So blocking a sale at a $20B valuation so the company can IPO at a $19.3B valuation 3 years later (a loss of $700M in value over 3 years) is a success?
tkzed49 · 53s ago
Yeah, because now it's not owned by Adobe, who are tanking their own stock price.
bix6 · 3h ago
founders would ultimately benefit from “a world in which you have six or seven or eight potential suitors” rather than “just one or two.”
Real talk Lina
timr · 2h ago
yep. So perhaps don’t block every potential transaction on flimsy pretense? Icing the transaction market seems like a great way to scare off potential competing acquirers in the name of social engineering.
I don’t know. All I know is that Lina is out of power, and suddenly we see an upswing in M&A. Coincidence, I’m sure.
stackskipton · 57m ago
Problem is, by the time she got into power, everyone had consolidated so icing the transaction market was pretty much only outcome.
Lina Khan was entering a market that was deeply flawed thanks to decades of bad policy.
tptacek · 2h ago
I'm not a Khan fan, like, at all, but by the time you're at the point where the FTC is getting involved in your M&A, you've crossed the threshold of success; all the signals to future startups about your path being promising have been sent.
Spartan-S63 · 1h ago
In fact, if future competition is contingent on successful M&A activity, that’s a sign of such deep organizational rot that you either have to radically transform management or ride the company down.
Not everything needs to last and companies that can’t radically transform their management culture to enable innovation and competition deserve to wane until they’re in a steady-state or they go under to allow for a new competitor to rise.
timr · 1h ago
I disagree. A lot of smaller acquisitions went away during the Khan reign, and from what I was hearing it wasn’t coincidental.
Basically the random and aggressive nature of it was having a chilling effect on all M&A. Why would you go thorough the hassle of a small acquisition (as a buyer) if you knew there was a even a 10% chance that the FTC was going to take an interest?
elefanten · 1h ago
I agree with your general point, but Khan was excessively trigger happy in a way that highlights exceptions to your observation. E.g. blocking Meta acquisition of Within was nonsense that did nothing to validate the concept of VR fitness as a promising category (anytime soon)
Edit: Within, not Withings
digitaltrees · 22m ago
Her point is that m&a isn’t the best thing for the economy or founders. Unchecked m&a creates cannibal capitalism where one mega zombie firm scoops up all competition.
Yet there are plenty of examples of monopoly or near monopoly businesses getting their butts handed to them by startups.
So it’s clearly not “once you have a monopoly it’s game over for competition”.
alephnerd · 2h ago
Except the majority of the Figma IPO was captured by banks due to it's severe pop. So while everyone made a lot of money, the overwhelming majority went to the underwriters [0].
The founding team at Figma would have gotten a similar amount much sooner if the acquisition was let thru OR if the underwriters didn't screw them over by underpricing at $33.
The IPO "pop" is not captured by banks: it's captured by the banks customers that pre-buy at the IPO price.
Basically, before an IPO, the underwriters take the company on a "roadshow" in which they pitch the IPO to potential buyers.
There's a hierarchy of these: the best are very large buyers that place large orders and trade seldom. Pensions, sovereign wealth funds, etc.
Those buyers then make offers ("I'll buy 50MM at $100"), which the bank uses to set the IPO price. The bank then gives them an allocation.
If you're a high (10MM+) net worth individual that banks with one of the underwriters, you can often get an allocation in an IPO. The richer you are, the more of an allocation you can get.
When an IPO pops, it's these people that get the benefit.
The benefit for the company is that the stock is owned by prime people the bank selected: you crucially _don't_ want to just sell to the highest bidder if they are going to dump the stock immediately after the pop (or that's the theory, at least). They have stable shareholders with a vision aligned with management.
