Except outlawing acquisitions by larger tech companies will absolutely reduce funding and incentives to start companies, and result in less products, less companies, and less competition.
I think this is net-negative for consumers, in a pretty significant way. If the most incentivised lifecycle is to seek VC investment to make a non-susitainable product in the hope of being acquired and swallowed into The Borg and shut down, we still end up with less good products.
- Product life-cycles become short, consumers are weary of anything new. How many times have you seen product launches here on HN where the top comments are worrying about sustainability? That either there will be a rug-pull for consumers in the future, or they just plan to be acquired and shut down.
- Larger companies continue to have no incentive to actually improve their product and compete with others if they just purchase everything in the market.
> If the most incentivised lifecycle is to seek VC investment to make a non-susitainable product in the hope of being acquired and swallowed into The Borg and shut down, we still end up with less good products.
"Aim for the moon so if you miss you still end up amongst the stars."
The actual _goal_ is to be an independent successful company, but getting bought is the back up option that provides a safety net. If it was success-or-bust (no "-or-get-bought") the risk calculus would not make it worth it. It would make the American economy much more conservative and much more like Europe.
But when the most common business plan is "1. Spend VC millions, 2. Acquire non-paying customers, 3. ???, 4. Profit!" it kinda seems like the un-written step 3 is "get acquired by a MAGMA company". You just say something like "oh, we'll get revenue by adding advertising / premium accounts later" as a fig-leaf for the public.
I think it's fine if no one starts vampiric companies that dump free services on the public destroying the perceived value of software for the purpose of a fast unicorn exit. Of course, these companies always look to advertising for funding so they are obtrusive.
Unless you are thinking of real companies that would be affected by this ban? Retail stores don't care about this ban. Companies that sell real products wouldn't care. If they sell real software services and plan to turn a positive profit rather than exit this wouldn't impact anyone other than unicorn chasers, which are bad for everyone.
But Figma isn’t a vampiric company dumping free services for the purpose of a fast exit. It’s been around for over a decade and charges _more_ for its principal product than Adobe charges for comparable products.
So by your own definition, real companies are affected by this!
I don’t see the relevance of that question: outcomes for companies fall onto positivity/negativity ranges beyond merely a bankrupt / not bankrupt bjnary.
The company will probably do well for the reasons you mentioned, only some late shareholders are affected. A good exit for the economy would be actually an IPO.
> A bureaucrat will decide if you can exit the way you want to.
It's not up to the bureaucrat but to the courts. The FTC doesn't "approve" or "reject" deals--it can just take legal action to try to stop a deal, but that still gets adjudicated either in a federal court or in an FTC administrative law court to a judge which is appointed independently.
Adding a legal battle with the FTC to the cost of any acquisition can chill and kill otherwise obvious deals, and or sap value out of those that push through.
FWIW, I think there are good reasons to limit tech consolidation, including this one. But anyone should realize that it will reshape the industry in unpredictable ways, including some that harm "real" consumers and builders.
But anti-trust isn't being invented now. It's always existed. Companies already factor in anti-trust risk when doing M&A—it's just hard to quantify the expected value of that risk
If anything, IMHO, we've been too lenient with anti-trust in Tech in particular over the past 5-10 years. This just dials things back a little, and makes it so that "hard to quantify" risk is a little more likely than it was before, and certainly a little more likely than zero
I don't think Adobe / Figma specifically is an "otherwise obvious deal" precisely because it has such obvious anti-trust risk. The fact that this merger was even announced is all the proof I need that we were being too lenient. Figma can still sell to any number of huge Tech companies
What’s net new about this? It has been the case for decades that if you try to sell to the only major competitor that it could be blocked under antitrust.
A bureaucrat also decides the amount of lead you can put in your product and sell.
In fact, there are all kinds of things you can't arbitrarily do because it hurts consumers, both physically and financially. This includes strengthening industry monopolies which has time and time again demonstrated that it causes incredible harm to entire segments of society.
> This includes strengthening industry monopolies which has time and time again demonstrated that it causes incredible harm to entire segments of society
I don't think you can take a hypothetical worst case and make it apply here. You could also say that we shouldn't have governments, because look at WW2 and all the war they declared.
Adobe buying Figma wouldn't cause incredible harm to entire segments of society. It's barely even a monopoly, in that Adobe doesn't really do what Figma does already, and there is incredible potential in just making another Figma competitor if Adobe ruins Figma.
