lead me to believe it is sarcasm.
Yes
That Amazon wasn't acquiring it for it's business acumen and was actually acquiring it for some secondary purpose (i.e. market consolidation, data extraction)
People don’t remember the hellscape of computing when Microsoft was an unchecked monopoly
Aren’t they basically the same now, unchecked in power? They’re able to muscle into anything using their money and incumbent strength. They can use existing products to sell new ones. They can copy products and give them away. They can wage legal wars.
Personally, I think it’s unacceptable to have any business worth 4T as a single company. It’s not good for competition and for customers in the long term. But today’s anti competitive tactics are different from the simpler monopolistic tactics of the past. We need all new regulations to deal with it.
"Embrace, extend, and extinguish" days will never be forgotten. One of the primary reasons I have always had disdain for MS.
You mean when Google, Nvidia, Amazon and Netflix were formed ?
That was after. Unless you count netflix mail service.
She was right. But Figma is a legitimate, profitable, and strong business.
The reality is most startups are not like Figma. They would make pretty bad businesses and their only exit strategy is to get acquired.
There's simply no way they could stand on their own legs and go public.
Figma being credible competition to Adobe was the reason the merger was blocked. If Figma was less like Figma, and was a pretty bad business, Adobe would be less interested in acquiring them, and regulators would be even less interested in blocking it.
If you arrest everybody who "looks guilty", you'll eventually end up arresting a criminal. That isn't a reason to celebrate.
I think the FTC was spot on with the Adobe-Figma merger, but there were quite a few other mergers they either prevented, tried to prevent, or were regretful about not preventing, where that was a very bad decision.
Ultimately I think the model we have is broken precisely because of what you describe: the FTC can’t “get it right” every time and many bad mergers will slip through the cracks.
I think a dramatic redesign of the M&A system needs to occur.
For example, I think a merger/acquisition ban for companies of a medium to large size could be an effective design of our corporate system. Most medium to large sized companies make acquisitions and mergers out of convenience and a desire to thin out competition rather than any sort of business need.
A company like Apple or Google or perhaps even a much smaller one should be disallowed from acquiring companies or being a part of a merger from the standpoint that they are sufficiently large as an entity.
Examples like the Apple acquisition of DarkSky and Beats or Google’s purchase of Nest represent companies who clearly have sufficient resources to build a competitor and new entrant to the market internally, but out of the economics of the arguably lazy M&A shortcut they are allowed to buy competitors and remove choice from the market to the detriment of both customers and the labor market.
In short, we’ve just accepted the base assumption that companies are allowed to buy each other at all and that entire concept is worth questioning.
> Khan’s critics are more likely to see Figma’s success as coming despite regulatory scrutiny, not because of it. For example, Wedbush Securities analyst Dan Ives told Business Insider, “Figma is a massive success, but it’s because of the company’s innovative growth and not due to the FTC and [Khan].”
That would be a great point if there were any indication at all that’s what Khan was implying. It’s either an intentionally disingenuous reading of her statements, or else an unintentionally dim comprehension of them…from an analyst…
It’s also not a great sign that Business Insider thought this was the best way to end this article. At the very least, how about interrogating whether or not their “innovative growth” might have something to do with how healthy regulatory systems might work to facilitate such things? Or whether that innovative growth could have continued apace under Adobe’s management?
I suppose I am being too credulous, and it’s more likely the same widely shared ideological bent that celebrates free market dynamism with each success, and decries oppressive regulations with each misstep. A culture that sees virtue in offshoring profits while simultaneously using them to eliminate competition, erode consumer protections, lobby for preferential tax credits, and generally skirt any/all obligations to the society which provided them with the opportunities, infrastructure, finance markets, skilled workforce, and well-qualified consumers that are all prerequisites to “innovative growth”.
On the other hand, now you see companies that don’t want to deal with government blocking acquisitions do they just get all of the people they want from startups and leave the rest of the employees high and dry and the investors worse off.
https://www.reuters.com/business/google-hires-windsurf-ceo-r...
Unlike Figma, companies rarely want the startup’s product and usually end up either abandoning it or making it a part of their own offerings by getting their new hires to write it from scratch.
Even when they do need the acquiring companies IP, they license the IP and then poach the employees.
Microsoft almost did that too with OpenAI during the Altman fiasco.
