Adobe loses Figma and (almost) everyone wins

However, ‘tis the season to be jolly—and for the main players in this scenario, the outcome is in many ways a positive one.

For Figma, the deal’s collapse comes with a $1 billion termination fee. That’s nothing to be sneezed at, even if the UX design tool company is already doing very nicely indeed. According to The Information, annual recurring revenue is up 40% year on year, likely surpassing $600 million this year, and now an IPO may beckon in 2025 or later.

Adobe’s share price rose 3% on the news, so its investors clearly see this as a win—don’t forget that the announcement of the acquisition in September 2022, at a valuation many thought was outlandish, knocked 20% off Adobe’s share price.

Even fans of the deal see considerable upside for Adobe in its failure. Constellation Research’s Liz Miller reckons the regulators blew it by hearing the word “design” and conjuring up conflicts that don’t exist—Adobe’s inferior and largely abandoned competitor to Figma, XD, was never a major part of its portfolio anyway. However, Miller wrote today, “The regulators may have done Adobe a solid by dragging their heels and bungling these inquiries”:

“Let’s, for argument’s sake, imagine a world in which the deal swam forward smoothly and realized a close date of mid-2023. This would have been in the THICK of the earth-shaking shift to generative AI. Would the world be a bit different if Adobe had been pushed into deciding between the investment into Figma and the investment into bringing the Firefly portfolio of AI models to market?…While regulators were lamenting that Adobe would use their posture in the marketplace to miss out on improvements and innovations, tools like Generative Fill and Firefly Image models have radically changed the work of creation in ways we couldn’t have truly envisioned when the headlines first broke about Adobe and Figma. The time free from the chaos of acquisition allowed Adobe’s roadmap into an AI-enriched creative future to unfold.”

And finally, let’s spare a thought for the regulators, who get to hold aloft the scalp of what they—rightly or wrongly—saw as a significant killer acquisition. They’ve blown it in the past by applying insufficient skepticism to acquisitions that turned out to have removed big potential competitors from the scene, notably Facebook’s purchases of Instagram and WhatsApp. (In the latter case, Facebook told the European Commission at the time of the 2014 takeover that it couldn’t automatically match user data from both services; it then went on to do just that, earning a $122 million fine for providing misleading information.) Killing Adobe-Figma overcomes some of that lingering embarrassment, and maybe a strong and independent Figma really will end up generating the anti-Adobe competition that the regulators feared would have been lost.

Always look on the bright side and all that. More news below.

David Meyer

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NEWSWORTHY

TikTok moderation. A Guardian investigation, based on internal company messages, has revealed that TikTok apparently moderates Amazon’s accounts on the platform with a particularly light touch. Moderation staff were told not to take down any of the five dozen accounts, or even to “flag” them for content guideline violations. Amazon is one of the biggest advertisers on TikTok, which denies giving the company special treatment. The newspaper also reports that TikTok moderators were told to give an easy ride to celebrities like Russell Brand and Sam Smith.

ActivityPub boom. Flipboard is joining the “fediverse” through its adoption of the ActivityPub protocol, according to TechCrunch. This means Flipboard content will be open for interaction on other platforms that plug into the fediverse, and Flipboard users will be able to do the same with content from those services. Meta’s Threads has also started testing the open-source protocol, which has long been key to platforms like Mastodon and Lemmy. WordPress also supports it, and tech publication The Verge is also about to plug its short posts into the fediverse. The Verge editor-in-chief Nilay Patel: “If we don't try radical new things the platforms will kill us all anyway.”

TomTom’s car AI. The Dutch navigation firm TomTom has partnered with Microsoft to create an AI chatbot for cars. As Reuters reports, the aim is to let drivers “converse naturally with their vehicles” about things like entertainment and (obviously) navigation, using OpenAI’s underlying technology.

ON OUR FEED

“A secure, resilient, and interoperable Internet benefits the public interest and supports human rights to privacy and freedom of opinion and expression. This is endangered by technologies, such as recent proposals for client-side scanning, that mandate unrestricted access to private content and therefore undermine end-to-end encryption and bear the risk to become a widespread facilitator of surveillance and censorship.”

—The Internet Architecture Board, which oversees (surprise) the Internet’s architectural development, does not like legislative proposals in the U.S., U.K., and EU to force device manufacturers to allow the scanning of people’s communications before encryption or after decryption.

IN CASE YOU MISSED IT

Jeff Bezos reveals his formula for running the perfect meetings to weed out those ‘who pretend to have done the reading’, by Orianna Rosa Royle

Apple scrambles to salvage its $17 billion smartwatch business amid a looming ban over patent infringement, by Bloomberg

Google will pay $700 million to settle state claims its Android app store stifled competition, by the Associated Press

Nikola founder who ‘over and over’ made false claims about his startup’s electric trucks gets 4 years in prison, by the Associated Press

Foreign hackers did not change vote totals or otherwise compromise the integrity of 2022 elections, declassified documents says, by the Associated Press

Arm lays off over 70 software engineers in China and will relocate some of the jobs outside the country as U.S. Chip restrictions take hold, by Bloomberg

BEFORE YOU GO

Campaigning with AI. Imran Khan, the former Pakistani prime minister who is currently imprisoned on charges of leaking classified documents that his supporters claim are intended to stop him from contesting upcoming elections, has released a campaign video that was made partly using AI.

As reported by AFP, Khan sent his team a barebones script, which they then expanded and realized using ElevenLabs AI that was trained on previously recorded audio of his voice. Khan in the video: “My fellow Pakistanis, I would first like to praise the social media team for this historic attempt.” Jibran Ilyas, from that team: “This was a no-brainer for us, when Imran Khan is no longer there to actually meet at a political rally. It was to get over the suppression.”