Adobe seeks to sell lawsuit-free AI models, expands Indian engineering hub-OxBig News Network

While lawsuits against AI models and Big Tech firms build up in India and globally for alleged copyright violations, California-headquartered visual illustration and editing software developer Adobe remains unperturbed as it only uses data that it owns to train its AI models, its India managing director Prativa Mohapatra said in an interview with Mint.

“We train our AI models only on data that we own—and hold their rights, with the files stored on our own servers. This ensures that we circumvent concerns that using our ‘Firefly’ generation of AI-enabled products might lead to creating illustrations that infringe upon artists’ intellectual property rights. This is helping us sell subscriptions of our AI-powered illustration tools, available around the world in varying subscription plans,” Mohapatra said.

Also read: Adobe rivals OpenAI’s Sora with new Firefly Video model: What is it and how to use?

For Adobe, the year ended March 2024 was the first year of AI-driven product sales in India and around the world. Firefly, to be sure, is the company’s proprietary foundational AI model family that will power its popular creative tools—such as Photoshop for photography editing, Premiere Pro for video editing and After Effects for graphic designing.

Regulatory filing data with the Registrar of Companies, accessed by Mint through market intelligence platform Tofler, showed that in fiscal year 2024 (FY24), Adobe India reported a 14% rise in annual revenue to ₹7,754.64 crore ($887.6 million). However, this pace is slower than the previous two fiscals—where Adobe’s India revenue grew at more than 30% year-on-year.

“We’re still in the initial years of AI, let alone using AI to drastically ramp up sales or clamp down upon unauthorized usage of software to increase monetization potential. But AI is steadily making a difference, and we expect to see its reflection in Adobe India’s growth potential in an equivalent way in the years to come,” Mohapatra said.

While Adobe’s claim about it using only its own data was initially well-received—and the company even offered to indemnify users globally from legal challenges with its proprietary take on AI—reports by Bloomberg last year underlined that some part of Adobe’s data sets included images created by a third-party AI platform, Midjourney. Adobe eventually accepted this claim, clarifying that “about 5%” of its datasets comprised such images—raising legal concerns yet again.

Industry experts, however, suggest that simply relying on AI to sell subscription packages to enterprises would not be enough for Adobe to sustain growth.

“Adobe’s claim to offer litigation-free AI integration is indeed promising for businesses. But it’s important to note that due to its stringent checks and balances and a play-it-safe approach, the versatility of its AI tools may not be as limitless as open platforms such as Midjourney, or even Canva,” Kashyap Kompella, AI analyst and chief executive of tech consultant RPA2AI Research, said.

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Two people with direct knowledge of the matter said that Adobe’s strong growth in FY22 and FY23 came on the back of higher-than-usual creative licence sales—as many creative agencies reduced human workforces and purchased software licences to automate creation of content. Further, individuals starting their own ‘boutique’ content operations after quitting larger creative agencies also fuelled Adobe’s growth.

Touching upon this, Mohapatra said that in the long run, “keeping the Firefly models free of copyright concerns will help us tap into demand for content automation—which will further give us fillip for stronger growth.”

Adobe Inc. was set up in 1982 and registered in India nearly three decades ago in 1997. The company started with what Mohapatra described was “a single room with a handful of employees for software testing.” Today, with over 8,500 employees, India is Adobe’s second-largest base for employees outside of the US—and has also been the fastest-growing geography by revenue in the past three financial years. Its double-digit growth in both revenue and operating profit between FY22 and FY24 is reflective of this claim.

But Adobe does not look at its India presence only as a sales hub, Mohapatra highlighted.

“India is one of the world’s most important engineering hubs for Adobe—to expand this, through the calendar year 2024 we invested in a new engineering division in Bengaluru and also set up our own local data centre operations to comply with local regulations and offer our cloud-based creative AI services to both companies and individuals. Much of Firefly’s generative AI feature development process has happened in India itself, including core technical aspects such as the integration of ‘vectors’ or dimensional graphics in the popular image editing service, Photoshop,” she added.

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RPA2AI Research’s Kompella said another key challenge for Adobe to persuade more users to pay for its tools lies in its billing structure—the developer community is critical of it compulsorily billing subscriptions for a full year, while the likes of Canva allow one to pay per day, almost in a pay-as-you-go format. This could be a key hindrance to the company’s revenue growth in India, he cautioned.

Mohapatra said that in order to rival the threat from the likes of Canva, Adobe is offering free tiers to rope more users into their umbrella. “We want to be present in the journey of making creativity accessible for all, which is what AI is doing today. With free tiers, we are also present in segments where our challengers are. This will, hopefully, keep us ahead of the competition for the years to come,” she said.