Adobe (NASDAQ: ADBE) is settling the US government’s subscription practices lawsuit for about $150.0 million, marking a concrete financial resolution to allegations that the company made cancellation too hard and obscured key terms in annual plans.
The settlement allocates $75.0 million to free services for affected customers and about $75.0 million to the Justice Department, according to Adobe’s statement.
The customer-relief component is the most operationally significant part of the agreement because it requires Adobe to absorb the cost through service delivery rather than treat the full amount as a straightforward legal payout.
For affected users, that means compensation will come in the form of free services instead of direct cash. For Adobe, it creates both a financial charge and a customer-retention tool wrapped into one remedy.
The original complaint was filed in June 2024, when US regulators alleged Adobe steered consumers into annual subscriptions for products including Photoshop while masking the true economics of those plans. Regulators said the plans carried hidden termination fees and cancellation hurdles.
The case centered on annual plans billed monthly, a structure that became the focal point of broader claims against Adobe beyond the federal enforcement action.
Adobe rejected the government’s characterization even as it agreed to settle.
“While we disagree with the government’s claims and deny any wrongdoing, we are pleased to resolve this matter,” the company said. Adobe added that its subscription plans include a simple cancellation process and said that process has become “even more streamlined and transparent” in recent years.
The timing lands awkwardly for Adobe. This week, the company also announced that longtime CEO Shantanu Narayen will step down once a successor is selected.
In a separate class action filed in federal court in August 2025, plaintiffs alleged Adobe’s “Annual, billed monthly” offering misled consumers by emphasizing the monthly payment while downplaying the one-year commitment and the early termination fee.
That class action said customers who believed they were purchasing flexible monthly subscriptions later discovered they could owe a cancellation charge equal to 50% of the remaining contract value. It also cited an FTC investigation in which one Adobe executive allegedly described the hidden termination fee as “a bit like heroin for Adobe,” adding there was “absolutely no way to kill off” the fee without taking “a big business hit.”
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