If there were thirty companies competing in the space then it could be good for consumers - e.g. by allowing economies of scale for the company and so reduced prices for consumers.
It should be noted that "economies of scale" works in manufacturing and distribution, but doesn't really work in software or other creative endeavours - in fact, creative teams are often more impactful and cost-effective (and hence cheaper) the smaller the company is.
Antitrust law should really get amended with that framework in mind.
Per se economies of scale don't work in all areas of business, but there is increased efficiency in centralizing nearly anything. That's exactly why standards get created in software as well as anything, and why hierarchies and specialization of labor happen.
The problem with monopolies -- and monarchies for that matter -- isn't that they're inefficient. They're incredibly efficient. It's merely that the gains are almost universally used to enrich the owners of the means at everyone else's expense.
Right, I think that’s part of what makes these types of monopolies particularly bad; efficiency no longer matters.
When everyone else is locked out of competing, the market owners lose incentive to do anything but maintain status quo.
There’s an interesting psychology here. We think of business leaders as hyper competitive, but they often seem to try to get to a place where they not only beat their competitors, but try to lock them out of the playing field.
Once there’s little or no threat from competition, doesn’t that get boring?
Athletes are competitive, but I think in a different way. I don’t think an athlete would find much enjoyment if they figured out a way to always be the only ones on the track, slowly meandering around by themselves.
Well it depends on your definition of efficiency. In a perfectly competitive (and perfect information) marketplace there will be more goods sold than in a monopolistic one. So in terms of resource allocations its inefficient.
There's a graph on this page title "Perfect Competition, Monopoly, and Efficiency" [1] that shows how since the monopoly can price set they choose a higher price than where demand meets supply since it results in higher profits. This isn't achievable in a competitive marketplace as then somebody else would just undercut them.
Interestingly you can correct this inefficiency by subsidizing a monopoly so that it offers the correct amount of supply.
I think what you mean by economies of scale are purchasing EoS. There are, I believe, many other forms of EoS that do not revolve around bulk discounts when buying raw materials. For example there are EoS that revolve around borrowing from banks [1], which is something that every big business regardless of industry does.
Also economies of scale do work in software/creative ventures. However these tend to be cancelled out by other diseconomies of scale that are caused primarily by ineffective communication, aversion to change, and people (and government's) changing attitudes to larger companies [2].
What you referred to about creative teams being more cost-effective the smaller the company follows logically from most diseconomies of scale. For example in large companies the biggest decision makers tend to be isolated from the results of their decisions. This is in part because decisions take many weeks/months to be properly evaluated by a team of analysts (who may suffer from their own economies of scale if the business is large enough) and partly (I don't think this is written about but just my own opinion) because the biggest decision-makers will have the most authority and hence their subordinates will not be eager to tell them that their decisions had a negative response.
If anybody finds any fault in this comment please reply to it. Please be polite.
[1]: when a large company borrows from a bank they usually obtain lower interest rates as large companies usually tend to borrow large sums of money on which even a low interest is still very high.
[2]: if a company like Google makes decisions that could, from 1 particular angle, be considered as anti-competitive the government is more likely to consider the situation from that 1 particular angle rather than if a smaller company takes the same decision. However, this assumes a perfectly functional government in a MEDC (as LEDCs won't usually go after monopolies since they want foreign investment from large companies) that also happens to be non-corrupt
> fact, creative teams are often more impactful and cost-effective (and hence cheaper) the smaller the company is.
There's obvious cases where there's small teams that make outsized impacts and teams that grow too unwieldy to manage.
But there's a reason why we don't have 300 Linux Kernel projects: there would be a whole lot of duplication of effort and it would cost 300x as much.
Indeed, software has massive economies of scale because duplication is basically free. It has a bit more of a tendency to fall into monopoly or oligopoly as a result: there's barriers to entry but no production costs.
well, yes. but, unless there are geographical constraints, they all know that only one will be truly successful and it's hard to pass an insane exit opportunity. Especially since you can try again but full of cash.
It takes me 2 seconds to switch to a different design tool. Adobe has 30K employees and been around for 30 years. Figma is a small scrappy startup. It seems pretty preposterous to me that the deal will have any meaningful impact on consumers.
