Adobe finally got caught. They are now paying $150 million, and I think you know why. But, something even weirder is going on. Adobe has been making more money than ever. Their revenue has nearly quintupled since 2015. But their stock has fallen 70% to an eight year low. Their market cap just dropped below $100 billion. And their CEO of 18 years just resigned. What happened? And, why is everyone betting against Adobe, when they're making more money than ever?

Over the years, Adobe built the most dominant position in creative software. Photoshop. Illustrator. Premiere. Acrobat. There is no company that rivals their position. Graphic design, video editing, photography, audio mixing, anything creative. But maintaining a monopoly takes more than great software, which brings us to CEO Shantanu Narayen. In 2013, Adobe was about to change everything. Adobe had a very specific strategy for that. Narayen pushed Adobe to move from boxed sales, to the subscription model.

"Today, people buy experiences, not products," Their revenue began to soar, as they added hundreds of millions to every quarter. And on the surface, this might seem like a win. Adobe products used to be pricey, around $700, and the entire creative suite might be a few thousand.so what was the problem? You save a lot of money subscribing each month, right? Well, for one, when you bought you owned that copy of Photoshop. That $700 wasn't for a year of use, it was totally yours. You could upgrade to the newest version for $200 as well. You would pick up a physical disc in-store, install it, and you were good to go. But, that subscription of Adobe's…

wasn't actually saving you much money. Adobe didn't offer two options like most subscription software. They offered three. The monthly plan - most expensive. The annual plan, paid upfront. And a third, in the middle, right where your eyes go first. A monthly plan, but cheaper? Except, it's not monthly. It's annually, billed monthly. You were locked into a year-long plan, charged each month. And it gets worse. If you wanted to cancel, Adobe charged you 50% of every remaining month on your contract. Why was someone who doesn't even want to pay for one month supposed to pay half of every month left?

Some users were trapped the moment their 14-day free trial ended. You might be paying $20 a month, but cancelling could be $70. But it gets even worse. Many subscriptions allow you to turn off "auto-renew", so your plan will automatically cancel at the end. Adobe doesn't. You cannot disable your plan auto-renewing. The only way is to cancel the entire plan, which causes the massive cancellation fee. It doesn't help that customer service was notoriously unreliable. If you go to the Adobe community website, Reddit, or any other creative forum, you'll see endless posts about cancellation fees.

"I've tried to cancel every month and they still charge me. I tried to contact them directly and the phones don't work, tried to cancel through PayPal and it doesn't work. Emailed them directly, they don't respond and proceed to charge my account again." "I'm trying to cancel my Adobe Acrobat Pro, but I can't afford the termination fee." "Adobe doubled my plan then hit me with a $200 cancellation fee. Freaking out right now." The only reliable way to avoid it, from what I've seen, was to just cancel your card.

In some cases, users even had Adobe charge them - multiple times - after they'd already cancelled. Customers hated Adobe, yet it felt like there were no alternatives for most of their products. Sure you could find an alternative, but if you worked in design, marketing or a creative field, your employer likely wanted you to use Adobe. It's what everyone else was using, and they were already subscribed to Creative Cloud, so… Which brings us back to CEO Shantanu Narayen, and, a weird twist in this story?

Narayen has, consistently, been ranked as one of the best CEOs to work for. He was #1 in 2021, #3 in 2025, is in the top 5% on Comparably with an A+, or 93/100. So while they weren't great to customers, he took care of employees and shareholders extremely well. Nonetheless, Adobe was the undisputed King. And it's partly why they're making more money than ever today… but not the only reason. But, soon they'd have to answer for their crimes. The endless complaints were adding up. They'd caught the attention of someone much bigger. But in the meantime, Adobe

had other matters to attend to. They were about to drop billions in a fight to keep their monopoly. Many fees and costs of business are hugely confusing. Yet what can be even more confusing, and unintentionally, is cash flow. Some clients pay right away, some on net-30 or even net-60. Then you have to balance costs, and what if you need to reimburse a client? Getting paid is, ironically, one of the hardest parts of business. But it doesn't have to be. That's where Xero can help. Xero is a cloud-based accounting platform that helps small businesses manage their finances: invoicing, bills, payments, payroll, sales tax, and more - all in one secure location.