Yeah, I get it, some founders start their startup motivated by a potential MA. And this is great for them.
However, as a customer, I absolutely hate this. Instead of finding a way to actually make the product/service self-sustainable, they just increase the number of (usually) free users. But once they sell, normally the new owner either shuts the service down or turns it into crap.
It’s a personality thing. The type of person who starts companies tends to start a lot of them. The idea of sticking around at a company and keeping a steady hand on the tiller (after all the big product problems have been solved) is anathema to these folks. What they need is a succession plan.
It just happened that mergers and acquisitions turned out to be the cleanest, easiest way for founders to hand over the reins. In days past, companies would go through this transition process internally, often by succession through the founder’s family. The founder may have been a very entrepreneurial type, but the child who was raised to be the successor was more of a managerial type. When it worked out, anyway. Sometimes none of the founder’s kids were suitable. Or the founder tapped the wrong kid to take over.
Agreed. I think if you’re passionate about an idea then you should be able to channel that energy into making it a sustainable business. If you can’t motivate yourself to do that… maybe let someone else who is motivated do it.
This isn't that though. This is a company with a clear monopoly trying to hoover up smaller competition to reduce competition. We shouldn't incentivise this behaviour, on either end.
If this is the liquidity event that Figma were betting on from day 1 that's their mistake for not foreseeing regulators being unhappy about it.
I'm fine with some other company buying-up Figma, just not Adobe. Microsoft could buy them (and hopefully not repeat what happened to Expression Blend) - or maybe Alludo could resurrect the Corel brand and launch Figma under that title?
The reality is that for extremely high-growth companies such as Figma, only companies with an extremely strong existing business and strategic fit can afford to acquire them. Corel, for example, was valued at $1bn in their 2019 acquisition. There's absolutely no way they could acquire Figma. At the same time, VCs are betting on Figma-like outsized exits for their model work.
I get people are dying to stick it to the big tech cos, but the reality is that the long-term effect of actions like this is reduced funding and less new, disruptive companies – and strengthening the situation for the cash-rich behemoths like Microsoft, Google, etc.
I think the "disruption" narrative has played itself out by now. Nothing has been disrupted. Society still largely functions the same way as it did 20 years ago, and the same firms are mostly still running the same businesses.
We were promised a radical new world, what we got was a couple of apps for fast food delivery from McDonald's.
Hmm... I struggle with your post. What about AMD vs Intel? Or TSMC / Samsung vs Intel? Intel is far weaker that it was 20 years ago, and chips are cheaper (inflation adjusted) and WAY faster 20 years later. Is that not a win? I feel like desktop computing is basically flying cars at this point. For 1500 USD, you can get 5GHz CPU, 32 GB RAM, 2 TB NVMe drive, reasonable GPU that is utterly light speed compared to 20 years ago. The first time I ever used an NVMe drive, I literally thought the Linux commands were not running correct because they finished so quickly!
Last one: I promise that I am not trolling here: What about psuedo-self-driving that Tesla and a few others have in cars now? On an expressway, it is pretty amazing -- hands off the wheel, talk with your friends with no worries of distraction.
I think the person you’re replying to was referring to the post-smartphone startup era. All those hardware companies you mentioned are older than dirt. None of them qualify as “disruptive, VC-backed startups” like Figma, Uber, or Airbnb.
Clearly Figma is providing a valuable product to the market. In part visible here by how people celebrate this decision. But people are celebrating Figma's continued independence without understanding that without the possibility of being acquired for a large amount of money, the funding and incentive situation that resulted in the beloved independent Figma wouldn't exist.
This is not as much about Figma, which is big already and will be fine, but the 100 other potential Figmas that might not even been started yet. They will have more difficulty finding funding, attracting employees with equity, etc., when the scenario 'big tech co acquires company for lots of $' doesn't exist anymore.
Why would anyone go worth at a small company for equity if there's no chance to get liquidity? Why would investors invest? This decision might improve the short-term situation of the market, but over the long-term, I can only see how it benefits the big companies, which rely on today's cashflows / RSUs to attract people.
> Are you saying that the business of "we make a thing and we ask for money from our users for said thing" model cannot work?
I'm saying that companies like Figma, which has raised $333 million dollars in venture capital, at up to a $10bn valuation, cannot exist if those investors don't see sufficient options for liquidity.
And given that people strongly value companies like Figma, as evident in this very thread, that would be a bad outcome all in all. The only market participants for whom this wouldn't be a bad outcomes would be big, established businesses that have to fear less startup competition.
