Adobe’s $150M Settlement Is a Win, But the Fine Print Trap Is Still Running

Adobe just paid $150 million to make a lawsuit go away. What it couldn’t buy off is the question underneath it: how many other companies are running the exact same thing right now?

The US Department of Justice and FTC filed against Adobe in June 2024 over how it structured its Creative Cloud “annual paid monthly” plan. The name sounds like a monthly commitment. It wasn’t. Customers were locked in for a full year, and if you tried to leave early, Adobe charged up to 50% of whatever remained on the contract. The fee didn’t show up clearly until the moment you tried to cancel. Which is, obviously, the moment it’s most effective.

An Adobe executive, per FTC filings, apparently compared the early termination fee to heroin — something the company knew it couldn’t just drop without bleeding revenue. That quote has been circulating since the case was filed and it’s the most honest thing anyone at Adobe said through this entire process.

The $150 million breaks into two halves. $75 million to the DOJ. $75 million back to affected customers, not as cash but as free services. Adobe will contact qualifying users after a judge formally approves the settlement. The company’s official statement: it disagrees with the government’s claims, denies wrongdoing, and is glad to put this behind it.

A company that operated with full transparency does not agree to a court order requiring it to disclose termination fees before signup, remind customers before free trials convert to paid plans, and provide a straightforward cancellation process. Those are not the terms of a company that was already doing those things.

This is also not an Adobe-specific problem. The “annual paid monthly” structure runs across SaaS products globally. Tools that Nigerian creatives, developers and small business owners subscribe to every month work the same way: the monthly number is the headline, the annual lock-in is the footnote, and the exit fee lives three screens deep in the cancellation flow. Adobe is just the one that got sued.

Adobe’s stock fell over 5% when the settlement was announced. Investors read it correctly — the friction wasn’t a bug in the business model. It was part of the model. Paying $150 million to a federal court is what it costs when that stops being legal.