You don't have any knowledge, skills, habits, techniques or workflows specific to the tool you use? If true then your use is... anomalous and you shouldn't present yourself as a typical user of this tool.
the European Commission reached the preliminary conclusion on Friday that if the deal goes ahead, it may “significantly reduce competition in the global markets” for the supply of interactive product design tools, vector editing tools, and raster editing tools.
And this isn't some esoteric use case used as an excuse. The core need the author has is "export my diagram to SVG and have it render the same in all browsers".
That's probably by historical incident. I'm a big advocate of open source design tooling, and I think the reason they haven't taken off as much is because design tools are generally ignored by developers. We spend loads of free time building open source developer tools, but there doesn't seem to be as much excitement as building solutions for the design side.
There's an element of that, but I think design tools tend to be ignored by designers as well. It took well over a year to get my last design team to even consider looking at Figma seriously. I've worked with several that have big gaps in understanding their day to day software. To some degree the issue can be lock in, but people also just seem to want get in and bang something out, even if the process is sub-optimal (and that can be valid.)
I've used several tools over the years and am not afraid to jump into a new UI or workflow, but have come to believe that's an exception and probably driven by the dev part of my brain.
Yeah I can see this. I think Figma might have changed the culture a bit, though that perception could be driven by the more vocal explorers on Twitter who post about new features and such.
It could be that much of design tool "output" is source-of-falsity, i.e. experiments, drafts, non-production work that is left in an ideation stage. For stuff like that, there's more breathing room for less-sophisticated products to shine.
Penpot is pretty great even in production environments. It hews much closer to web standards in for things like layout (flexbox and grid), supports working completely offline and doesn’t use a proprietary file format.
What they don’t have is the inertia of Figma and being as-good-as or maybe a little better isn’t enough to get the traction they need.
Well, I don't need an open source replacement for Figma, I just want Figma to continue being good so I can do my job over the course of the next ten years. If there's a viable alternative after that, I'll evaluate it, but there isn't one at this point.
I love that penpot has prioritised making the API happen. Figma made design -> dev easier. But to complete the loop, we're looking to link our integration tests back into the design program with screenshots of how the screen(s) actually turned out. Ie dev -> design. And if they're insufficient, design can go back to dev and say "more!", or else update their own prototypes of what's in place, ready for the next feature to be designed
I feel like Penpot could become the dev favourite over figma for the API alone
If I was to try to steel man an argument for why acquisitions like this are good it would be that a lot of startups like Figma only exist because acquisitions are common and therefore offers early investors an exit on their investment that isn't 1-2 decades in the future.
If we got rid of M&A in tech there would significantly less investment and much less innovation, which I think you could argue is bad for the ecosystem as a whole and the end consumer of these products – even if individual acquisitions are often not great when viewed independently.
Or to look at it another way, big tech basically outsources their R&D to startups and the successful projects (companies) are then acquired. And this goes both ways given the goal of a lot startups is to be acquired.
Alternate argument. Maybe these kinds of investments are bad and we would have more realistic companies if founders and investors focused on profitable companies and making sure their customers were actually happy rather than trying to look appealing to some behemoth that will buy them down the line or other investors.
I assume by "realistic" you mean companies that prioritise profitably?
I don't hold a strong opinion on this, but the way I see this is that, yes, investors could invest in companies and demand those companies maximise profits so they can see a return on their investment as soon as possible without the need for accusation, but I genuinely don't know if most users would agree this is better for them.
To appeal to an acquirer or other investors companies most first appeal to their users and show strong user growth. So I don't buy your second point that companies prioritising profitably are somehow more focused on building a good products for their users – and if anything I'd probably argue the inverse is generally true.
I suppose if you were to push me for an opinion on this I think it's fine to let the market decide what's best. Companies can already focus on profits if they wish. And if you're right that companies that do this will have better products and keep their users happy then companies that choose to do this should take market share from big tech over time.
But to be so certain of this that you'd use regulation to enforce it thereby destroying a significant source of funding from early stage companies and the innovation those companies provide the tech sector would be a risk. Especially when I'm not even sure you're right that consumers prefer companies that focus on profitability.
> To appeal to an acquirer or other investors companies most first appeal to their users and show strong user growth. So I don't buy your second point that companies prioritising profitably are somehow more focused on building a good products for their users – and if anything I'd probably argue the inverse is generally true.