The benefit to the bank is that they get to reward their customers with access to profitable trades--but the bank itself does not profit.
wat10000 · 2h ago
Why don’t more IPOs do an auction to set the price? Trying to determine the “right” price ahead of time seems like a really bad way to do things.
ptero · 1h ago
An auction for IPO price is much easier to manipulate and can lead to much volatility. Pre-allocating to the entities that are not expected to sell quickly or participate in pump-and-dumps (pension funds, etc.) is considered a better long term strategy for the company, as the sister comment says.
oooyay · 2h ago
My experience with mergers and acquisitions is that it's akin to keeping a warm body on life support. When I worked at a company that did a lot of M&A I was sitting around like, "Why couldn't you have just built that?" When I worked at a company that was recently acquired and went through the merger process I was like, "wow I see why you bozos would've never built this yourselves." That isn't to say there aren't companies that do them well or there aren't places where it makes sense in an ultra-competitive landscape but I'm curious - when was the last time anyone really considered tech an ultra competitive landscape?
Post-2015 other than large language models this industry has mostly been riding on intellectual property consolidation. That's basically Lina's point; nobody actually benefits from this - not customers, not share holders, not the American people. The over practice of M&A leaves a small pool of winners who are not the kind of people that post on or read this forum.
delfinom · 23m ago
The only ones that benefit are the executives from temporary boosts of revenue numbers hitting targets for their bonus payouts.
grandmczeb · 3h ago
So what is iRobot’s bankruptcy evidence of?
sealeck · 3h ago
That if Amazon acquired it, this would enable it to horizontally integrate and take control of yet another market? This, eventually, woudl lead to lower prices for consumers...
bryant · 3h ago
> This, eventually, woudl lead to lower prices for consumers...
What incentive would Amazon have to drop prices after vertical integration is done?
tomrod · 2h ago
Economies of scope are the common claim.
margalabargala · 2h ago
No, that's what lowers Amazon's costs.
Why would Amazon, having lowered their costs, pass that savings on to the consumer when they could simply profit more?
dgfitz · 2h ago
Are you asking about supply and demand?
margalabargala · 1h ago
The context of the conversation is one of a horizontal monopoly, in a market that's near saturation, operated by a megacorporation that could afford to ignore profits or losses indefinitely, in the specific industry of robot vaccuums. So maybe the question is "why on earth would someone think supply and demand does apply here?"
roughly · 2h ago
I believe he’s asking why the parent poster was suggesting monopolistic consolidation would be good for the consumer, contrary to what all theory and experience would suggest.
tomrod · 1h ago
*shrug* I gave him the argument baseline argument commonly known because it claims that costs become lower (and thus the merged entity claims to pass lower costs to the consumer) that normally flies at the FTC.
bee_rider · 1h ago
This is sarcasm, right? The “eventually,” the ellipses, and the underlying ridiculousness lead me to believe it is sarcasm.
conscion · 49m ago
That Amazon wasn't acquiring it for it's business acumen and was actually acquiring it for some secondary purpose (i.e. market consolidation, data extraction)
CamperBob2 · 2h ago
Evidence that you can only coast for so long on patents. Eventually you have to get back to work and provide value to customers.
steveBK123 · 1h ago
More companies going public, earlier is better for markets and society.
Having companies stay private growing from 0 to 100B value allows VC bros to capture all the growth and then unload onto the public via IPO or selling to a larger BigTech firm.
sitkack · 29m ago
Lina Khan is a genius.
eggn00dles · 4m ago
would not be surprised if shes the first fpotus
x3n0ph3n3 · 2h ago
And yet she allowed Broadcom to purchase and gut VMware.
richwater · 3h ago
Lina Khan's obsession with "big is bad", especially her preexisting prejudice of Big Tech should have disqualified her from any position well before she took the wheel.
How many times did the FTC fail in court under her watch? More than I can count on two hands.
Meanwhile local and state utility and cable tv monopolies continue to _flourish_ without so much as a peep.
sealeck · 3h ago
> especially her preexisting prejudice of Big Tech should have disqualified her from any position well before she took the wheel.
The purpose of the FTC is literally to take regulatory action to prevent unfair competition. Your argument is that you shouldn't appoint a commissioner on the basis that they think large tech companies are engaging in anti-competitive behaviour?? Note that this position isn't playing dictator; the FTC is subject to judicial oversight.
> Meanwhile local and state utility and cable tv monopolies continue to _flourish_ without so much as a peep.
