Lina Khan, former chair of the Federal Trade Commission (FTC), recently lamented the success of Figma’s high-profile initial public offering (IPO). She argues that this win underscores the effectiveness of her regulatory strategy toward mergers and acquisitions in the tech space. President Joe Biden appointed Khan as chair of the FTC. She was in that position until she stepped down—right when the second Trump administration started.
Khan defended her regulatory stance during her tenure, arguing that it aimed to foster an environment where founders could thrive through competition with multiple potential suitors. Third, she pointed out that only 1.2% of tech deals received what she called “a second look” from the FTC. As a result, she noted, her strategy would pay long-term dividends to startup founders.
In a post on X, Khan lauded Figma’s IPO as “a win for employees, investors, innovation, and the public,” highlighting its significance beyond mere financial metrics. She went on to praise the company’s banner first day of trading. This new milestone of achievement is even more notable for the value that’s created when startups are able to grow on their own, rather than being bought out by larger companies.
“This is a great reminder that letting startups grow into independently successful businesses, rather than be bought up by existing giants, can generate enormous value.” – Lina Khan
Khan’s statements come at a time of intense controversy over her regulatory strategy. This new approach has faced fierce backlash from several industries across the gig economy. Detractors argue that Figma’s success is not a result of regulatory scrutiny but rather due to the company’s innovative growth trajectory. Dan Ives, an analyst, remarked, “Figma is a massive success, but it’s because of the company’s innovative growth and not due to the FTC and Khan.”
During her tenure at the FTC, Khan’s work contributed to raising the alarm over the dangers of startup acquisitions by big tech. Her projects pushed many companies to consider “reverse acqui-hires.” Under this playbook, they focus on hiring talent and licensing technology, not buying up those technologies by acquiring startups—at least not up front. This tactic developed as firms looked to avoid regulatory hurdles but still needed to find and access talent and innovation.
The subsequent collapse of Adobe’s proposed $20 billion acquisition of Figma drew further attention to the high stakes and complexities of M&A in the tech sector. Adobe had argued that there was no such “clear path to an effective competitor” when its deal imploded. That illustrates the level of scrutiny companies face under Khan’s regulatory approach.
Khan’s unswerving faith in her approach is remarkable. She envisions a more textured playing field with “six or seven or eight potential suitors” for startups creating more innovation and more successful startups to emerge from that diversification. Her comments about Figma’s IPO in particular are illustrative of this fundamental conviction. She argues that there are significant long-term advantages to a dynamic, competitive market structure for tech companies.