It’s hard to compete with free. You can’t burn millions you don’t have to present a sweet deal to users or releasing features in month. And now people have become accustomed to receive everything on the internet for free (bundled with ads).
Alternatively, blocking anticompetitive mergers will make VCs less likely to fund loss-making companies for decades, thereby creating space for healthier competition at a much earlier stage.
How many competitors died on the vine because Figma was able to offer a free tier subsidised with low interest rate VC money?
> How many competitors died on the vine because Figma was able to offer a free tier subsidised with low interest rate VC money?
Is it any different from wealthy established multinationals offering a free tier subsidized by steady profits from established (sometimes even monopolistic) product lines killing all startup offerings?
It’s probably the same, but I’m not necessarily talking about outlawing the practice itself, just the acquisition that makes the practice (eventually) profitable for investors. Large companies with monopolistic product lines shouldn’t be able to merge either.
> if founders and investors focused on profitable companies and making sure their customers were actually happy rather than trying to look appealing to some behemoth that will buy them down the line or other investors.
This right here. What happened to IPOs being the endgame?
> profitable companies and making sure their customers were actually happy
These two are negatively correlated. Google and reddit and other companies were awesome and very user friendly when they had investors pouring in money and they could afford loss.
All the VC hate in HN is weird given we are in a platform owned by VC.
Google not being awesome has nothing to do with VC. They could be wildly profitable while continuing to innovate on product and providing excellent customer support. Instead they're wildly profitable while their dysfunctional organization is sending their product quality to shit.
Investors don’t have to structure their deals such that selling the company or an IPO is the only way to get their money out though. They could say give me 10% of profit until I get 10x my investment, etc. At least that way investors are aligned with creating a company with sustainable profits, rather than the VC pump and dump that we’re all familiar with.
There are other big tech companies that could acquire Figma without decreasing competition. I could see Microsoft buying it for example. They don't have a play in the graphic design space, and could potentially benefit from the acquisition
> a lot of startups like Figma only exist because acquisitions are common and therefore offers early investors an exit on their investment that isn't 1-2 decades in the future.
> If we got rid of M&A in tech there would significantly less investment and much less innovation
It appears this way because of the path we took with our economy, but that doesn’t mean that an alternate path isn’t viable. The giants didn’t get big through innovation. They all created some initial innovation that allowed them to print money, which then allowed them to gobble up any other company that could either be of use or compete against them. If they weren’t able to acquire, that money wouldn’t disappear from the economy. It could be sent back to shareholders in the form of dividends, who would find other investments for it. Perhaps the market would find the best use for that money instead of having it controlled by a few giant entities. I tend to think that’s how the stock market was supposed to work.
This is a good argument, but it would drive their valuations even higher if there were two competitors leading to a bidding war , instead of just one Adobe
Their goal (in my opinion) is to have enough studios to be cranking out one or more games each month for game pass.
With many games taking over 3 years now to make and about 10 of those Activision studios working on just Call of Duty, they have several more studios to go.
In my opinion, they're just playing catch up with Sony. Sony started buying up studios years ago and has some quality studios pumping out top notch games which are Playstation Exclusive. To deal with that Microsoft is buying up some too, they just went straight to the top and decided to go for an already estabished studios instead of going for smaller ones and investing until they deliver in 5-10 years.
What people hated about Microsoft’s acquisition was that it will deprive its competitors IPs they used to have access to - eventually.
Sony’s acquisitions are less “egregious” as the companies they acquire usually generated few to no (valuable) IPs for their competitors - there are exceptions of course. That’s why most all of their acquisitions fly under the radar.
Yea, but the problem was originally caused by Sony. Many say it's anti-competive but really it's basically done to compete. I would say making games console exclusive should be banned if you want to remove things like this.
If you aren’t allowed to sell something, you don’t really own it. Whoever decides the valid sale conditions also owns part of it, it’s just off the books (so to speak).
Do we really want governments implicitly part-owning companies that aren’t related to violence? At least a monopoly can be out innovated.
IMO the problem was the acquisition of Blizzard by Activision.
I agree that MS will be a better steward than Activision who managed to completely ruins Blizzards reputation since the acquisition.
While saying nothing about the quality of their games or the decline thereof, Blizzard did a perfectly good job torching their reputation themselves when the report of their insane and inappropriate office antics was made public.
