U.S. government assails Adobe for putting up ‘wholly unnecessary’ roadblocks when subscribers try to cancel (2024)

Now, it used to be the case that Adobe was an inescapable software provider for many if not most creative professionals, but some viable rivals have come up in recent years, such as Affinity (now owned by Canva) for photo editing and publishing layouts, and Blackmagic’s DaVinci Resolve for video. Not only are these options hugely cheaper than Adobe’s Photoshop and InDesign and Premiere Pro respectively—DaVinci even has a free version that’s more than enough for most users—but they only require one-off payments.

However, Adobe has been making life very difficult for users who decide to cancel their subscriptions, according to a lawsuit filed yesterday by the Justice Department and the Federal Trade Commission—naming as defendants not only Adobe, but also senior executives David Wadhwani and Maninder Sawhney.

The complaint alleges that Adobe broke consumer protection law in two big ways: first, by pushing customers toward an “annual, paid monthly” plan while not clearly telling them that they’ll have to pay a “hefty” early termination fee (sometimes amounting to hundreds of dollars) if they cancel within the first year; and secondly, by prominently highlighting that fee when someone does try to cancel early, making the fee “a powerful retention tool.”

There are loads of redactions in this filing—the allegations specifically about Sawhney remain a complete mystery—but what’s on public display paints a pretty grim picture of Adobe’s cancellation process. Canceling online means having to “navigate numerous pages with multiple options, much of which is wholly unnecessary to honor consumers’ cancellations requests,” and those trying their luck over the phone regularly find their calls dropped or disconnected.

The FTC also filed a complaint against Amazon a year ago, alleging that the e-commerce giant “knowingly duped” many users into signing up for its Prime subscription—and, again, making it difficult to cancel those subscriptions. Amazon has unsuccessfully tried to have that lawsuit dismissed, but it should go to trial early next year.

“Americans are tired of companies hiding the ball during subscription sign-up and then putting up roadblocks when they try to cancel,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a statement.

And here’s Adobe general counsel Dana Rao: “We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process. We will refute the FTC’s claims in court.”

Who’s right? Drop me an email if you’ve had issues with Adobe’s subscriptions, or if you find their processes just tickety-boo! Either way, Adobe’s shareholders don’t seem to care much—the share price dipped a little yesterday before bouncing right back this morning.

More news below.

David Meyer

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NEWSWORTHY

Battery breakthrough. The Japanese electronics giant TDK says it’s made a big breakthrough in tiny-battery technology—think headphones and other wearable devices—by using a new ceramic material to achieve around 100 times the energy density of TDK’s current tiny batteries. That could allow for smaller devices that need less frequent charging. TDK, which counts Apple among its customers, says its new solid-state battery material “can make a significant contribution to the energy transformation of society.” But, as the Financial Times points out, technical challenges mean there’s no chance of the material being used to make a battery for anything so big as a smartphone, let alone a car, anytime soon.

TikTok’s AI avatars. TikTok is giving its creators the option to use AI-generated avatars of themselves that can speak multiple languages, for branded content and advertising. Brands can also choose from TikTok’s new “stock avatars,” which are based on paid actors, TechCrunch reports. Bonus read: Bloomberg on how TikTok’s legal pushback against the recent law requiring it to find a U.S. buyer or face a ban, will test the secrecy of the briefings that persuaded lawmakers to take that step.

Amazon union move. Members of the Amazon Labor Union have overwhelmingly voted to link up with the International Brotherhood of Teamsters. As the New York Times reports, leaders at the two unions reckon the affiliation will make it easier to tackle Amazon, which still refuses to recognize the ALU’s victory in a 2022 Staten Island warehouse unionization election.

ON OUR FEED

“It is time to require a surgeon general’s warning label on social media platforms, stating that social media is associated with significant mental health harms for adolescents.”

—U.S. Surgeon General Vivek Murthy, using a New York Times opinion piece yesterday to call for a move that would remind parents of what’s at stake with their offspring’s online habits. However, Murthy also said legislative measures remained a higher priority than his proposed warning label.

IN CASE YOU MISSED IT

Tesla rival Fisker files for bankruptcy after layoffs, delisting, and the flop of its glitchy Ocean SUV, by Bloomberg

BYD’s shares are doing so well, early backer Warren Buffett has paused selling his shares, by Bloomberg

Apple exits buy-now-pay-later business as the sector draws regulatory scrutiny, by Bloomberg

Huawei’s homegrown mobile OS is proving so successful, it’s reportedly thinking of charging developers for using it, by Lionel Lim

McDonald’s just fired its drive-thru AI and is turning to humans instead, by Chris Morris

The ‘Godfather of AI’ quit Google a year ago. Now he’s emerged out of stealth to back a startup promising to use AI for carbon capture, by Ryan Hogg

Indonesia’s $5 billion deal with Tesla is only part of its all-in strategy on nickel mining, by Gregor Stuart Hunter

BEFORE YOU GO

IMF AI recommendation. Analysts at the International Monetary Fund are concerned about the potential impact of generative AI on labor markets, and how this may worsen income and wealth inequality. But they also worry that special taxes on AI could harm productivity growth. So, in a new paper, they recommend that countries consider reducing tax incentives that could speed up the displacement of human jobs, while also increasing taxes on capital income to combat rising inequality. They also suggest taxing AI companies’ carbon emissions, to make sure that their pricing factors in their extraordinary energy usage.