[HN Gopher] UK competition regulator finds Adobe's purchase of F...
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UK competition regulator finds Adobe's purchase of Figma could
reduce innovation
Author : saulr
Score : 151 points
Date : 2023-06-30 10:56 UTC (12 hours ago)
(HTM) web link (www.gov.uk)
(TXT) w3m dump (www.gov.uk)
| Pete-Codes wrote:
| How does it work if the UK blocks it and the rest of the world
| doesn't?
| daveoc64 wrote:
| If an activity has been blocked in one country, the options
| are:
|
| 1) Cancel the merger/acquisition completely.
|
| 2) Work out some sort of mitigation with the country.
|
| 3) Spin off/discontinue business in that country.
| pcurve wrote:
| Is there a similar precedent for 3)?
| RadiozRadioz wrote:
| Possibly a spinoff organization like Figma UK Operations LTD
| that handles the UK business separately from Adobe.
| bsimpson wrote:
| And what, buys/sells from merged AdobeFigma?
| [deleted]
| rvz wrote:
| Unsurprisingly. [0]
|
| Did people here really think that the regulators are going to
| allow this merger to happen?
|
| Adobe might as well pay the $1BN break up fee and the Figma will
| just use that to fund their IPO.
|
| [0] https://news.ycombinator.com/item?id=33919862
| edgyquant wrote:
| I did not want this to go through, but totally expected it
| since I'm in the US and until a few months ago it seemed our
| regulators no longer cared about monopolies
| pavlov wrote:
| Figma has about $500M annual revenue, AFAICT.
|
| In the current environment, money-losing software companies
| aren't exactly hot. The valuation from an IPO would be
| extremely disappointing for investors compared to the $20
| billion Adobe is paying. A price/sales multiple of 10x would be
| generous, and that would be a $5B valuation.
| drumhead wrote:
| Adobe's actually done investors a favour and made a realistic
| enterprise valuation of the company for everyone. If it's
| worth $20bn to them then it's not likely to float for $5bn.
| They clearly think there's value there or some kind of
| competitive advantage that makes the company worth that much.
| pavlov wrote:
| The problem is that the company is worth $20 billion only
| to Adobe.
|
| And that explains why antitrust authorities around the
| world are interested in this deal: that kind of discrepancy
| suggests a market distortion in progress.
| drumhead wrote:
| What about Adobe's competitors? It's not going to be
| worth that much less to them either
| pavlov wrote:
| Which competitors? I can't think of anybody but Adobe who
| would pay a premium for Figma.
|
| It doesn't fit in Autodesk's portfolio, and their
| acquisition activity tends to be frugal.
| mattkevan wrote:
| XD proved that Adobe doesn't really care about the UX/UI
| design sector - Figma's worth 20bn to Adobe to kneecap a
| potentially existential threat.
| lhnz wrote:
| On the contrary, the ability for startups to be purchased by
| larger companies is the majority of the financial incentive
| towards creating startups. If competition regulators prohibit
| these transactions, it will harm the startup ecosystem and reduce
| innovation.
| mattkevan wrote:
| Or they could have focused on building a sustainable company
| that made a profit from the start and didn't use VC money to
| essentially give the product away for free.
|
| I was really unhappy about switching my design team to Figma
| because their only ways forward are to either IPO or get
| purchased, with all the pain they involve. Or worse, if they
| actually have to start making a profit, then prices will be
| raised immensely and features will be diminished.
|
| None of those things lead to a stable platform to base on
| potentially years of work.
| etblg wrote:
| Out of curiosity, what were the alternatives to Figma you
| were looking at and were more in favour of?
| mattkevan wrote:
| Sketch doesn't have all the features of Figma, but it is
| backed by a sustainable company who haven't taken on vast
| amounts of funding.
|
| We really needed the real-time collaboration features,
| which Sketch didn't have at that time so we went with
| Figma. I was concerned that it only had a couple of years
| left in its current state, which sadly seems to be true.