Xero helps with one of the hardest parts of freelancing: cash flow. Track the status of payments in your dashboard, so you can see which are outstanding, which are overdue, and for how long - turning finances from confusing to clean. Xero can also integrate your bank account to make transactions fast, seamless, and up to date. (show) This also means no need to upload bank statements! Xero also solves one of the most awkward parts of business: charging clients. What if they use a different payment method than others did? What about different currencies? What if they're late?

Xero gives your invoices a "Pay Now" button, which makes paying you easy, and accepts online payments, credit cards, and even Apple & Google Pay. Xero can automatically send clients reminders, too. Xero will also help you easily prepare and file taxes, removing stress from one of the busiest times of the year. Xero has all kinds of plans. Whether you run a small business, are a freelancer, or just have a side gig, Xero has the perfect plan for you. offering 90% off for 6 months using the link below. Join 4.6 million subscribers and start

using Xero to get on top of your finances. Thank you to Xero for sponsoring our videos. On September 15, 2022, Adobe announced it was acquiring Figma. $20 billion. Why Figma? Figma had something rare. Real-time collaboration. Lightweight. Browser-based. No install required. Plus, a very generous free tier, compared to Adobe's oppressive hidden fees. It was the most credible threat to Adobe's design dominance in years, and it was growing fast. Users had watched Adobe acquire their favorite tools over the years - and slowly watch them change or disappear. In 2005, Adobe acquired the design tool FreeHand.

Then, slowly killed development, and shut it down. Why? It was a competitor to Illustrator. Then, when users got mad, they said "While we recognize FreeHand has a loyal customer base, we encourage users to migrate to the new Adobe Illustrator". So, fans of Figma knew exactly what was coming. But this time, it didn't go as planned. Out of nowhere, Adobe abandoned the acquisition. They had run into some trouble. Previous Adobe acquisitions had mostly passed unnoticed. But this was big. $20 billion. So, it stretched across the US and Europe. The UK's Competition and Markets Authority

opened an in-depth investigation, publishing a provisional finding of competition concerns. They said it would "harm innovation for software used by the vast majority of UK digital designers" The European Commission followed in November 2023, with similar concerns. So, Adobe and Figma walked away on December 18, 2023. Though, this meant Adobe had to pay a "reverse breakup fee". Aka, a fee in mergers to protect the smaller company. In this case, Figma. But for Adobe, this was $1 billion dollars. That's right. Adobe had to pay a $1 billion dollar cancellation fee. You love to see it.

More than the financial hit, it was a huge threat to their monopoly. They had literally handed $1 billion to their biggest competitor. But that wasn't even the biggest problem. While the Figma deal was collapsing, the FTC had been building a case. Then, they filed a lawsuit. "[Adobe] fails to adequately disclose to consumers that by signing up for the 'Annual, Paid Monthly' subscription plan, they are agreeing to a year-long commitment and a hefty early termination fee [ETF] that can amount to hundreds of dollars." They also said "Adobe's ETF disclosures are buried on the company's website in

small print or require consumers to hover over small icons to find the disclosures." "Despite being aware of consumers' problems with the ETF, the company continues its practice of steering consumers to the annual paid monthly plan while obscuring the ETF." Adobe, naturally, disagreed… amongst other comments. But that didn't matter. After multiple years of fighting, Adobe gave in. They settled for $150 million. $75 million in penalties. $75 million in free services for the customers they wronged. And they agreed to disclose subscription terms upfront - the thing they'd been hiding all along. Of course, they didn't admit to any wrongdoing, as expected in

a settlement case. After the verdict, Shantanu Narayen, the CEO, resigned. He'll step down when a successor is found. The one who pushed for the subscription model, after 18 years, was leaving. So - is Adobe's reign finally over? Not exactly. Adobe would still likely continue with these fees, but make them clearer and less hidden. Adobe is making serious money. Stupid money. $6.40 billion in revenue, Q1 FY2026. Up 12% from the same quarter the year before. Operating income was $2.42 billion. Net income: $1.89 billion. Adobe's revenue has nearly quintupled since 2015. But take a look at this. Adobe keeps making more money.

