Lina Khan on Figma IPO: A Win for M&A Scrutiny?

Figma's IPO Draws Praise from Lina Khan

An unexpected figure is acknowledging Figma’s triumphant initial public offering (IPO): Lina Khan, previously the chair of the Federal Trade Commission (FTC).

On Friday, Khan shared a link to an article detailing Figma’s strong debut on the stock market via X. She posited that the IPO serves as “a valuable illustration that allowing startups to mature into thriving, independent entities—as opposed to being absorbed by established corporations—can yield substantial benefits.”

The Blocked Adobe Acquisition

Khan’s statement referenced the failed $20 billion agreement for Adobe to purchase Figma, which dissolved in 2023. Adobe attributed the collapse to an uncertain path toward approval from both the European Commission and the U.K. Competition and Markets Authority.

However, the proposed acquisition also encountered regulatory challenges within the United States. Concerns were raised regarding the potential for stifling Figma’s ability to function as a viable “competitive force” against Adobe.

FTC Scrutiny of Big Tech

During her tenure as FTC chair, Khan spearheaded efforts to challenge large technology companies, particularly concerning their acquisition of startups. This led some companies to employ tactics like “reverse acqui-hires” – hiring key personnel and licensing technology instead of outright acquisitions – to circumvent regulatory review.

This practice appears to be ongoing, even following Khan’s departure from the FTC. Her assertive approach drew considerable criticism from within the tech sector.

Khan's Defense of Her Approach

Khan consistently defended her policies, emphasizing that only a small fraction of deals underwent detailed examination. She argued that founders would ultimately gain from “a landscape with six, seven, or eight potential buyers” rather than being limited to “just one or two.”

Despite resigning at the beginning of the second Trump administration, Khan’s recent comments position the Figma IPO as validation of her strategies. She described the IPO as “a positive outcome for employees, investors, innovation, and the broader public.”

Differing Perspectives on Figma’s Success

Conversely, Khan’s detractors are inclined to attribute Figma’s success to factors beyond regulatory oversight. Dan Ives, an analyst at Wedbush Securities, stated to Business Insider, “Figma’s achievement is a result of the company’s innovative expansion, and not attributable to the FTC or [Khan].”

Key Takeaway: The Figma IPO has ignited debate regarding the impact of regulatory scrutiny on startup growth and competition within the tech industry.

• The failed Adobe-Figma deal was a central point of contention.
• Khan championed a more proactive approach to regulating Big Tech acquisitions.
• Opinions diverge on whether regulatory pressure aided or hindered Figma’s success.