UK competition regulator finds Adobe’s purchase of Figma could reduce innovation

https://www.gov.uk/government/news/design-software-deal-could-harm-uk-digital-economy

by saulr • 3 years ago

168 72 3 years ago

have_faith• 3 years ago

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• 3 years ago

Like what? In my neck of the woods, everyone uses Figma, XD or Sketch.

southwesterly2• 3 years ago

https://penpot.app/

karaterobot2• 3 years ago

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.

danielmarkbruce2• 3 years ago

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.

_jab• 3 years ago

Small startups these days regularly train cutting edge LLMs. I don't think Figma is that far out-of-reach.

mattkevan5• 3 years ago

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• 3 years ago

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• 3 years ago

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.

spandrew• 3 years ago

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.

pcurve3• 3 years ago

They're also continuing to cripple free seat functions.

ljm• 3 years ago

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• 3 years ago

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.

mushbino2• 3 years ago

They also recently got rid of most of the free tier. Many files I had from years of use gone overnight without warning. I used the free version as a personal depository for files, I made using the pro version paid for by my employers.

tuukkah• 3 years ago

The way out: https://penpot.app/

DHPersonal• 3 years ago

Sketch exists, too. https://www.sketch.com/

v3ss0n3• 3 years ago

It's opensource but performance wise is really bad due to SVG instead of webgl.

rvz• 3 years ago

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

pavlov3• 3 years ago

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.

drumhead3• 3 years ago

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.

edgyquant• 3 years ago

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

oli56792• 3 years ago

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_...

ClumsyPilot2• 3 years ago

Thank you, I’ve provided some feedback.

hfkwer• 3 years ago

You're about a month and a half too late. The request for comments ended on May 18.

GenerWork• 3 years ago

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• 3 years ago

Until they find Figma will either disappear or get more expensive under adobe.

southwesterly2• 3 years ago

They’ll just add it to their subscription service.

And probably rename it Figma XD Max Pro.

firecall2• 3 years ago

They’ll just roll it into their Creative Cloud sub.

Probably.

It will replace XD.

mushbino2• 3 years ago

I love sigma and have been using it for years, but I'm already starting to look for alternatives. They've already made some changes to free versus premium tiers and anyone who trusts Adobe is an absolute fool. I've moved away from all of their products entirely with the exception of Figma.....for now.

mercurialsolo• 3 years ago

I would love to see an independent alternative to the Adobe menace

olliecornelia• 3 years ago

Lol now do Autodesk

crest• 3 years ago

I'm sure it will produce innovative business practices inflicted on a captive userbase.

Pete-Codes• 3 years ago

How does it work if the UK blocks it and the rest of the world doesn't?

daveoc64• 3 years ago

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.

pcurve3• 3 years ago

Is there a similar precedent for 3)?

RadiozRadioz• 3 years ago

Possibly a spinoff organization like Figma UK Operations LTD that handles the UK business separately from Adobe.

bsimpson• 3 years ago

And what, buys/sells from merged AdobeFigma?

lhnz2• 3 years ago

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.

barnabee2• 3 years ago

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.

spacebanana72• 3 years ago

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.

lhnz2• 3 years ago

I don't want to get into an argument with you and didn't explain the argument very well, however, it's not as if I'm just coming up with weird opinions on my own here.

The basis of my argument comes from the director of competition policy at the International Center for Law & Economics, who explains it all in depth here: https://www.ft.com/content/b7fdbb35-e104-47bf-9e03-ef5d8b324...

  > Moreover, start-ups depend on acquisitions. Along with
  > an initial public offering, being bought is the main 
  > way entrepreneurs and venture capital investors can 
  > “exit” the firms they have built. The harder it is to 
  > sell your company, the harder it is to make a 
  > return. Fifty per cent of US start-up executives said
  > that being acquired was a long-term goal, and 90 per
  > cent of US start-up exits in 2008-18 happened thanks
  > to acquisitions. 
  >
  > Empirical evidence suggests investment in start-ups is 
  > sensitive to rules on acquisitions. One paper found 
  > venture capital activity grows by about 40-50 per cent 
  > in countries that enact pro-takeover laws, and US states
  > that introduced anti-takeover laws saw a 27 per cent 
  > decline in VC investment deals compared with those that 
  > did not.

M2Ys4U• 3 years ago

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• 3 years ago

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.

mattkevan5• 3 years ago

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• 3 years ago

Out of curiosity, what were the alternatives to Figma you were looking at and were more in favour of?

drumhead3• 3 years ago

I wonder if Adobe will respond by saying the UK isnt a good place to invest in as well.

karaterobot2• 3 years ago

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• 3 years ago

They did this before with at least Aldus and Macromedia.

firecall2• 3 years ago

although they genuinely killed Quark Xpress by making a better product with Indesign.

Whilst Quark totally dropped the ball and failed to innovate and update for modern MacOS.

Quark had as good as a 100% of the market before InDesign came along.

danielmarkbruce2• 3 years ago

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.

floomk3• 3 years ago

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• 3 years ago

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.

floomk3• 3 years ago

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.

fortenforge• 3 years ago

If you make it harder for startups to achieve profitable exits does that incentivize or disincentivize innovation?

pcurve3• 3 years ago

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.

hiidrew• 3 years ago

I love figma, dislike the merger. Have hopes for this open source alternative https://penpot.app/.

v3ss0n3• 3 years ago

You are saying without trying.Penpot can only compete in functionalities. Due to their architectural choices of using SVG ,no WebGL renderers, very resource intensive java backend they will never reach performance req of FIGMA. Designing just a few screen is crippling it.

UK competition regulator finds Adobe’s purchase of Figma could reduce innovation

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