How do we know this isn't just your preexisting prejudice of cable companies? Maybe you've just got an obsession with "big [cable] is bad"? On a serious note – it seems that you _do_ agree with antitrust regulation, just not against Facebook/Amazon for some reason (and only against Comcast)??
bix6 · 3h ago
You expect a perfect success rate against the highest paid lawyers in the world? At least she was trying to enforce antitrust for once.
Big is bad bro. There’s like 5 companies carrying the entire S&P rn how is that good for anyone outside of those 5 companies?
elefanten · 3h ago
Doesn't have to be a perfect success rate... how about just something other than abysmal failure rate?
Asserting a sloganized refrain is not very convincing. Make a real argument. Here are some counterpoints to "big is bad" Neobrandeisianism:
-Scale enables better economics for certain businesses which consumers and other businesses then benefit from.
-Large size allows additional speculative cutting edge R&D funding which the whole world benefits from even if it never pays off.
-Being big on its own is almost never a cheat code to permanent monopoly / monopsony lock-in, especially in the technology business. That comes from actual anti-competitive behavior or regulatory capture (which ARE the parts that should be regulated, rather than targeting or preventing size for its own sake).
The S&P point is more than a bit overstated and it also doesn't really matter? The subset of the S&P that's performing well will naturally get weighted higher over time, until the performance changes. It doesn't really matter if the S&P is driven by 5 enormous companies or 500 equally-sized ones. Whatever works at the moment is what gets rewarded with capital -- that's the point of the system and it's been more effective than any alternatives. Besides, it'd be poor investing practice to be literally all-in on the S&P.
bix6 · 3h ago
Scale enables big companies like Amazon and Walmart to force anti-competitive vendor and pricing agreements that harm small businesses.
Meta is top 10 for DC lobbying. No regulatory capture to see here.
richwater · 3h ago
> Big is bad bro
Using "big" as a synonym for "consumers are worse off than alternatives" does not do anyone justice.
> At least she was trying to enforce antitrust for once.
Her prejudice against big tech and pretty much ignoring any other industries is not something to be proud of.
lemoncookiechip · 3h ago
- Three major court wins (Illumina, Tapestry/Capri, Kroger/Albertsons), multiple deals dropped.
- Junk-fees ban, click-to-cancel rule (You can thank the current administration for walking back on this), non-compete ban.
-Right to repair, data privacy enforcement, health-care pricing interventions ( reduced out-of-pocket costs for inhalers and insulin).
nicoburns · 3h ago
Big doesn't necessarily mean that consumers will be worse off than small. Just like having a dictator doesn't neccesarily mean that citizens will be worse off then in a democracy. What it does mean in both cases is that if the powerful entity decides to abuse their power for their own gain, it's very difficult (albeit not entirely impossible) to do anything about it. It's therefore better in the long-run to preempt this and bias towards smaller entities that are each less powerful.
bix6 · 3h ago
I’m unclear what your first point is saying
FTC under her blocked Kroger/Albertsons, blocked Tapestry/Capri, ended non-competes, enacted click to cancel, made major strides on right to repair, etc. in addition to all the “prejudice against big tech” which are the titans of industry right now…
redserk · 3h ago
Big tech has been ignored for quite some time compared to other industries.
jeffbee · 2h ago
Under Khan, the FTC has abandoned the standard of consumer harm, and now just blocks mergers based on vibes. I really liked this article criticizing her approach:
I stopped reading when they defended Albertsons and Kroger merger. Can anyone defend the consolidation of grocery stores with a straight face? Walmart has obliterated any competition and it has destroyed local food sources everywhere. They can do it at scale that no one can compete with. If the only solution is to further consolidate then we might as well just hand over the government to Walmart.
jeffbee · 2h ago
And yet, groceries have never been cheaper. So the question becomes which do you want: consumer benefits, or your aesthetic preferences regarding how big a company should be?
xrd · 1h ago
Should jobs be a factor as well? I see a lot of job loss in small town Iowa and Nebraska. I don't live there and people there have definitely voted with their wallets.
Food plus quality price index in Japan and France look better to me despite the lack of Walmarts.
