Lina Khan points to Figma IPO as vindication of M&A scrutiny

Lina Khan, the former chair of the Federal Trade Commission (FTC), has publicly praised Figma's recent initial public offering (IPO), viewing it as a testament to her advocacy for rigorous scrutiny of mergers and acquisitions in the tech industry. In a post on X, Khan highlighted Figma's strong debut in the stock market and emphasized that allowing startups to flourish independently can create substantial value, rather than being absorbed by larger corporations. This commentary comes in the wake of a failed $20 billion acquisition deal between Adobe and Figma that was abandoned in 2023. Adobe's decision was influenced by the absence of a clear pathway to regulatory approval from both the European Commission and the U.K. Competition and Markets Authority. Moreover, the proposed takeover raised significant concerns in the U.S. about Figma's ability to remain a competitive force against Adobe. During her tenure as FTC chair, Khan spearheaded efforts to challenge Big Tech's acquisition strategies, particularly focusing on how these mergers could restrict competition. This initiative prompted some companies to engage in what has been termed 'reverse acqui-hires,' where key personnel were hired and technologies licensed instead of outright acquisitions. Despite her departure from the FTC, this practice appears to persist. Khan faced substantial criticism from various sectors of the tech industry for her vigorous approach, but she maintained that only a small fraction of deals underwent deeper examination. She argued that a competitive landscape with numerous potential buyers is ultimately beneficial for founders and innovation. Although she resigned following the inauguration of the second Trump administration, Khan's recent comments frame Figma's IPO as a victory for employees, investors, and the spirit of innovation. However, some critics suggest that Figma's success should be attributed to its own innovative strategies rather than the regulatory environment. Dan Ives, an analyst at Wedbush Securities, remarked that while Figma's achievements are indeed impressive, they stem from the company's growth rather than the FTC's regulatory scrutiny.