Adobe’s controversial practice of penalizing customers who terminate their subscriptions early is a result of the company’s dependence on this form of revenue, the FTC says. According to the US regulator, the company recognizes this.
In June, the FTC sued Adobe, claiming that the company failed to properly inform content creators about its own rules for billing subscriptions and penalties for canceling them. The software developer may disclose these details on its website, but they are allegedly not disclosed during the subscription registration process.
The FTC alleges that Adobe executives know that «inadequate … disclosure» of its annual fee plans «misleads and harms consumers», but that Adobe executives «continue to engage in these illegal practices because better disclosure would harm Adobe’s profits by reducing subscription revenues».
«As one Adobe executive admitted, the hidden ETF is «a bit like heroin for Adobe» and «there is absolutely no way to cancel the ETF or talk about it more obviously [without] a big hit to the business», — the regulator’s document says.
Adobe publicly denies the FTC’s allegations. One of the company’s executives, speaking on condition of anonymity (due to the sensitive nature of public comments amid the litigation), suggested that the federal agency is simply collecting provocative discovery materials to support an unviable lawsuit. The person who made the comparison to heroin, he said, is not part of the executive management.
Source: The Register