If the stock goes up then you were right. If the stock goes down then you were wrong.
I've learned to accept this when it comes to things like TSLA or Bitcoin. But it's new to me that we do legislation like this.
There is another side to this coin: Figma's gain here is Adboe's loss. It doesn't make sense to use market-caps of specific companies as yardsticks of consumer welfare, which is the ultimate measure which antitrust actions seek to maximize.
The tradeoffs of allowing or preventing the merger are more abstract and counterfactual. We cannot know for sure what the world in which Adobe successfully acquired Figma would look like. Its natural to imagine concerns of Adobe simply killing, enshittifying or failing to improve the product - all things that still may happen under Figma's new corporate structure. Also consider the potential integrations with and improvements to Photoshop that have been missed.
That all being said I think Figma is an excellent product for the price and I have no fondness towards Adobe (though I've never really been a customer) and I'm glad that Figma exits as its own delightful product.
We can’t know what would have happened exactly, but can be certain there would have been less competition if Adobe had acquired Figma.
We can’t know for sure whether increased competition is going to lead to a better outcome here, but we can say with a high level of certainty that more competition usually leads to better outcomes.
The fact that this also turned out to be fantastic for investors is just icing on the cake. Increased competition in markets is a worthy goal in itself.
Fantastic for investors in Figma specifically, not so fantastic for investors in Adobe. My point is that the IPO price and subsequent price increase are not themselves proof (or even relevant) that preventing the merger was a good thing.
There most likely would have been fewer firms if the merger went through (though it could be possible that more competitors enter the market in that alternate timeline). Idk if that constitutes less competition necessarily, and competition understood as number of firms or something similar certainly doesn't always lead to better outcomes.
In the cases of "natural monopolies", consumer welfare is maximized when one firm is able to realize all the economies of scale because the benefits of mass production are so large that goods/services can only be produced at the lowest cost with sufficient consolidation. Utilities like electricity and water are often used as examples of natural monopolies.
You did say usually in fairness and I'd agree that increased competition usually leads to better outcomes. And we usually see multiple firms competing in any given industry without antitrust intervention.
It’s not proof that blocking the merger was good, but it does undermine many of the arguments against blocking it.
I’m all for the government getting out of the way of business, but we’ve seen a large amount of consolidation in many software categories.
Adobe’s market share is pretty extreme already in the creative software space, and I think it is reasonable for the government to step in to try to prevent further consolidation.
I agree with you that it’s really unknowable whether blocking or not blocking was a better choice. But if we only made decisions based on knowing the outcome, we’d never do anything.
As others have said, this is classic selection-effect. Lina Khan isn't coming out and telling people about
- the companies that died because acquiring them was too much of a hassle
- the companies that died or never got funded / started because the investors couldn't see and exit path
- the companies that got acquired piecemeal (Windsurf, Inflection), leaving the early employees with NOTHING simply to avoid the ire of anti-trust hawks at the FTC. This has irreversibly damaged the SV bargain - early startup employees work hard in case of an acquisition, they get rich.
So Lina Khan can keep patting her own back but there's a reason founders, early-stage startup employees and investors disagree.
> the companies that died because acquiring them was too much of a hassle
So it was a shitty non-viable business
> the companies that died or never got funded / started because the investors couldn't see and exit path
More shitty non-viable business. Creating a company only to sell it and screw over your customers is evil.
Maybe those founders should try to make real businesses, instead of playing glorified rollette.
> the companies that got acquired piecemeal (Windsurf, Inflection), leaving the early employees with NOTHING simply to avoid the ire of anti-trust hawks at the FTC
Plain-old loop hole exploitation. Simple anit-competetive stealth aquihire that isn't called so. My conclusion is that the market needs more regulations.
Does your ideal market only contain 5 or mega-corps that control every aspect of our lives?
It's a fair point but it's easy to say it after the fact- there was no guarantee of a better outcome.
She was instrumental in blocking the acquisition by Adobe, obviously her claim at that time was that it would lead to a better outcome.
Everyone in this thread who posts some variation of "wow love it how the government gets to decide if you get to sell your startup or how the market should work" should be handcuffed to their chair and forced to answer these 3 questions:
1. is there any role for gov't antitrust in your view of modern capitalism? 2. if there is a role, why is Adobe x Figma not the perfect example for enforcement? 3. if your answer is "Adobe clearly isn't a monopoly, look at the existence of Figma as evidence," why are you dumb?