|
| Penpot is an interesting upcoming alternative, though it's
| not ready for prime-time yet.
| barnabee wrote:
| This argument makes absolutely no sense to me.
|
| The large tech acquirers have extremely high market valuations
| partly because of the expectation that they continue to get
| away with doing exactly this.
|
| If we had more competent competition regulators and this sort
| of acquisition was basically not on the cards at all, ever,
| once a company reaches a certain size then that value would
| stay in the innovating startups until they IPO or are acquired
| by a smaller, less predatory/monopolistic company. Either way
| there's still an attractive exit.
|
| We need to stop inventing reasons to tolerate and justify this
| behaviour that is clearly bad for society and start pushing for
| a more diverse tech ecosystem with proper antitrust
| enforcement.
| spacebanana7 wrote:
| > This argument makes absolutely no sense to me.
|
| There are some business models where acquisition is the only
| viable way to make money.
|
| Deepmind, Shazam, and Giphy were largely valuable because
| they create value for other big tech companies with respect
| to customer acquisition, market positioning and intellectual
| property. These companies had limited ability to make profits
| on their own.
|
| One can still argue though that such acquisitions are still
| against the public interest even if they're helpful to a
| class of startups.
| fauigerzigerk wrote:
| _> There are some business models where acquisition is the
| only viable way to make money._
|
| Maybe so, but blocking a dominant company from buying out
| its closest competitor is not quite the same thing as
| banning all acquisitions.
| manderley wrote:
| Seems like companies that could have made money through
| licensing their product instead of being bought out?
| spacebanana7 wrote:
| The licensing would need to be exclusive and long term,
| otherwise the big tech companies would've (and should've)
| feared the risks of being deeply integrated and dependent
| on a third party.
|
| Google would never have allowed a third party to use
| search results as training data, for example. Shazam
| might've had more flexibility unless Apple wanted to link
| it with customer data.
|
| Exclusive long term licensing is effectively acquisition
| by another name.
| M2Ys4U wrote:
| >reduce innovation
|
| Maybe the real innovation that we need is how to create
| companies that are designed to operate indefinitely as a going
| concern, breaking even or turning a profit without the _need_
| for an "exit" event.
|
| Let's work on business fundamentals that aren't three financial
| engineering schemes in a trenchcoat, for once.
| lotsofpulp wrote:
| Nature does not allow for solving anything "indefinitely".
|
| Restricting owners from being able to sell is an idea,
| although not sure it has enough merit, since society can
| benefit from businesses being able to be acquired. Perhaps
| the pendulum has tilted too far, or technology makes
| economies of scale too good to compete against.
| fortenforge wrote:
| If you make it harder for startups to achieve profitable exits
| does that incentivize or disincentivize innovation?
| pcurve wrote:
| In my person opinion, in the grand scheme of things, the impact
| on innovation in this particular case is negligible because
| only under exceptional circumstance, anti trust regulators
| intervene to block a merger of a startup.
|
| If it becomes more of a common occurrence, I agree it could
| stifle innovation.
| [deleted]
| hiidrew wrote:
| I love figma, dislike the merger. Have hopes for this open source
| alternative https://penpot.app/.
| GenerWork wrote:
| Interesting. Right now Figma is THE standard for UX design. It
| completely blew Sketch away thanks to Covid. I really haven't
| heard UX designers talk about going back to Sketch or any other
| program, in fact I've only heard multiple people talk about how
| Figma is just getting better with their new update (especially
| around prototyping). Personally, I'm not a fan of Adobe, but it
| seems like there's a lot of UX designers who simply don't care if
| Adobe buys them or not.
| elforce002 wrote:
| Until they find Figma will either disappear or get more
| expensive under adobe.
| southwesterly wrote:
| They'll just add it to their subscription service.
|
| And probably rename it Figma XD Max Pro.
