Adobe’s cancellation policy just cost it $150 million. Photoshop, Lightroom quitters may be entitled to free software

In what could be the end of a multi-year battle, Adobe has agreed to settle a lawsuit over the software giant’s cancellation policies – including offering free services for affected customers.

Adobe and the Department of Justice have agreed to settle an investigation initiated in 2024 with a proposed stipulated order that, if accepted by the courts, would have Adobe facing a $150 million penalty divided equally between a fine paid to the DOJ and free services offered to affected users.

The order has to be entered by the courts, and, as the settlement isn’t quite finalized, Adobe has not yet shared who qualifies or when qualified former customers will be receiving the free services.

In 2024, the DOJ filed a complaint against Adobe following a Federal Trade Commission investigation that the company’s subscription software violated the Restore Online Shoppers’ Confidence Act. The lawsuit claimed that Adobe’s cancellation policy, which includes an early termination fee, wasn’t clear enough, alongside claims that the cancellation process had unnecessary steps and delays.

Adobe continues to refute those claims, but has agreed to the settlement. “We are transparent with the terms and conditions of our subscription agreements, have a simple cancellation process, and clearly disclose the details of our plans, which we carefully crafted to maximize value and benefits to our customers,” Adobe wrote in a statement. “In recent years, we have made our sign-up and cancellation processes even more streamlined and transparent.”

“While we disagree with the government’s claims and deny any wrongdoing, we are pleased to resolve this matter,” Adobe added.

While not quite finalized, the agreement means Adobe would pay $75 million to the DOJ and offer $75 million worth of free services “for customers that qualify.”

Because the filings are not yet finalized in the court, Adobe did not have any additional details about what customers may be entitled to those free services, nor did they comment on when those services would be available. “We will proactively reach out to the affected customers once the appropriate filings with the Court are made and accepted,” Adobe wrote.

While the agreement is set to give free software to affected customers, the agreement doesn’t offer any sort of refunds for cancellation fees. Adobe’s Creative Cloud software is now worded as an “annual plan, paid monthly.” Subscribers who cancel before one year is up – and after a 14-day grace period – pay up to 50 percent of the remaining balance.

The news of the settlement comes as Adobe announced a record $6.4 billion in revenue for the first quarter of 2026 alone, $6.17 billion of which comes from subscriptions. Divide that revenue by the 90 days typically represented in one quarter, and the $150 million settlement is less than three days' worth of revenue.

The settlement also requires Adobe to clearly disclose the early termination fee and how it's calculated. The company must also send reminders when a free trial is about to end, along with offering an easy way to cancel those subscriptions.

Adobe’s move to a subscription-based service model remains a contested topic in the photography community. Supporters of the Creative Cloud platform welcome the more affordable monthly rate compared to the high cost of purchasing the license outright – for example, a Photoshop license cost around $700 in the US before 2013, and now the photo editor costs $20 a month as part of the Photography Plan.

Critics express frustration with the inability to own the software, leaving the only option to access the popular tools as a recurring subscription. The monthly payment structure on a one-year agreement with cancellation fees added fuel to that debate.

The internet’s reaction to the settlement has been mixed. Some took to Reddit to argue that the settlement should have been monetary to those who paid the cancellation fees, while others criticized the now widely used subscription model across tech and software as a whole.

Last week, Adobe CEO Shantanu Narayen, who has led the company for 18 years, announced he will be stepping down, remaining as a board chair.

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