The European Commission (EC) has confirmed that it’s opening an in-depth investigation into Adobe’s proposed $20 billion bid for digital design software rival Figma.

The Commission said that the acquisition “may reduce competition in the global markets for the supply of interactive product design software and for digital asset creation tools.”

First announced last September, Adobe’s megabucks bid for one of its biggest competitors was always likely to attract scrutiny from regulators around the globe. The U.S. Department of Justice (DoJ) is looking closely at the deal, while the U.K. also recently confirmed that it is preparing a deeper probe on the basis that the merger would lead to a “substantial lessening of competition” in the U.K.

Europe, for its part, revealed in February that it was looking at the acquisition on competition grounds, so today’s news comes as little surprise.

The crux of the investigation will focus on whether buying Figma will remove one of Adobe major rivals and impact the broader design software market. The EC points to Figma as the “clear market leader” for interactive product design tools, noting that there is unlikely to be any other “credible” players entering the market post-acquisition. And while Adobe leads on digital asset creation tools, Figma currently serves as a “constraining influence” over Adobe. Thus, buying Figma may prevent Figma from continuing its role as an “effective competitor.”

“Adobe and Figma are two leading providers of software for the creative community in the digital sphere,” said Margrethe Vestager, the EC’s executive vice-president for competition policy, in a statement. “Many users and businesses rely on their digital design tools to excel in their work. With our in-depth investigation we aim to ensure that users continue to have access to a wide pool of digital creative tools among which to choose.”

Thresholds

In truth, the transaction didn’t actually meet the turnover thresholds set out in the EU merger regulations, meaning that the duo weren’t required to notify European regulators. However, Article 22 of the regulations contains provisions that allow individual EU member countries to refer cases to the EC if they believe a transaction will reduce competition in their own market. And that is what happened here, with more than a dozen constituents referring the acquisition to the EC.

While Europe does have a fairly robust track record of late in terms of investigating Big Tech acquisitions, it has also shown that it’s reluctant to block deals outright. In the past few months it has greenlighted Microsoft’s $68.7 billion Activision acquisition and Broadcom’s $61 billion VMware bid, albeit with strict caveats and oversight stipulations in place.

So, all is not lost yet for Adobe, but it will likely have to make some kind of assurances and compromises if it wants to get the deal over the line.

The Commission said it plans to make a decision by December 14, 2023 — roughly one month after the outcome of its investigation into Amazon’s $1.7 billion iRobot acquisition will be announced.