And its stock keeps falling. Right now, it's the lowest it's been in eight years. They're no longer a $100 billion company. As of me writing this, they have a P/E ratio of about 14. High margin high-growth software companies are usually multiple times higher than that. And Adobe's has been falling for a long time. In fact, every time I check it while writing, it keeps going down. Revenue up. Earnings up, but, the amount investors are willing to pay for those earnings, is falling. What the heck is going on?

Is it the lawsuit? Losing Figma? Partially, but there's something else. Ironically, one of Adobe's biggest bets is exactly what's got investors worried. Justice has finally come for Adobe, and if you like stories like this, please subscribe! It helps a ton, and we don't have hidden subscription fees like Adobe does! Speaking of which, Adobe has two money engines right now. The first: Digital Media. Basically Creative Cloud apps. Photoshop, Illustrator, Premiere, but also Document Cloud, which is basically Acrobat and PDF workflows.

PDFs are everywhere. That part of the business isn't going anywhere. In Q1 FY2026, Digital Media brought in $4.84 billion. Up from $4.39 billion the same quarter last year. Document Cloud alone hit $843 million - up 17% year over year. That's huge, but it's not even the whole picture. The second is Digital Experience - Adobe's marketing and enterprise arm. Analytics, commerce, customer data tools. In Q1 FY2026, that segment did $1.41 billion. Up from $1.33 billion the year before. So Adobe is making more money than ever. From more places than ever.

Why is the stock still falling? Losing Figma hurt Adobe in ways the $1 billion fee doesn't fully capture. That deal was supposed to be Adobe's move into collaborative design and product workflows - a space it didn't dominate yet. Walking away didn't just cost a billion, it funded a huge threat. But this is much bigger than just Figma. Both Adobe and Figma are utilizing the same thing. AI. In March 2023, Adobe launched Adobe Firefly - its family of generative AI models, built directly into Creative Cloud.

Type a prompt, generate an image. Text to image, text to video, generative fill in Photoshop. Within a year of its beta launch, users had generated over 13 billion images with Firefly. Thirteen billion. Adobe even built a whole monetisation layer around it. In other words: Adobe had moved from selling software… to selling AI outputs. This might sound good but this was a huge problem. Not only were there huge controversies, like Adobe forcing users to allow their work to be used as training data, But also requiring many users to grant them full access to users' local content, and most bafflingly of all, they included

that they had a "non-exclusive, worldwide, royalty-free sublicensable, license, to use, reproduce, publicly display", and much more. This was especially bad for users and companies who use NDAs to protect their work, like those working in the film or commercial space. The backlash was immense, and Adobe quickly backpedalled on it. But, Adobe had created a bigger problem for themselves. Investors are increasingly worried that generative AI won't strengthen Adobe's competitive advantage but do the opposite. Analysts are concerned AI tools are directly challenging Adobe's traditional software model, and that rivals like Canva and

Figma are moving fast - building AI features directly into their products. "The market already viewed Adobe as on the wrong side of the early AI winners and losers, and the CEO stepping down without a clear succession plan has simply deepened that skepticism." Adobe's moat was their massive portfolio, deep, integrated workflows, those insanely packed tools on top of tools. Switching from Creative Cloud, especially in a business, was quite hard. But now, with such a big push into AI, and design getting faster and cheaper because of AI… Adobe's competitive advantage is shrinking. Competitors now have an easy comparison point to them.

No matter what Adobe does, it can't seem to escape the pressure. AI, Figma, subscription fees. Granted, it's all their fault. Though to be fair - Figma is feeling it too after their IPO. But it feels like Adobe's tight grip might be loosening. Justice has come at last for Adobe. They're not the only ones experiencing AI woes either. Microsoft is, weirdly enough, going through something much worse. Microsoft's market cap dropped $500 billion in a single week, after they announced more AI spend. Click here to learn the rest of the story.