Why Adobe’s Acquisition of Figma is Bad For Everyone
On a couple of occasions over the last few years I predicted that the 20s would see a swell in antitrust activity in response to a solid decade of horizontal mergers and anti-competitive acquisitions in tech, but the Figma-Adobe deal has me looking like a twinkly-eyed naïf yet again.
The deal is a transparent attempt by a large, stagnant legacy operator to buy a competitor for a premium in order to prevent said competitor from pursuing eventual parity with them. It’s a tap-in for competition regulators, and it is to web designers what the death of Queen Elizabeth II was to British monarchists, only the reign to be mourned was considerably shorter and the forward prospects considerably bleaker and more consequential.
Will the FTC take up the baton? There’s no sign of them yet, with court proceedings in the last couple of years suggesting that American antitrust legislators think that there is only one monopoly run in the United States and that it is run by Meta.
But while the sale of a universally adored cloud-based design software to a near-universally despised legacy tech Lavos is self-evidently bad news for the consumer, who can at best expect Figma to be thrown into the premium tier Adobe subscription and locked away in this £500/yr tower like a proverbial Rapunzel, the acqusition is also, in its way, bad for Figma.
Yes, this acquisition deal struck for a 50x the acquired company’s annual recurring revenue is, in fact, bad for the acquired company.
From one perspective Figma’s willingness to be acquired makes sense, and Adobe have certainly overpaid relative to Figma’s current revenues and level of debt. But they have probably not overpaid relative to Figma’s future-earnings, and particularly relative to the current and future threat to Adobe’s status as ‘market solver’ in the design space. And looking at the deal from this point of view, it’s easy to think that Figma’s brass haven’t played the long-game here.