There isn’t a good time to be sued by US regulators. But for Adobe, the timing of the lawsuit filed by the Federal Trade Commission this week, accusing it of making it too difficult for customers to cancel their subscriptions, looks particularly poor.
Regulatory scrutiny in the UK and Europe had already prompted the maker of Photoshop, Acrobat and Illustrator to abandon its proposed $20bn acquisition of rival design software company Figma back in December. While Adobe, which has a market value of $232bn, had to pay Figma a $1bn termination fee, the collapse of the cash-and-stock transaction was in many ways a blessing in disguise.
The deal was pricey, valuing Figma at roughly 50 times annual recurring revenue, and twice its last private valuation. The world has also dramatically changed since Adobe announced the acquisition in 2022. Back then ChatGPT and generative AI had yet to enter the everyday lexicon.