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I just got a Macbook Pro M1 Pro (16GB Memory) and I keep getting "Your system has run out of application memory" whilst using Adobe software. After about an hour of using InDesign and Illustrator simultaniously I get this pop-up and am forced to quit one of the programs to free up memory space. On activity monitor it shows InDesign using 70GB+ of memory with only 2 or 3 documents open after only a couple hours. I also noticed that when importing an image into an InDesign document, the application memory goes up a considerable amount. For example, importing a single 1MB image increased my InDesign application memory by 2GB. I previously had a 16GB Intel Macbook Pro and never had this issue.
Are you using the latest versions of InDesign and Illustrator? Until pretty recently none of the Creative Cloud programs were running natively on computers with the M1 chip. This caused lots of issues. Make sure that your InDesign is version 16.3 or later (CC 2022 v.17.0 is the latest) and update Illustrator to a version 25.4 or later (26.0.1 is the latest) and see if that makes a difference.
Im using InDesign 17.0. I saw a comment saying this is fixed on the InDesign beta app but Im unable to load it. It says the InDesign (beta) has expired.
Sorry to hear about the trouble you are facing, Currently there is an issue in macOS Monterey where users are facing Memory issues (https://9to5mac.com/2021/11/15/monterey-app-memory-leak-solution-suggestion/) (https://www.macrumors.com/2021/11/01/macos-monterey-memory-leak-user-reports/). I would suggest you to to be patient and wait for a new update from Apple.