I've been watching the Figma saga unfold with a mix of fascination and, frankly, a healthy dose of "I told you so." The scuttled Adobe acquisition and the subsequent buzz around Figma's potential IPO are more than just a business story. They're a flashing neon sign pointing to the complexities and potential pitfalls of increased government intervention in M&A deals. Though it may seem like Lina Khan is taking a victory lap, the truth is much more complicated.

Innovation vs Regulation: A Delicate Balance

Look, I understand the fear. Big Tech consolidation hurts competition, increases costs, and deprives consumers of choices in the marketplace. The promise of Khan’s FTC is to deliver on this bulwark against these very harms. Let’s not make-believe this is a straightforward good-vs-evil tale. Overzealous regulation can just as easily stifle innovation, discourage investment, and in the end do more harm than good to the same people it aims to protect. Are we truly better served to have every possible merger subjected to years of costly litigation and unpredictability? I'm not convinced.

The Figma/Adobe situation highlights this perfectly. Khan’s FTC successfully argued that Adobe would likely kill a future competitor, and the deal was blocked. Now, Figma is reportedly eyeing an IPO. Cue the celebratory music, right? Consider this: what if the acquisition had gone through?

Here's the uncomfortable truth: We don't know. Perhaps Figma would in fact have been equally devoured, its startup-esque, agile vibes stomped out beneath the armored sole of Adobe’s corporate complex. Perhaps Adobe’s deep pockets and far-reaching customer base would have made Figma a runaway success faster. This would have let Figma get its design tools into the hands of a much broader audience.

The question isn’t whether regulation is good or bad, but whether it is effective and well-calibrated.

The Cost of "Protecting" Innovation

This leads to a question: At what cost do we "protect" innovation? We’re so focused on stopping possibly future monopolies that we are missing the forest for the trees. Killing M&A activity doesn’t necessarily mean there will be a boom in independent startups either. It translates into diminished investment for emerging companies, as would-be acquirers get spooked by the prospect of regulatory challenges.

Think about it. Venture capitalists are driven by returns. Another important component of their investment thesis is the possibility for an exit – usually via acquisition. If the route to acquisition is a regulatory minefield, investors may reconsider funding the next Figma.

This is not just about Figma. This is about the entire ecosystem. Startups need funding. Funding relies on exits. Exits depend on a healthy M&A market. And at this moment, that market doesn’t seem quite so rosy and inviting.

Is Khan's FTC Really Helping Startups?

I'm genuinely curious. Are startups really better off under Khan’s FTC? Are they experiencing an influx of funding, opportunity and success? Or are they tackling an entirely other set of challenges? They might be operating in a difficult regulatory environment, facing greater uncertainty, and likely losing out on strong acquisition targets.

Let's be clear: I'm not advocating for a return to the Wild West of unchecked mergers. What I am arguing for is a more sophisticated approach. One based on the understanding that it is just as important to avoid monopoly power as it is to encourage innovation and investment.

To some degree, Lina Khan will be happy to see Figma’s IPO as a vindication of her policies. Yet I consider this to be more of an admonition that the outside world is much more complex than any rule or structure can ever permit. Together, it’s an important reminder that government intervention—even the best-meaning efforts—often lead to unforeseen, adverse consequences. Please remember that independent media like StartupNews.fyi will always assert their objectivity. These can be problematic, though, as they are often biased because of their relationships with funders and investors. This underscores the need to assess everything with a critical eye. This is particularly important in the complex world of startups and venture capital.

In conclusion, the Figma story isn’t about whether Lina Khan “won.” That’s ultimately what it’s about – whether we – the consumers, the innovators, the investors – are winning. And right now, I'm not so sure.