The European Commission said today it’s opening a full-scale investigation into Adobe Inc.’s proposed $20 billion acquisition of Figma Inc., a provider of cloud-based design tools.

According to the European Commission, a preliminary review of the deal triggered major concerns that it could significantly reduce competition in the global market for interactive product design tools, and also shut out competitors.

Founded in 2012, Figma provides a cloud-based platform that companies use to design user interfaces for websites and applications. The startup’s platform enables multiple designers to edit an interface at the same time.

Figma also makes it possible to collect feedback from other users who may be participating in a project, such as software developers. The platform has become hugely popular with technology companies, including Coinbase Inc., Zoom Video Communications Inc. and Airbnb Inc.

EU antitrust regulators said they’re concerned that the acquisition would remove an important rival to Adobe’s own tools, and ultimately restrict competition in the interactive product design tool market. In addition, the deal could hurt impact Figma’s potential to grow and become an effective competitor to Adobe’s asset creation tools, as it could be bundled with the Creative Cloud suite.

“With our in-depth investigation we aim to ensure that users continue to have access to a wide pool of digital creative tools to choose from,” European Commissioner for Competition Margrethe Vestager said in a statement.

Adobe announced it had agreed to acquire Figma for $20 billion back in September 2022. At the time, it said it planned to add a number of capabilities from its Creative Cloud suite to Figma, which would continue to operate as a standalone product under the management of Chief Executive Dylan Field.

“The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity,” Adobe CEO Shantanu Narayen said when the acquisition plan was announced.

Unfortunately for Adobe, its plans to buy Figma are increasingly under threat. In addition to the EU, antitrust regulators in the U.K. and the U.S. have also raised concerns over the deal.

In June, the U.K.’s Competition and Markets Authority announced it had completed a Phase 1 investigation and determined the acquisition could reduce competition in the graphic design software market. It said Adobe had five days to respond to a number of concerns it had raised. It’s not yet clear how Adobe responded, but if the CMA is not satisfied, it could launch an in-depth probe known as a Phase 2 investigation and potentially block the deal.

The U.S. Department of Justice is also investigating the acquisition, and there were reports in February that it may opt to sue Adobe to prevent the deal going ahead. It is yet to make any official announcement, however.

The EU’s decision to launch an investigation makes it very uncertain if Adobe will be able to proceed with the acquisition, analyst Liz Miller of the consultancy Constellation Research Inc. told SiliconANGLE. Somewhat ironically though, she pointed out that the delay caused by this investigation may actually help Figma and Adobe’s competitors in the digital product design space.

“Players like Framer and Sketch are advancing with AI and other capabilities around video, animations and 3D, and these are all areas where Figma needs to accelerate its own pace of innovation,” Miller said. “So while the acquisition is being delayed, Figma’s competitors aren’t waiting around and will see the investigation as an opportunity to leap forward.”

The EU’s antitrust enforcer said it will conclude its investigation by December, at which time it will make a decision on whether to block the acquisition. Miller said that a lot can happen on the innovation front during that time, helping Figma’s rivals to further close the gap. “The 90 working days it takes to complete the investigation will feel like forever,” she said. “Just think, it was only 90 working days ago that many people were first hearing about ChatGPT, and look at how far generative AI has advanced since then.”

In a statement, Adobe said it has received overwhelmingly positive feedback from customers on the proposed takeover of Figma, and is looking forward to pushing the acquisition over the line.

“We remain confident in the merits of the case as Figma’s product design is an adjacency to Adobe’s core creative products, and Adobe has no meaningful plans to compete in the product design space,” the company told Reuters in a statement. “We look forward to establishing these facts in the next phase of the process and successfully completing the transaction.”

Image: Adobe