Figma’s Soaring IPO Sparks Debate: Did Blocking Adobe’s $20B Deal Help or Hinder Innovation?

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Photo by Pawel Czerwinski on Unsplash

When Figma hit the public markets and its stock skyrocketed over 200% on day one, it wasn’t just investors popping champagne.

Lina Khan, the former chair of the Federal Trade Commission (FTC), took to X (formerly Twitter) to call it a win—not just for Figma, but for her own approach to regulating Big Tech. She pointed to the IPO as a shining case for why some startups should be allowed to grow up without being swallowed by tech giants.

What happened here?

Let’s rewind a bit. In 2022, Adobe made headlines trying to buy Figma for a massive $20 billion. The design community gasped, regulators raised their eyebrows, and after a year of friction, the deal crumbled in 2023.

Officially, Adobe pulled the plug because it couldn’t find a “clear path” to regulatory approval in Europe and the UK. But in the U.S., Khan and the FTC were also putting on the pressure, questioning whether an Adobe-Figma deal would crush healthy competition.

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Photo by Valentin Zickner on Unsplash

Now, with Figma’s independent IPO blast-off in 2025—instantly hitting a $45 billion market cap—Khan is celebrating. In her post, she said the event is “a great reminder that letting startups grow into independently successful businesses, rather than be bought up by existing giants, can generate enormous value.”

Why does Khan care?

As FTC chair (appointed by President Biden), Lina Khan made headlines with her tough stance on how tech giants acquire smaller companies. She insisted that regulators had been too lenient for too long, letting monopolies form quietly through startup buyouts.

Some startups, feeling the heat, tried to dodge regulatory radar altogether with “reverse acqui-hires”—avoiding formal acquisitions by hiring core team members and licensing their tech instead.

Of course, her approach didn’t go over smoothly with everyone. Critics in the tech world accused her of overreaching and scaring off big opportunities. They claimed that this kind of regulation stifles innovation rather than protecting it.

Khan pushed back hard. She said only a tiny fraction of deals actually got close scrutiny. And she argued that giving startups more than just “one or two” potential buyers leads to better long-term outcomes—for founders, employees, and users alike.

Is Figma proof she was right?

Khan thinks so. Her Friday post called the Figma IPO “a win for employees, investors, innovation, and the public.” The message: Thanks to regulators stepping in, Figma had the chance to thrive on its own. And boy, did it.

But not everyone sees it that way. Dan Ives, an analyst at Wedbush Securities, told Business Insider that Figma’s success came “because of the company’s innovative growth and not due to the FTC and Khan.”

So, who’s right? It depends on your lens. Did regulation open the door for a bigger win, or did the company succeed despite it?

What this means for tech and startups

Whether you side with Khan or her critics, Figma’s journey is a milestone moment for anyone watching how startups and regulators collide.

  • If you’re a founder, it raises big questions: Should you hold out for independence, or take the mega-exit when it knocks?
  • If you’re a policy watcher, it’s an unexpected case study in how intervention might actually drive growth.

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Photo by Anthony Indraus on Unsplash

One thing’s for sure: Figma didn’t fade after the blocked deal. It exploded. And that story is going to stick with regulators and startup teams for years to come.

Just don’t expect the debate to end here. As we head toward more IPOs and more Big Tech drama, this tug-of-war between growth and control is far from over.

Stay curious. Stay tuned.

Keywords: Figma IPO, Adobe acquisition, Lina Khan, FTC regulation, tech startups

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