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Adobe's stock slipped 0.5% in Tuesday's premarket after CMA said the Photoshop maker's proposed $20B buyout of Figma could harm the design sector.

UK regulator Competition and Markets Authority (CMA) unveiled findings from its in-depth investigation of the $20 billion Adobe-Figma deal, saying the buyout could put the UK’s design sector at risk and reduce competition. Adobe’s stock (Nasdaq: ADBE), which rose significantly in 2023, fell nearly 0.5% ahead of the market open on Tuesday. 
 

Adobe’s Buyout of Figma Could Affect $75.6B Digital Design Market

Shares of Adobe fell slightly in the Tuesday premarket trading after the UK’s competition regulator released a statement, raising fresh concerns over Adobe’s proposed $20 billion acquisition of cloud-based designer platform Figma.

Notably, the CMA said the deal could harm innovation for software used by most UK digital designers. Further, the buyout would also affect competition as it would remove Figma as a threat to Adobe’s flagship Photoshop and Illustrator products, the watchdog said, citing the findings from an in-depth investigation it launched in July.

The probe was initiated after Adobe declined to develop concessions to address the regulator’s concerns. The company’s stock witnessed a nearly 90% surge this year amid the ongoing AI boom.

“We are reviewing the provisional findings and will reengage with the CMA on the facts and merits of the case.”

– Adobe wrote in a statement.

The CMA highlighted that the UK digital design sector is valued at around 60 billion pounds ($75.6 billion), accounting for 2.7% of the national economy. The industry employs over 850,000 people in highly skilled work, it added. 

Its antitrust probe comes amid an increased regulatory crackdown on Big Tech acquisitions. These deals have been scrutinized due to concerns that they enhance the market dominance of major companies or involve startups perceived as emerging competitors.

The CMA said it was open to hold consultations with interested parties on its findings before announcing its final verdict. 
 

Adobe-Figma Deal Overview

Adobe’s plans to acquire Figma were announced in September 2022, with the Photoshop maker offering $20 billion in a cash and stock deal. Figma, which primarily competes with Adobe’s XD program, was valued at $10 billion in its last funding round in 2021. 

But it wasn’t long before the deal drew the attention of global regulators. Apart from CMA, the European Commission (EC) also opened an extensive probe into the proposed transaction and reached a preliminary conclusion in August that if the deal goes ahead, it could “significantly reduce competition in the global markets” for the supply of interactive product design, vector editing, and raster editing tools.

The deal was initially expected to close this year, but delays are now expected, with CMA set to declare its final decision in February 2024. 

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