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Formatted Text Edit is supported both in CRM and Cloud for Customer ( starting from 1702 according to blog What's New in 1702 SAP Hybris Cloud for Customer – Responsive UI.

Formatted Text Edit in CRM

Sometimes when you create new button in Note assignment block:

The Formatted Text Edit control is available, since you can see various buttons in toolbar now.

However when you have chosen one Text Type from drop down list, the Formatted Text Edit control is gone, instead a pure Text Edit field is displayed.

The reason is simply because the Formatted edit function for the given text type is not enabled in customizing, which could be done via SPRO->Basic Functions->Text Management->Define Text Format: create a new entry for the text type and mark the checkbox "Formatted":

After that the Formatted Text Editor is back:

Take the rich text I maintained in above for example,when you open the page next time, as its name means, you could observe the formatted text is read from database by function module READ_TEXT.

Formatted Text Edit in C4C

I am asked by partners why Formatted Text edit is enabled in some tenant while disabled in some others.

Take the Product Tab in Sales Quote TI for example:

There are two "duplicate" Text Edit controls, value of one is bound to model field "text" and the other with "FormattedText":

In the runtime both the pure text and formatted text are returned from ABAP backend, the HTTP response could be monitored in Chrome development tool:

The flags to control which of them should be visible in the runtime are IsItemNotesPlainTextVisible and IsItemNotesFormattedTextVisible accordingly.

This is the reason why you could observe the different behavior in different tenant in the runtime:

For sure these flags are determined by BC scoping in backend: