Waking Up The Regulators

Epic Games winning its antitrust case against Google was mildly surprising. But the real shock was learning that the Federal Trade Commission was trying to lock Adobe into a consent decree.

After seemingly years of big tech kind of running roughshod over ethical business practices, this week felt a little like a wake-up call for big technology on the anticompetitive practices front.

Let’s dive into both of these stories real quick.

First up, Google. A few years ago in one of the most transparently aggressive ploys in recent history, Epic decided to intentionally break payment processing rules in the Apple App Store and Google Play Store in an attempt to force a legal battle on antitrust grounds. (The video promoting this action was cringe, but hey, it got everyone talking.)

The reasoning for this made a lot of sense—Epic, a big company but one that remembers its roots, didn’t want to pay massive cuts to companies just because of the store it used.

The Apple version of that legal battle kind of went up in smoke, but the Google version went to a jury—and that jury sided with Epic. One of the really fascinating things about the situation was that putting this case in front of a jury of presumably more tech-savvy regular people, rather than the judge deciding as was the case in Apple vs. Epic, might have been the determining factor in the case.

After all, they landed on their decision pretty quickly, ruling in just a few hours, and one has to presume that the issues are likely obvious to the average person who has had to use these services for more than five minutes.

(Another factor suggested by Epic founder and CEO Tim Sweeney is essentially that Google, despite using software to automatically remove chat logs, had a very obvious paper trail, one that Apple did not have.)

Odds are that it’s going to be stuck in appeals for years, but this ruling is really important and will likely reshape what Google can and can’t do. One thought that I have is that Google is likely to get the front-door treatment around regulatory decisions, in that they’re probably the ones who will have to deal with this pain in court, but Apple will get the “back-door treatment,” where they’re going to have to change their business practices on their own as a result of public or legislator pressure, rather than overarching legal decisions.

Seeing how it’s been handling Beeper Mini of late—and the fact that legislators have emerged to defend the messaging service—hints that Apple may yet see another day in court.

Of course, there are other ways to deal with regulators, and Adobe just ran into their version of this.

For people who don’t use Creative Cloud, here’s the deal: The service is quite expensive to use, at an apparent cost of $59.99 a month for individuals, but that price is actually misleading—it’s actually $89.99 a month if you want the right to cancel at any time without paying an additional fee, an aggressive SaaS upcharge that is unique in the industry and puts particular pressure on freelancers, who often are working with tight budgets.

This is perhaps the most misleading pricing plan you’ll find in the world of SaaS.

On top of that, if you do any reasonable amount of looking online you’ll find that there are a lot of people upset with Adobe’s tendency to make it hard to cancel, as well as to not send you a note before the trial period is up. Essentially Adobe isn’t making its terms clear.

The Federal Trade Commission, given new powers by an act of Congress, has chosen to do something about this, something Adobe revealed in an SEC filing on Wednesday:

Since June 2022, we have been cooperating with the Federal Trade Commission (“FTC”) staff in response to a Civil Investigative Demand seeking information regarding our disclosure and subscription cancellation practices relative to the Restore Online Shoppers’ Confidence Act. In November 2023, the FTC staff asserted that they had the authority to enter into consent negotiations to determine if a settlement regarding their investigation of these issues could be reached. We believe our practices comply with the law and are currently engaging in discussion with FTC staff. The defense or resolution of this matter could involve significant monetary costs or penalties and could have a material impact on our financial results and operations.

Now, about the Restore Online Shoppers’ Confidence Act, essentially it’s a law against deceptive sales practices like the very ones Adobe uses—and the fact that the FTC is pushing Adobe on this issue basically first suggests that they’re one of the worst offenders.

It’s not clear yet what the FTC is annoyed with the most, but I have to imagine the headaches with cancellation are probably the worst part.

I’ve personally written how Adobe’s tendencies towards controlling the creative experience have been dangerous and lead users to pay higher prices for products, especially those just getting in the field who get priced out by practices like these. (It also gives them carte blanche to ignore issues that users are running into, like a fullscreen mode that doesn’t work like any other fullscreen Mac app.) So to see the FTC doing something is heartening. (They’re well beyond Europe, where the U.K. appears ready to scuttle Adobe’s plans to buy Figma.)

It’s been a long time since regulatory talk around big tech went somewhere in the U.S., so it’s nice to see it’s happening.