Keep in mind that this is a forum run by a company that is a funnel for new VC companies and most people are in adjacent places in tech,
Principles don’t pay the mortgage.
If your house is in Atherton, maybe.
And without governments there is no business as we know it, just a Mad Max scenario a bit like rival criminal gangs.
Lina Khan is a genius.
would not be surprised if shes the first fpotus
She’s not even US born. Nice try.
if the establishment lets that happen it would be incredible for the US imo. But weren't there also pushes for her to get fired even if Harris got elected? Of course not as strong or immediate as it happened with Trump, but the Lobbies weren't happy either way...
And yet she allowed Broadcom to purchase and gut VMware.
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Lmao you cannot be serious. Lina Khan is right about m&a but if you don't understand how absurd the current price of FIG is you should never comment on anything economics-related ever again.
Why should a regulator interfere with the free market in this example?
That's, like, their job.
The idea is to interfere in the free market of buying software companies in order to maintain the free market of software.
Adobe buying Figma at that time looked likely to reduce competition in the "creative" software market.
Love the FTC getting to decide if you’re permitted to sell your startup or forced to deliver more shareholder value.
If a big company in dominant position is allowed to gobble up any and all upstart competitors that's bad for competition, and it is the FTC's job to preserve competition.
How was Figma able to generate any value operating in Adobe’s powerful monopoly?
significantly better product with no mature comparable adobe counterpart
It sounds like you are actually upset at Congress, which created FTC and gave it the power to decide if you can sell your startup. FTC is just doing the job prescribed by Congress.
$20 billion sell price is no longer a “startup”
Indeed, in a week Meta will offer that to an ML undergrad as a signing bonus.
As an investor that can’t invest in private companies, I love it unsarcastically.
I do love it. Companies don't exist solely to enrich their founders, they exist to provide a benefit to society. There needs to be a balance, of course, but if allowing a sale does not benefit society, then we should not allow it.
> your startup
You're under the misconception that companies "belong" to individuals. Companies are legal frameworks that society has decided upon. We could legally decide that M&A just isn't allowed, ever, if we wanted to. (I don't think that would be a good idea, but I hope you see my point.)
It's also not "your" startup once there are shareholders, including employees.
If it's a one person shop, then sure it's "yours", and the FTC can't block you from being hired (that I'm aware).
Congratulations you’ve just described central planning.
So “society” should be able to veto a sale, but when payroll is due the owners are on the hook?
Reductionist. Your phrasing it like the onky options are full central planning and libertarianism. Theyre both wrong. You need the free market to do what it is capable of, and regulate it when its isnt. The free market was going to let monopolies form. We have all already agreed thats bad. Khan's policies just updated that to the tech sphere
Actually, the owners not being on the hook when payroll comes due and the business is out of cash is exactly the protection that society has extended to incorporated businesses. But I'd be happy to horse trade unregulated m&a activity for owners, boardmembers and executives having full liability exposure, financial and criminal.
Lina Khan's obsession with "big is bad", especially her preexisting prejudice of Big Tech should have disqualified her from any position well before she took the wheel.
How many times did the FTC fail in court under her watch? More than I can count on two hands.
Meanwhile local and state utility and cable tv monopolies continue to _flourish_ without so much as a peep.
> especially her preexisting prejudice of Big Tech should have disqualified her from any position well before she took the wheel.
The purpose of the FTC is literally to take regulatory action to prevent unfair competition. Your argument is that you shouldn't appoint a commissioner on the basis that they think large tech companies are engaging in anti-competitive behaviour?? Note that this position isn't playing dictator; the FTC is subject to judicial oversight.
> Meanwhile local and state utility and cable tv monopolies continue to _flourish_ without so much as a peep.
How do we know this isn't just your preexisting prejudice of cable companies? Maybe you've just got an obsession with "big [cable] is bad"? On a serious note – it seems that you _do_ agree with antitrust regulation, just not against Facebook/Amazon for some reason (and only against Comcast)??
You expect a perfect success rate against the highest paid lawyers in the world? At least she was trying to enforce antitrust for once.
Big is bad bro. There’s like 5 companies carrying the entire S&P rn how is that good for anyone outside of those 5 companies?