| have_faith wrote:
| I think many Figma users are concerned with Adobe's purchase of
| Figma. I've already removed Adobe products twice from my life
| (professional and personal) and would prefer to not have to do it
| again.
|
| That said, I can't see the acquisition being a problem for
| competition in this particular space. It's not hard to imagine
| someone just making figma-but-different and becoming the next big
| thing. There are also countless other existing options.
| safety1st wrote:
| Like what? In my neck of the woods, everyone uses Figma, XD or
| Sketch.
| southwesterly wrote:
| https://penpot.app/
| karaterobot wrote:
| It would be very hard to build a product from scratch that
| competed with Figma. Even if you just straight-up stole all
| their product choices, features and UX and so on, the
| engineering under the hood seems pretty high level. Anything is
| possible, but it would not be trivial.
| danielmarkbruce wrote:
| Figma started in 2016 and competed against giant companies
| (like Adobe) who had been around for decades, and did
| extremely well. The competition in this space is never
| ending. They just keep coming. The competition regulators
| seem to consistently misunderstand the industries they are
| regulating.
| drumhead wrote:
| I wonder if Adobe will respond by saying the UK isnt a good place
| to invest in as well.
| karaterobot wrote:
| They were losing the battle for the design software market, so
| they bought the competition. The less innovative company bought
| the more innovative company. Of course it would reduce
| innovation.
| rvense wrote:
| They did this before with at least Aldus and Macromedia.
| danielmarkbruce wrote:
| Some people argue this acquisition opens the door for a new
| company to make another, newer, better version of Figma because
| Adobe could screw it up.
|
| Ie, they are driving innovation by killing the leader.
| oli5679 wrote:
| I interned at the CMA in 2014 and had several friends working on
| merger control.
|
| This [1] page has more details on the case, and has an invitation
| to comment at the bottom. In my experience, detailed comments
| from relevant industry participants, e.g. customers, competitors,
| are given serious weight and consideration, and very few are
| supplied. It's a useful mechanism for those concerned about a
| tech merger.
|
| "Invitation to comment: closes on 18 May 2023 3 May 2023: The
| Competition and Markets Authority (CMA) is considering whether it
| is or may be the case that this transaction if carried into
| effect, will result in the creation of a relevant merger
| situation under the merger provisions of the Enterprise Act 2002
| and, if so, whether the creation of that situation may be
| expected to result, in a substantial lessening of competition
| within any market or markets in the United Kingdom for goods or
| services.
|
| To assist it with this assessment, the CMA invites comments on
| the transaction from any interested party.
|
| These comments should be provided by the deadline set out above.
|
| Contact Please send written representations about any competition
| issues to:
|
| xxxx@cma.gov.uk"
|
| Other cases can be found here [2].
|
| [1] https://www.gov.uk/cma-cases/adobe-slash-figma-merger-
| inquir...
|
| [2] https://www.gov.uk/cma-
| cases?case_type%5B%5D=mergers&market_...
| ClumsyPilot wrote:
| Thank you, I've provided some feedback.
| hfkwer wrote:
| You're about a month and a half too late. The request for
| comments ended on May 18.
| ClumsyPilot wrote:
| oh dear
| mercurialsolo wrote:
| I would love to see an independent alternative to the Adobe
| menace
| bannedbybros wrote:
| [dead]
| tuukkah wrote:
| The way out: https://penpot.app/
| DHPersonal wrote:
| Sketch exists, too. https://www.sketch.com/
| [deleted]
| v3ss0n wrote:
| It's opensource but performance wise is really bad due to SVG
| instead of webgl.
| crest wrote:
| I'm sure it will produce innovative business practices inflicted
| on a captive userbase.
| floomk wrote:
| If you want to talk about reducing innovation then have a look at
| Apple's walled garden. They're preventing so many innovative new
| apps from ever being created by being inaccessible to young/poor
| developers.
| whalesalad wrote:
| You can develop iOS applications for free?
