Adobe Faces Potential Penalties Amid FTC Scrutiny Into Subscription Cancellation Practices

Adobe Inc. ADBE may face substantial fines or penalties due to an ongoing Federal Trade Commission (FTC) inquiry into its disclosure and subscription cancellation policies.

What Happened: A Wall Street Journal report on Wednesday states that Adobe has been collaborating with FTC staff since June 2022. The investigation focuses on the company’s adherence to the Restore Online Shoppers' Confidence Act, as revealed in a regulatory filing on Wednesday.

In November, FTC staff implied having the power to commence consent negotiations to determine a possible settlement over the investigated issues. Adobe, headquartered in San Jose, California, maintains that its practices are within the boundaries of the law and is currently engaged in discussions with FTC staff.

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"We have been cooperating with and engaging in discussion with the FTC staff regarding our disclosure and subscription cancellation practices," confirmed Adobe.

Additionally, the company shared its Q4 results and issued guidance for the current quarter and fiscal year on Wednesday.

Why It Matters: This FTC investigation comes on the heels of another regulatory hurdle for Adobe. In November 2023, the U.K. Competition and Markets Authority (CMA) tentatively concluded that Adobe’s proposed $20 billion acquisition of Figma could potentially stifle innovation in software used by U.K. digital designers. The CMA’s detailed Phase 2 investigation suggested that the deal might diminish competition in product-design software, curb innovation, and eradicate Figma as a competitive threat to Adobe’s major products like Photoshop and Illustrator.

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