Britain's competition watchdog is opening an investigation into Adobe's early cancellation fees on membership plans to ascertain if it breaks competition law. The action comes just days after the software company settled with the US Department of Justice over similar allegations, signalling a broader push by regulators on both sides of the Atlantic to police what they view as predatory subscription practices.
Under its terms, Adobe says customers that cancelled its "annual billed monthly" subscription after more than two weeks are subject to a cancellation fee equating to 50 percent of the yearly cost. After they end the plan, the user only has access to the software until the close of that month's billing period.
The Competition and Markets Authority says it will examine if these terms are unfair and whether customers get "clear and timely information upfront" about these fees that could influence their buying behavior. The CMA has until September to complete the initial phase of the investigation.
"From students to content creators, millions of people rely on digital design tools - and they should feel confident that businesses selling these services play by the rules," said Emma Cochrane, Executive Director for Consumer Protection at the CMA.
Recent US settlement signals regulatory consensus
The CMA probe comes hot on the heels of Adobe's $75 million settlement with the US DoJ to resolve allegations over hidden cancellation fees. In fact, the agreement requires Adobe to pay a $75m civil penalty and provide another $75m in free services to customers, pending court approval.
The Justice Department and Federal Trade Commission filed a complaint in June 2024, asserting that Adobe obscured information about early termination fees on its "annual paid monthly" subscription plan, reported Reuters. These fees could reach hundreds of dollars and were often hidden in fine print or placed behind hyperlinks and text boxes.
Authorities also claimed that Adobe made it difficult for customers to cancel subscriptions, requiring multiple steps online or repeated interactions with customer service representatives when cancelling by phone. Adobe has stated that in recent years it has made its "sign-up and cancellation processes even more streamlined and transparent", though the company denies wrongdoing despite the settlement.
New enforcement powers reshape regulatory landscape
Over in the UK, Adobe is the ninth business to be probed under the direct consumer enforcement powers, allowing the British watchdog to rule on breaches of the law rather than going to court. The CMA can impose fine on corporations of up to ten percent of global turnover, and it can also penalize businesses for concealing evidence or providing false information.
This marks a significant shift in how regulators approach consumer protection. Rather than pursuing lengthy court cases, the CMA can now conduct investigations, determine breaches, and impose remedies or penalties directly. The CMA says it has "reached no conclusions about whether Adobe has broken the law."
The broader context is worth noting: the digital design sector is worth almost £60 billion, or roughly 2.7 percent of the UK economy. The sector expanded 138 percent in the nine years to 2019, making it the largest and fastest growing segment of the design industry. Adobe's dominance in this space, with products like Photoshop, Illustrator and Premiere, means its commercial practices carry outsized weight.
The investigation reflects a genuine tension between subscription business models and consumer transparency. Adobe's position that it offers flexibility and affordability through subscription services has merit; continuous updates and cloud features do justify recurring payments. Yet the government's allegations suggest the company failed to make the financial consequences of early termination clear enough to ordinary users who may not expect to pay half a year's fees to cancel in month three.
Whether the CMA finds a breach, and what remedies it pursues, will likely influence how other tech firms structure their subscriptions. For Australian consumers using Adobe products, these decisions matter; regulatory action in the UK and US often creates global standards that trickle down to local markets.