The UK's competition regulator said on Friday that Adobe's planned $20 billion takeover of website and app designer Figma could "stifle innovation" as it considers extending a takeover probe. Adobe announced a large cash and stock offer for American company Figma in September.

The Competition and Markets Authority said on Friday that it had asked Adobe to address the watchdog's concerns about the deal.

If it is unable to find solutions, the CMA has stated that it will conduct a more thorough investigation into the transaction and may block it. "We're worried this deal could stifle innovation and lead to higher costs for companies that rely on Figma and Adobe's digital tools -- as they cease to compete to provide customers with new and better products," Sorcha O'Carroll, senior mergers director at the CMA, said in a statement.

Multi-front investigation

Today's announcement comes nearly two months after the CMA first revealed it was investigating the merger, which was announced last September, and invited comments and submissions from interested parties.

The European Commission (EC) also revealed in February that it was evaluating the acquisition on competition grounds, with early indications pointing to a lengthy investigation. In addition, the US Department of Justice (DoJ) is reportedly preparing a lawsuit to block the deal.

Many outside observers see the growing regulatory obstacles to the Adobe/Figma merger as unsurprising, given that the deal would undoubtedly remove a major competitor from Adobe's path.

The CMA compared Adobe's creative design software suite, which includes illustrations, photos, videos, and animations, to Figma, which offers "some basic creative design functionality as part of its screen design software" but lacks "advanced or standalone creative design tools."

On the other hand, it stated that Figma is the "largest supplier of all-in-one screen design software," which can be used for web and app design, as well as digital marketing – all of which are markets in which Adobe operates.

While the products of Adobe and Figma are not identical, the CMA has determined that Adobe's XD vector design tool "remains one of only a limited number of close alternatives to Figma." Additionally, the CMA reported that its investigation revealed that Adobe had canceled the development of a new all-in-one design tool before it announced its merger with Figma. The tool had a variety of features, including whiteboarding, marketing, and product design.