Doesn't have to be a perfect success rate... how about just something other than abysmal failure rate?
Asserting a sloganized refrain is not very convincing. Make a real argument. Here are some counterpoints to "big is bad" Neobrandeisianism: -Scale enables better economics for certain businesses which consumers and other businesses then benefit from. -Large size allows additional speculative cutting edge R&D funding which the whole world benefits from even if it never pays off. -Being big on its own is almost never a cheat code to permanent monopoly / monopsony lock-in, especially in the technology business. That comes from actual anti-competitive behavior or regulatory capture (which ARE the parts that should be regulated, rather than targeting or preventing size for its own sake).
The S&P point is more than a bit overstated and it also doesn't really matter? The subset of the S&P that's performing well will naturally get weighted higher over time, until the performance changes. It doesn't really matter if the S&P is driven by 5 enormous companies or 500 equally-sized ones. Whatever works at the moment is what gets rewarded with capital -- that's the point of the system and it's been more effective than any alternatives. Besides, it'd be poor investing practice to be literally all-in on the S&P.
Scale enables big companies like Amazon and Walmart to force anti-competitive vendor and pricing agreements that harm small businesses.
Meta is top 10 for DC lobbying. No regulatory capture to see here.
Big is bad? She went up against Amazon which is literally one company that delivered on lowering costs to consumers. She doesn’t understand the fact that there are NATURAL monopolies outside of utilities. You would know this if your training is more than a couple of intro level courses in economics.
And why is it that no one is talking about the biggest vertical and horizontal roll ups in all of corporate America in healthcare? Interesting.
> Big is bad bro
Using "big" as a synonym for "consumers are worse off than alternatives" does not do anyone justice.
> At least she was trying to enforce antitrust for once.
Her prejudice against big tech and pretty much ignoring any other industries is not something to be proud of.
- Three major court wins (Illumina, Tapestry/Capri, Kroger/Albertsons), multiple deals dropped.
-Over $1.5B refunded. Significant settlements (Epic, MoneyGram, Amazon delivery drivers, etc.)
- Junk-fees ban, click-to-cancel rule (You can thank the current administration for walking back on this), non-compete ban.
-Right to repair, data privacy enforcement, health-care pricing interventions ( reduced out-of-pocket costs for inhalers and insulin).
I’m unclear what your first point is saying
FTC under her blocked Kroger/Albertsons, blocked Tapestry/Capri, ended non-competes, enacted click to cancel, made major strides on right to repair, etc. in addition to all the “prejudice against big tech” which are the titans of industry right now…
Big doesn't necessarily mean that consumers will be worse off than small. Just like having a dictator doesn't neccesarily mean that citizens will be worse off then in a democracy. What it does mean in both cases is that if the powerful entity decides to abuse their power for their own gain, it's very difficult (albeit not entirely impossible) to do anything about it. It's therefore better in the long-run to preempt this and bias towards smaller entities that are each less powerful.
Under Khan, the FTC has abandoned the standard of consumer harm, and now just blocks mergers based on vibes. I really liked this article criticizing her approach:
https://insights.som.yale.edu/insights/the-ftcs-antitrust-ov...
I stopped reading when they defended Albertsons and Kroger merger. Can anyone defend the consolidation of grocery stores with a straight face? Walmart has obliterated any competition and it has destroyed local food sources everywhere. They can do it at scale that no one can compete with. If the only solution is to further consolidate then we might as well just hand over the government to Walmart.
And yet, groceries have never been cheaper. So the question becomes which do you want: consumer benefits, or your aesthetic preferences regarding how big a company should be?
Groceries have gotten cheaper because the companies selling it pass off their negative externalities to society.
Groceries were cheapest around 2000 and have gotten more expensive since? Particularly 2020 on
Should jobs be a factor as well? I see a lot of job loss in small town Iowa and Nebraska. I don't live there and people there have definitely voted with their wallets.
Food plus quality price index in Japan and France look better to me despite the lack of Walmarts.
And, I read some things about price collusion of the major grocers during the pandemic that makes me concerned.
I will say, thanks for being a human and discussing this as a human. Too many bots on HN lately.
You can analyze it on that basis, but it's a political question. Is the grocery industry a jobs program?