That would certainly be good for Adobe's users, but it means they'll have to put in a lot of work, which costs money that could otherwise buy so many yachts.
Maybe it would be more accurate to say that they that there is no way for them to make a product that will steal Figma's market for less than $20 billion.
Adobe's despised reputation in business practices makes it hard for users to choose Adobe when any other creative option when it is available.
I'm fine with some other company that has a track record of doing bad things to the things they've purchased, which is no different than the company I'm against buying this company.
How are you okay with MSFT? The logic is not very sound
I guess the parent's point was that it's better for Figma to be acquired by a company that clearly has a Figma-shaped hole in their lineup, rather than someone with a lot of existing overlap that will likely just strangle it quietly in the night.
TBF, they kept Skype, GitHub, and Minecraft, running fairly well - one can disagree on the features, but they did get continuous development and support, they weren't just "deprecated" and sunset like, say, Yahoo would do.
Let's say you're pitching your startup to a potential investor. Would you pitch it as "the next Adobe" or "something Adobe might want to buy"? Which one would you be more likely to invest in?
I think it's the opposite. Because many companies start with the dream of an exit with a high price tag, and what they end up developing is a missing feature from a bigger software suite, which is already enshittified by a big software house to the core.
Instead, smaller companies can start and slowly get bigger while getting bigger. Affinity suite is a great example. While their photo tool is not my cup of tea, designer is great, IMHO.
Tech acquisitions haven't been outlawed. And this particular situation is applicable to perhaps 2 or 3 a year (all of which are multi-billion dollar values).
I doubt very much if this will stop funding of new companies except perhaps at the level of Uber/WeWork.
Acquisitions also reduce competition. If competition only exists to be acquired you are only funding an ever-growing oligopoly, the more acquisitions into the oligopoly the more power they have, diminishing the number of available markets to compete in (since one of the oligopolistic companies will certainly have more capital than a newcomer).
Anti-trust is not a new thing, it's even considered a foundational aspect of competitive capitalism by some thinkers...
If your only goal in founding a company is to get acquired, you haven't made a company; you've made a product, and probably not a profitable one.
We should be encouraging way more medium-sized companies, that operate sustainable business models, make money for their founders and employees, and aren't subsidized by cheap money. I think if startups actually had to sustain themselves we'd see a lot less grift and waste in VC.
I don’t disagree with the notion that there should be more medium sized, self sustaining (“lifestyle?”) companies, but such statements are rarely if ever followed up with _why_ this is a desirable outcome for everyone involved.
I guess it comes back to how you view the current system. If you find the idea of unicorns and acquisitions and the further centralization of capital distasteful, it's kind of self-evident why you'd want to see something that represents a break from that norm.
For me, yes, I see the obvious argument that more money leads to more (and faster) innovation. But it can also result in an economy that is too tightly coupled and dependent on the might of a few massive companies, whereas an economy that is distributed across more smaller businesses is more robust.
At the extreme, you might imagine South Korea: a country that is highly consolidated into one or two major cities and propped up by massive, economy-shaping corporations. I don't think anyone would disagree that Korea made massive economic strides in a short period of time, but I think there's much more debate about the long-term health of the Korean economy and people now that their continued prosperity is so centralized.
And, of course, there's the consumer angle; though I can't claim any scientific methodology, my impression of the sentiments surrounding this merger are that it was pretty popular with Figma's investors and employees (understandably so, as they stood to gain from the merger), but was deeply unpopular with their customers. You could make the argument that "a Figma owned by Adobe is better than no Figma at all," but consumers have seen it all before at this point: a good product is acquired, and then either a) the pricing model changes, b) the rate of innovation slows down, c) the product is ultimately abandoned somewhere down the line, etc, etc. None of these outcomes are essential truths, but they are common outcomes of companies getting larger and larger to the point where a business unit that is otherwise healthy is deprioritized because it is not profitable enough or growing fast enough for the larger parent to care; or, conversely, the smaller parts suffer because the larger parent encounters trouble and can no longer sustain their acquisitions, even if they are keeping the bloat afloat.
- Product life-cycles become short, consumers are weary of anything new. How many times have you seen product launches here on HN where the top comments are worrying about sustainability? That either there will be a rug-pull for consumers in the future, or they just plan to be acquired and shut down.
- Larger companies continue to have no incentive to actually improve their product and compete with others if they just purchase everything in the market.