And, I read some things about price collusion of the major grocers during the pandemic that makes me concerned.
I will say, thanks for being a human and discussing this as a human. Too many bots on HN lately.
bix6 · 1h ago
Groceries were cheapest around 2000 and have gotten more expensive since? Particularly 2020 on
elefanten · 3h ago
Her opinion should not be taken seriously on the matter. It's not just the empirically terrible track record she had as a regulator and the baffling cases she brought to bear (imo proof of your point that she had an overgeneralized bias). It's also that she was demonstrably inexperienced at the time she was selected! It was clearly performative political appointment, which the Biden administration was pretty egregious about (and so have both Trump administrations, this is not a political point).
The essay (literally, a homework assignment she did at law school) for which she became famous that criticizes Amazon for being big is so chock full of errors, misconstructions and faulty logic, that it's an indictment of some really poor political habits and instincts that the US is prone to. That due diligence in vetting her as a rigorous and informed thinker on the topic failed is an unequivocal failure.
gruez · 3h ago
>The essay (literally, a homework assignment she did at law school) for which she became famous that criticizes Amazon for being big is so chock full of errors, misconstructions and faulty logic, that it's an indictment of some really poor political habits and instincts that the US is prone to.
She got boosted by an insurgent group of law professors who spearhead whats called the Neobrandeis moment. Their theory is that anti-trust should be preemptively enforced against size for its own sake.
This is the article she wrote for her law review as a law student which put her on their radar and they started calling her a "rising star" etc etc, which snowballed into the performative appointment by the Biden admin.
Feel free to read through it.
estearum · 2h ago
Performative and ineffective but somehow actually deterred a lot of M&A? How does that make sense?
linotype · 2h ago
What errors?
elefanten · 1h ago
A lot beyond the scope of the time I have to comment here. Read it with an open mind, knowledge of tech business, knowledge of how things unfolded since it was published and see for yourself.
But some short hand:
-Assumes vertical integration is necessarily abusive
-Assumes lowering price is necessarily a setup for anti-competitive practices. This one’s particularly ironic because lowering prices is definitely a first-order good for consumers and businesses that buy those goods. Bezos’ famous saying was “your margin is my opportunity” —- would you rather the standard continue to be massive retailer markup profit that goes straight to retail corps?
-Vague scare tactic claims that expanding into media production etc will somehow (yadda yadda, Step 2: ???) lead to monopolies in every category they enter.
The TLDR of the problem with Neobrandeis is it forms a very opinionated paranoid notion that size can only lead to bad things and no good things. It is a lazy dodge around the traditional responsibility of regulators to identify and regulate actual anti-competitive behavior when it actually happens
By constraining companies from using any form of size or integration-related advantage, it lowers the pressure to actually be competitive and innovative for everyone else.
I’m not saying everything should be unconditionally allowed, there’s a balance to strike. But when you just have a blunt “anti-size” hammer, you’re gonna do collateral damage to a healthy competitive ecosystem in a damaging way.
Sherveen · 21m ago
Everyone in this thread who posts some variation of "wow love it how the government gets to decide if you get to sell your startup or how the market should work" should be handcuffed to their chair and forced to answer these 3 questions:
1. is there any role for gov't antitrust in your view of modern capitalism?
2. if there is a role, why is Adobe x Figma not the perfect example for enforcement?
3. if your answer is "Adobe clearly isn't a monopoly, look at the existence of Figma as evidence," why are you dumb?
DenverR · 2h ago
Love the FTC getting to decide if you’re permitted to sell your startup or forced to deliver more shareholder value.
breadwinner · 2h ago
If a big company in dominant position is allowed to gobble up any and all upstart competitors that's bad for competition, and it is the FTC's job to preserve competition.
DenverR · 15m ago
How was Figma able to generate any value operating in Adobe’s powerful monopoly?
linotype · 2h ago
As an investor that can’t invest in private companies, I love it unsarcastically.