Money is a means to facilitate self-organisation in the economy — it's not a good in itself, only as a means to an end.
For the most part, people are happy to not look too closely and just assume it's all good, but the entire point of regulators such as the Competition Markets Authority is to find the cases where a trade isn't good for the wider economy.
If UK or Europe government think that merger of two US tech companies they don't control is bad for competition, they need to invest in creating a competition. And I am not talking about a million or two they give here and there, they need big investments.
It baffles me that Europe programmers has similar or better education and skills than US, but they get paid 1/3rd of US's salary for the same cost of living for senior positions.
Then thr wider economy can decide if it's good or not, and choose alternatives. The only thing that would really stifle consumer choice is ip laws that could just claim the entire solution of Figma is off limits
I feel the issue here is that Figma has become the standard tool for UI design, it's what everyone uses and everyone knows. Which means there's a potentially huge collective cost if it goes downhill.
The fun fact around this is that, whatever number you believe, each paying user is worth something north of 50-100k to Adobe. Figma has 4 million active users, maybe 5% signed up for a paid plan, will make 100k for each user at the acquisition price.
Supposing that one company's cash-value offer is equivalent to what it would cost to build, there would be no point in building a startup.
That value estimate is what the built thing plus company staff plus brand recognition plus timing is worth. Hardly the same thing as what it would cost to build again. Especially now knowing an effective UI/UX for the task.
Endless consolidation isn't the only way to make money. There's plenty of money for Figma to make if they remain an independent company, _and_ their customers would be better off.
it's monopoly, in professional setting in most cases is no possibility to use something else even if alternative tools is better for your specific task. It really similar to case of MS Word decades ago, now we have choose but not in the past.
Figma had chance to grow later to level where it could become Adobe competitor, now it's no hope that would be any competition any time soon.
Just to illustrate why I think that. Usually Adobe software used for everything so is no escape in most cases, but Figma became so widespread in popular specific case so it could really transform situation in way: use Adobe for everything but for UI/Web use only Figma. In that way everybody become committed enough to Figma ecosystem and they as company can start offering new tools which will able to capture Adobe businesses bit by bit.
Every dominant piece of software is its own monopoly as long as the documents have a proprietary format and there exist no independent readers/writers.
Note the regulator phrases the concern, not as "monopoly", but as "substantial lessening of competition (SLC)".
In particular, page 6, item 25:
> We consider that Adobe’s and Figma’s platforms are characterised by network effects. These network effects cause the value of the respective platforms to increase with the number of users. These strengthen Adobe’s position in vector and raster editing software. They also strengthen Figma’s position in product design software. Network effects operate across markets. For example, the value of using Figma’s vector and raster editing offerings is greater the more Figma is used for product design, and vice-versa. Therefore the strength of the Parties’ positions in each of these markets is influenced by their strengths in the others, implying that the Parties exert multi-market competitive pressure on each other across vector editing, raster editing, and product design.
Page 9, item 41:
> The Parties identified more than 45 competitors in vector editing and more than 65 in raster editing. We undertook an assessment to identify the most relevant competitors in each of vector and raster editing software. We considered the extent to which these competitors are referred to in the Parties’ internal documents and in third-party evidence. We consider that very few competitors in vector editing software (Affinity and Corel Draw) and raster editing software (Affinity) provide any meaningful competitive constraint on Adobe’s product development for professional users, and that constraint is weak to moderate at most. This is particularly true for product design and related digital use cases
Sports also has rules. Can't pick up the ball and run across the pitch in association football. Can't use an anti-material rifle to knock the bails of the wickets in cricket. Can't respond to the Tennison Gambit in Chess with an Intercontinental Ballistic Missile: https://www.youtube.com/watch?v=E2xNlzsnPCQ
One of the economic rules in certain countries is "we like competition, don't thwart it".
Uh, yes? That is literally the entire reason competition regulatory bodies like the CMA exist. To prevent monopolistic behavior and ensure no single entity gets big enough to squash all competition.
Tell me you don't know about sports without telling me you don't know about sports.
There's a huge problem in most sports precisely because of money. Those that have the money have the best players, the best equipment, the best facilities etc. And yes, they spend money on exclusive contracts and deals so that others don't get the same.
