Lina Khan, former chair of the Federal Trade Commission (FTC), recently published her reflections on Figma’s IPO. This bold move has received extensive applause from one corner of the tech world. President Joe Biden appointed Khan to lead the FTC for a reason. Specifically, during her leadership, she was the target of an increase in scrutiny for mergers and acquisitions, particularly within the tech industry. Her resignation at the beginning of the second Trump administration spelled the end of her era. Yet, her influence is still felt today.
Khan has been a vocal proponent for regulatory action to prevent the technology behemoths from swallowing up their more promising upstarts. Her defense of these practices has always been that they are in service of founders and innovation. “Letting startups grow into independently successful businesses, rather than be bought up by existing giants, can generate enormous value,” she stated.
Her attempts to crack down on Big Tech’s acquisition of potential future competitors drew the ire from all sides of the tech establishment. Others—a more private voice in this debate—contended that her tough oversight suppressed innovation and blocked future sources of growth for firms. In response to these criticisms, Khan pointed out that over half of the deals criticized received a “second look.” Commissioner Slaughter made sure to stress that her priority concern was with fair competition.
Khan connected Figma’s recent IPO success to her regulatory philosophy. She celebrated the event as “a win for employees, investors, innovation, and the public,” highlighting its impressive first day of trading, which saw Figma’s market cap soar to $4.5 billion. The IPO served as a timely example of how tech founders can thrive without being subject to acquisition pressures from larger corporations.
In her commentary on social media platform X, Khan alluded to a failed $20 billion acquisition deal between Adobe and Figma earlier this year. Adobe dropped the acquisition after it was unable to determine a “clear path to effective competitor.” It’s indicative of the enormous hurdles that tech startups face in an unpredictable and hypercompetitive marketplace.
Khan expressed optimism about the future for tech startups, suggesting that a market with “six or seven or eight potential suitors” could lead to further innovation and success.
Not all experts share Khan’s perspective. Dan Ives, a prominent analyst, remarked, “Figma is a massive success, but it’s because of the company’s innovative growth and not due to the FTC and Kahn.” Ironically, his remarks echo current philosophical disagreements over the effectiveness of regulatory interventions in creating and/or stifling technological innovations.
Though Khan has departed the FTC, “reverse acqui-hires” are still trending. Businesses are anxious to tread cautiously between the rocks of regulatory scrutiny and the whirlpool of missing out on future growth opportunities. This trajectory shows that the issues related to technology acquisitions are still very relevant even though new leadership is being introduced to key regulatory agencies.