BobAliceInATree · 2h ago
$20 billion sell price is no longer a “startup”
mosura · 1h ago
Indeed, in a week Meta will offer that to an ML undergrad as a signing bonus.
kelnos · 17m ago
I do love it. Companies don't exist solely to enrich their founders, they exist to provide a benefit to society. There needs to be a balance, of course, but if allowing a sale does not benefit society, then we should not allow it.
> your startup
You're under the misconception that companies "belong" to individuals. Companies are legal frameworks that society has decided upon. We could legally decide that M&A just isn't allowed, ever, if we wanted to. (I don't think that would be a good idea, but I hope you see my point.)
Real talk Lina
I don’t know. All I know is that Lina is out of power, and suddenly we see an upswing in M&A. Coincidence, I’m sure.
Lina Khan was entering a market that was deeply flawed thanks to decades of bad policy.
Not everything needs to last and companies that can’t radically transform their management culture to enable innovation and competition deserve to wane until they’re in a steady-state or they go under to allow for a new competitor to rise.
Basically the random and aggressive nature of it was having a chilling effect on all M&A. Why would you go thorough the hassle of a small acquisition (as a buyer) if you knew there was a even a 10% chance that the FTC was going to take an interest?
Edit: Within, not Withings
So it’s clearly not “once you have a monopoly it’s game over for competition”.
The founding team at Figma would have gotten a similar amount much sooner if the acquisition was let thru OR if the underwriters didn't screw them over by underpricing at $33.
[0] - https://pitchbook.com/news/articles/figma-ipo-pop-spotlight-...
Basically, before an IPO, the underwriters take the company on a "roadshow" in which they pitch the IPO to potential buyers.
There's a hierarchy of these: the best are very large buyers that place large orders and trade seldom. Pensions, sovereign wealth funds, etc.
Those buyers then make offers ("I'll buy 50MM at $100"), which the bank uses to set the IPO price. The bank then gives them an allocation.
If you're a high (10MM+) net worth individual that banks with one of the underwriters, you can often get an allocation in an IPO. The richer you are, the more of an allocation you can get.
When an IPO pops, it's these people that get the benefit.
The benefit for the company is that the stock is owned by prime people the bank selected: you crucially _don't_ want to just sell to the highest bidder if they are going to dump the stock immediately after the pop (or that's the theory, at least). They have stable shareholders with a vision aligned with management.
The benefit to the bank is that they get to reward their customers with access to profitable trades--but the bank itself does not profit.
Post-2015 other than large language models this industry has mostly been riding on intellectual property consolidation. That's basically Lina's point; nobody actually benefits from this - not customers, not share holders, not the American people. The over practice of M&A leaves a small pool of winners who are not the kind of people that post on or read this forum.
What incentive would Amazon have to drop prices after vertical integration is done?
Why would Amazon, having lowered their costs, pass that savings on to the consumer when they could simply profit more?
Having companies stay private growing from 0 to 100B value allows VC bros to capture all the growth and then unload onto the public via IPO or selling to a larger BigTech firm.
How many times did the FTC fail in court under her watch? More than I can count on two hands.
Meanwhile local and state utility and cable tv monopolies continue to _flourish_ without so much as a peep.
The purpose of the FTC is literally to take regulatory action to prevent unfair competition. Your argument is that you shouldn't appoint a commissioner on the basis that they think large tech companies are engaging in anti-competitive behaviour?? Note that this position isn't playing dictator; the FTC is subject to judicial oversight.
> Meanwhile local and state utility and cable tv monopolies continue to _flourish_ without so much as a peep.
How do we know this isn't just your preexisting prejudice of cable companies? Maybe you've just got an obsession with "big [cable] is bad"? On a serious note – it seems that you _do_ agree with antitrust regulation, just not against Facebook/Amazon for some reason (and only against Comcast)??
Big is bad bro. There’s like 5 companies carrying the entire S&P rn how is that good for anyone outside of those 5 companies?
Asserting a sloganized refrain is not very convincing. Make a real argument. Here are some counterpoints to "big is bad" Neobrandeisianism: -Scale enables better economics for certain businesses which consumers and other businesses then benefit from. -Large size allows additional speculative cutting edge R&D funding which the whole world benefits from even if it never pays off. -Being big on its own is almost never a cheat code to permanent monopoly / monopsony lock-in, especially in the technology business. That comes from actual anti-competitive behavior or regulatory capture (which ARE the parts that should be regulated, rather than targeting or preventing size for its own sake).