Some sports even go as far as try and implement certain restrictions and limits so that money don't play such an outsized role
> How does this "hinder the growth of human development"
Easy. The larger any company gets, the more difficult it becomes to compete with them as customers of a potential competitor expect a certain set of features to be available to even consider migration, and thus the large company gets ever more and more market share over time. On top of that the large company may simply outspend a competitor in advertising or sue competitors for barely-legal patents.
Capitalism at its core is the ruthless elimination of inefficiencies, and competition is inefficiency (just look how many dozens of billions of VC were burned in the "gig economy" sector to get rid of competitors).
The problem for the development of humanity is that an entrenched, dominant/monopolist company has zero reasons to innovate and progress.
> Consumers always have the opportunity to switch.
For that, there needs to be an alternative option. Just look at Walmart and how they destroy small food stores in a massive radius around them as no small retailer can compete with their scale.
That's every monopoly in history. Any smart monopoly allows just enough competition to tread water to show regulators that "hey, look, there's competition, we're just dominant".
Because they commonly swap to profit extraction models when they fail to integrate the acquisitions, and after that they typically shutter otherwise viable businesses. Most recently seen with Unity and Weta Technologies
The last time I used it, it was like a slower, buggier version of a subset of Figma's feature set from 3 years ago. But Figma has come a long way in 3 years, so it's not a serious competitor now, if it ever was. If you just occasionally need to put some text on top of something, or make a couple wireframes, it would be fine. If you work on complex production designs as part of a team, it's far from ready for you to switch over. I believe Penpot has even acknowledged that some architectural choices they've made mean that it's unlikely that a Penpot document can ever scale to the size or complexity of a Figma document, which to me means it'll always be a toy, or, more generously, a tool for simpler use cases.
I tried for a while back in 2022 when Adobe announced acquiring Figma. I spent a week with Penpot. It's pretty good, but there were a number of issues that forced me going back to Figma... mainly random freezes and issues causing me to lose saved work.
I'm confused: why is this article/headline focused on developers, when the report and its outcomes are explicitly focused on designers, who are Figma and Adobe's primary audience?
That confused me too. I think they just don't have as nuanced a vocabulary when it comes to the different roles in software development. To them, a software developer is the company that makes the software product, and/or everyone involved in making it, including designers and SWEs.
Figma does have features specifically made for developers rather than designers, but my guess is that's not what they're talking about, they just mean "software people".
Would make my fucking year if there could be a new law that makes it easier for those lawsuits to work. After all there is no reason to think that the present antitrust laws are the ones we ought to have.
It was an easy decision. You can't allow one single company to own all the major web dev tools. I'm surprised they actually decided this, since the EU has a history of turning a blind eye to some of these deals.
These companies operate in the UK. It's the same authority that the EU or China has. The deal is that you can adhere to their laws or leave the market.
They killed pretty much everything they ever did, considering how shitty their software is. I work with it from time to time and I am amazed how it doesn’t change (meaning all the bugs and idiotic UI decisions) over decades. Ducking decades. There is Affinity. There is Pixelmator Pro, Figma, Blender. I wish everyone and their dogs cancelling their CS subscriptions.
It's only one possible remedy, but yes. Facebook was forced to sell Giphy.
I presume the CMA doesn't have worldwide jurisdiction (I mean, even hypothetically, under UK law). However, if a merger went ahead against its wishes, I presume it could easily block the Figma portion of Adobe operating in the UK.
I think it would go further. The CMA can impose fines of 10% of worldwide revenue if they ignore the breach, and also disqualify at least the UK business unit company directors from holding another UK company directorship for up to 15 years (in any company).
I think the only way to do it would be to entirely pull Adobe out of the UK market. This would be extremely difficult for many reasons, not only that Adobe has many multi year enterprise license agreements with many UK companies which would incur enormous penalties for severing them, plus the UK is probably still a quite large market for Adobe.
I'm not even sure if that's possible though, as they could still get a judgement in the UK and then take that to other jurisdictions to get payment for fines and other breaches.
Insane how anyone could call Figma terrible, even from an engineering perspective it's basically magic seeing it throw thousands of assets around at high framerate with multiple users, it all just works.
Actually it's so good it makes Adobe software look embarrassing how poorly it performs.
Sketch used to be the first choice for app developers. However, it has always been macOS only and their collaboration tools were lacking for a long time. Don’t know about current differences though.