Big tech has been ignored for quite some time compared to other industries.
I don’t get the downvotes. He’s just stating his opinion. Lina Khan had zero real-world experience. She wrote ONE widely circulated opinion piece in law school. It contained barely any rigorous economic analysis. This is akin to giving authority to some 21-yo philosophy major to direct the entire direction of US AI policies.
What AI experience did Sam Altman have before becoming OpenAI CEO? Wasn’t he just a VC wunderkind beforehand?
I am not a big Sam Altman fan but this is not a good comp. Sam is an insider in SV and one of the biggest at that. He knows everyone. You are basically saying Sam didn’t know anything about AI yet he is one of OpenAI’s founding members. Unlike Elon, at least Sam knows a thing or two about actual software dev.
Okay, what experience did Musk have in aerospace when he founded SpaceX?
He had money. Why do you keep conflating people doing business using their own money with appointing government officials with zero experience?
I thought this place was against credentialism and all about experimentation utilizing people who show promise? Whither “talent investing”?
Her opinion should not be taken seriously on the matter. It's not just the empirically terrible track record she had as a regulator and the baffling cases she brought to bear (imo proof of your point that she had an overgeneralized bias). It's also that she was demonstrably inexperienced at the time she was selected! It was clearly performative political appointment, which the Biden administration was pretty egregious about (and so have both Trump administrations, this is not a political point).
The essay (literally, a homework assignment she did at law school) for which she became famous that criticizes Amazon for being big is so chock full of errors, misconstructions and faulty logic, that it's an indictment of some really poor political habits and instincts that the US is prone to. That due diligence in vetting her as a rigorous and informed thinker on the topic failed is an unequivocal failure.
>The essay (literally, a homework assignment she did at law school) for which she became famous that criticizes Amazon for being big is so chock full of errors, misconstructions and faulty logic, that it's an indictment of some really poor political habits and instincts that the US is prone to.
source?
https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.p...
She got boosted by an insurgent group of law professors who spearhead whats called the Neobrandeis moment. Their theory is that anti-trust should be preemptively enforced against size for its own sake.
This is the article she wrote for her law review as a law student which put her on their radar and they started calling her a "rising star" etc etc, which snowballed into the performative appointment by the Biden admin.
Feel free to read through it.
Performative and ineffective but somehow actually deterred a lot of M&A? How does that make sense?
What errors?
A lot beyond the scope of the time I have to comment here. Read it with an open mind, knowledge of tech business, knowledge of how things unfolded since it was published and see for yourself.
But some short hand:
-Assumes vertical integration is necessarily abusive
-Assumes lowering price is necessarily a setup for anti-competitive practices. This one’s particularly ironic because lowering prices is definitely a first-order good for consumers and businesses that buy those goods. Bezos’ famous saying was “your margin is my opportunity” —- would you rather the standard continue to be massive retailer markup profit that goes straight to retail corps?
-Vague scare tactic claims that expanding into media production etc will somehow (yadda yadda, Step 2: ???) lead to monopolies in every category they enter.
The TLDR of the problem with Neobrandeis is it forms a very opinionated paranoid notion that size can only lead to bad things and no good things. It is a lazy dodge around the traditional responsibility of regulators to identify and regulate actual anti-competitive behavior when it actually happens By constraining companies from using any form of size or integration-related advantage, it lowers the pressure to actually be competitive and innovative for everyone else. I’m not saying everything should be unconditionally allowed, there’s a balance to strike. But when you just have a blunt “anti-size” hammer, you’re gonna do collateral damage to a healthy competitive ecosystem in a damaging way.
> It is a lazy dodge around the traditional responsibility of regulators to identify and regulate actual anti-competitive behavior when it actually happens
Traditional since the ‘70s, when Chicago school jackasses got their way and all but destroyed antitrust enforcement, in practice.
A shift back would be great. Let’s get a little more traditional.
We’ve seen this TV show before, but nobody paid attention. The magnificent 7 are essentially the ITT/LTV/Litton of the 1960s reborn. GE is the other one of more recent memory.
Massive diversified entities get bureaucratic, unwieldy and ineffective over time.
What gets me about this Lina Khan hero worshipping is that she has ZERO real-world experience. It’d be one thing if she crafted a worthy law career in fighting big corp. She never put in any hard work. She essentially an influencer.