The S&P point is more than a bit overstated and it also doesn't really matter? The subset of the S&P that's performing well will naturally get weighted higher over time, until the performance changes. It doesn't really matter if the S&P is driven by 5 enormous companies or 500 equally-sized ones. Whatever works at the moment is what gets rewarded with capital -- that's the point of the system and it's been more effective than any alternatives. Besides, it'd be poor investing practice to be literally all-in on the S&P.
Meta is top 10 for DC lobbying. No regulatory capture to see here.
Using "big" as a synonym for "consumers are worse off than alternatives" does not do anyone justice.
> At least she was trying to enforce antitrust for once.
Her prejudice against big tech and pretty much ignoring any other industries is not something to be proud of.
-Over $1.5B refunded. Significant settlements (Epic, MoneyGram, Amazon delivery drivers, etc.)
- Junk-fees ban, click-to-cancel rule (You can thank the current administration for walking back on this), non-compete ban.
-Right to repair, data privacy enforcement, health-care pricing interventions ( reduced out-of-pocket costs for inhalers and insulin).
FTC under her blocked Kroger/Albertsons, blocked Tapestry/Capri, ended non-competes, enacted click to cancel, made major strides on right to repair, etc. in addition to all the “prejudice against big tech” which are the titans of industry right now…
https://insights.som.yale.edu/insights/the-ftcs-antitrust-ov...
Food plus quality price index in Japan and France look better to me despite the lack of Walmarts.
And, I read some things about price collusion of the major grocers during the pandemic that makes me concerned.
I will say, thanks for being a human and discussing this as a human. Too many bots on HN lately.
The essay (literally, a homework assignment she did at law school) for which she became famous that criticizes Amazon for being big is so chock full of errors, misconstructions and faulty logic, that it's an indictment of some really poor political habits and instincts that the US is prone to. That due diligence in vetting her as a rigorous and informed thinker on the topic failed is an unequivocal failure.
source?
She got boosted by an insurgent group of law professors who spearhead whats called the Neobrandeis moment. Their theory is that anti-trust should be preemptively enforced against size for its own sake.
This is the article she wrote for her law review as a law student which put her on their radar and they started calling her a "rising star" etc etc, which snowballed into the performative appointment by the Biden admin.
Feel free to read through it.
But some short hand:
-Assumes vertical integration is necessarily abusive
-Assumes lowering price is necessarily a setup for anti-competitive practices. This one’s particularly ironic because lowering prices is definitely a first-order good for consumers and businesses that buy those goods. Bezos’ famous saying was “your margin is my opportunity” —- would you rather the standard continue to be massive retailer markup profit that goes straight to retail corps?
-Vague scare tactic claims that expanding into media production etc will somehow (yadda yadda, Step 2: ???) lead to monopolies in every category they enter.
The TLDR of the problem with Neobrandeis is it forms a very opinionated paranoid notion that size can only lead to bad things and no good things. It is a lazy dodge around the traditional responsibility of regulators to identify and regulate actual anti-competitive behavior when it actually happens By constraining companies from using any form of size or integration-related advantage, it lowers the pressure to actually be competitive and innovative for everyone else. I’m not saying everything should be unconditionally allowed, there’s a balance to strike. But when you just have a blunt “anti-size” hammer, you’re gonna do collateral damage to a healthy competitive ecosystem in a damaging way.
1. is there any role for gov't antitrust in your view of modern capitalism? 2. if there is a role, why is Adobe x Figma not the perfect example for enforcement? 3. if your answer is "Adobe clearly isn't a monopoly, look at the existence of Figma as evidence," why are you dumb?
> your startup
You're under the misconception that companies "belong" to individuals. Companies are legal frameworks that society has decided upon. We could legally decide that M&A just isn't allowed, ever, if we wanted to. (I don't think that would be a good idea, but I hope you see my point.)