I still use Sketch because it’s still better at creating general screen-destined vector graphics. While Figma can do that too, it’s more geared for collaborative UI prototyping which makes other use cases a bit of an awkward fit.
Our designers are wedded to Figma so I have to use it from time to time. I despise it. The other day I had some work to do on an old project designed in Sketch and it was an absolute joy. For a lot of things our developers end up taking stuff out of Figma and into Sketch just to be able to work in a pleasant app.
Sorry, keep leaving out details. I hate the non-native UI, I hate that copying from Figma creates something in the pasteboard that most apps won't allow to paste, I hate that to open a file I have to click a link and open it in a browser and then spend ages trying to get it to open in the "desktop" "app" because in a browser it runs like a turd. I mean, the list is long. I'm sure if I was a designer, working in it regularly, I'd probably like it a bit more, but as someone who only has to dip in and out occasionally it seems to make everything I ever need to do with it considerably more difficult than it should be. As mentioned above, people on our dev team copy and paste stuff out of it, into Affinity Designer, and then copy and paste from there into Sketch, just so that they can get decent assets out of it.
Try it - select a group of objects in Figma, hit Cmd+C and then try pasting that into Sketch - most of the time you'll get nothing at all, sometimes you get some text and none of the vectors. Basically it's just not a good OS citizen - working properly with the system pasteboard is surely one of the first things you'd get working.
As in, the fact that it's not built using native Mac OS elements unlike Sketch? If so, is this because it's slow even when opening one file, or just because it's not native code?
>I hate that copying from Figma creates something in the pasteboard that most apps won't allow to paste
That's probably because it's a vector and ensuring cross-app compatibility frankly isn't something that Figma (or any other program like Sketch) will place high on their todo list because designers generally stay in 1 tool.
For your last point, the only time I've had Figma open in the browser and then not open the tab in the desktop app was when I got a new work computer and I hadn't set the auto open in the app functionality yet.
Also, I'm really, really curious as to why people on your dev team go Figma --> Affinity Designer --> Sketch just to get assets. Are you looking for elements like spacing and color hex codes, or are you looking to export those assets into something like Jira so you have screenshots? Figma should be able to do all of those things in app, however I will say that if you only have view access and want to export something, someone with edit access will have to set something to be exported.
UI - as in it refuses to behave as a native app in any way and they obviously don't care. For instance, it ignores system zoom levels etc. - very high DPI screen + old man eyes means I have everything slightly zoomed so that I can read it, the UI text in Figma is so small I have to physically move to actually read it.
> That's probably because it's a vector and ensuring cross-app compatibility frankly isn't something that Figma (or any other program like Sketch) will place high on their todo list because designers generally stay in 1 tool.
This is just wrong. As I mentioned further down, a complex UI element with vector shapes and text on it can be perfectly copied and pasted between Sketch, Affinity Designer / Publisher / Photo, or even Pixelmator - I'm fairly sure it's just postscript in the paste buffer. Lord knows what is actually getting stored in the pasteboard when you copy from Figma, but whatever it is there's a 1/100 chance of you being able to paste it anywhere. If you copy as SVG it produces an abomination with all the text as paths.
The Figma -> Affinity Designer -> Sketch flow is just to get stuff into an app that doesn't behave in a completely alien way to every other app.
That's fine for some simple shapes, but a complex UI element with text in produces an absolute abomination of an SVG that's useless when pasted into another app.
Copying and pasting a complex UI element between Sketch, Affinity Designer / Publisher / Photo, or even Pixelmator works perfectly. Every other app I have has a functioning pasteboard.
> and their collaboration tools were lacking for a long time
Lacking as in completely non-existent. I used to love Sketch for being a very nice native feeling Mac app but Figma proved that doesn't really matter and I also love the fact it works on PC now PCs are the workhorses for creative AI workflows.
Used to love Sketch then they did some strange stuff with pricing and I moved to Figma. Just checking out their site now might give it a try. But always irks me when companies put SSO as a premium enterprise tier feature.
In the long run the positive thing is that this deal shows there's money to be made in this space. This will likely attract more companies to come up with new ideas and solutions.
it's no surprise that there's money in the space, every tech company uses design tools extensively, and more and more as the prototyping capabilities get better
How could a merger like this possibly be good for consumers? You take two companies actively competing against each other and ...stop one of them.