|
| This comment is so ironic because Apple has been the #1
| innovator in so many arenas for decades.
| floomk wrote:
| Can I give it to my friend to try on his phone without
| jumping through a million hoops every week or so? Because I
| can just send him an apk file via whatsapp without paying
| anyone a dime.
|
| Or let's take a step back: Can I develop the app without
| buying a $1000 macbook? You can develop for android using any
| platform. Apple's build tools are limited to only work on
| macos.
| drewbeck wrote:
| While true, I think you need to make an argument that those
| issues are specifically anti-innovation.
|
| Really tho I think we collectively use that term whenever
| it suits us, without much clarity on what innovative
| outcomes actually are. We need a better definition and
| better yardsticks.
| floomk wrote:
| Of course there are many different things that can aid or
| hurt innovation. I believe that one of the things that
| aids innovation is accessibility to a wide spread of
| developers of all ages, so measures that make this more
| difficult hurt innovation.
| mattkevan wrote:
| Good. It absolutely would reduce innovation.
|
| Adobe have already canned XD, which was a poor alternative to
| Figma, but Adobe had to at least pretend to compete.
|
| Problem is, even though Figma have captured a large proportion of
| the digital design market, they took on so much funding that
| their only real options are a purchase or IPO.
|
| I don't believe that subscriptions alone would bring in enough
| for the kind of returns the VCs are looking for, especially as
| it's almost free for individual designers.
|
| And so the enshittification begins.
| quitit wrote:
| Adobe, Netflix, Google, etc.
|
| They all need to realise one thing. You can choose to start
| something, but it's only the audience that can choose to end
| it.
|
| Whether that's a new app, series, or web tool: the problem is
| the same, no one is going to invest their time and effort on
| something that will be canned if it is not an instant success.
|
| Each are now trapped in a problem of their own making: people
| avoid their new offerings for fear of wasting their time,
| dooming the new entry.
| 8ytecoder wrote:
| We need a term for it - the fear of adopting something
| because it might be cancelled based on past history leading
| to the cancellation further confirming that these companies
| would cancel new products.
| mattkevan wrote:
| The word Google has already been used as a noun, so we
| could slightly repurpose it and use it again.
|
| E.g. "That Netflix show is fantastic but I wouldn't bother
| starting it as it got Googled at the end of the first
| season."
|
| Or:
|
| "Google's new messaging service looks cool but I'm not
| going to get everyone to use it as I bet they'll only go
| and Google it in about 18 months."
| spandrew wrote:
| This is absolutely right, and why their new dev tools feature
| add an additional $25 per seat to use.
|
| Even though I would rather pay less -- if the integration
| between a Design System and Github is clean enough it might be
| worth it for my DSM team? It's real value. It's also why they
| launched Figjam -- which has gotten Miro off of my balance
| sheet.
|
| I want Figma to scale up and be the anti-Adobe. Financial
| balance of Figma aside - this acquisition kinda sucks.
| pcurve wrote:
| They're also continuing to cripple free seat functions.
| ljm wrote:
| I tried uninstalling Adobe software from my PC a few weeks ago.
|
| Clicking on 'uninstall' booted up their cloud launcher app, and
| then I had to log in with an account, and then it had to
| install four or five different updates in sequence, and then it
| tried auto-updating the software I had installed, and after
| about thirty minutes of making sure Adobe obtained all of their
| analytics I was finally able to uninstall everything.
|
| It is one of the worst user experiences I've ever encountered
| in recent times and it is a sign of what will happen to Figma
| under Adobe's leadership. Figma is too much of a threat to
| them, so they can just squash it in an acquisition.
|
| The revamped Serif suite is much nicer.
| boomskats wrote:
| I own all the Serif products and love the company, but have
| to say v2 is so buggy on windows still. I hear it's better on
| mac, though I've had it crash on iOS a few times. I've gone
| back to mostly using designer v1.
| [deleted]
| olliecornelia wrote:
| Lol now do Autodesk
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