Apple faces $3.8 billion compensation claim over UK's iCloud monopoly

UK consumer rights group 'Which?' filed a legal action against Apple under competition law on behalf of approximately 40 million users of iCloud, a cloud storage service.

The class action lawsuit, which seeks $3 billion in damages (about $3.8 billion at current exchange rates), accuses Apple of breaking competition rules by giving preferential treatment to its own cloud storage service and effectively trapping people into paying a “rip-off fee” for iCloud. Alleged violation. -off” price.

“iOS has a monopoly and control over Apple's operating system, and it is Apple's obligation not to use that control to gain an unfair advantage in related markets, such as the cloud storage market. But it actually happened.” In a press release announcing the filing of the case at the UK Competition Appeal Tribunal (CAT), it wrote:

The lawsuit accuses Apple of encouraging device users to sign up for iCloud for photo storage and other data storage needs while making it difficult for consumers to use alternative storage providers, including not allowing any storage or backup. Mobile phone data through third-party providers.

iOS users will have to pay for the service if their photos, notes, messages, and other data exceed the free 5GB limit.

The suit also accuses Apple of charging UK consumers excessive fees for iCloud subscriptions due to a lack of competition. “Apple has increased iCloud prices for UK consumers by 20-29% across storage tiers in 2023,” it writes, and is seeking damages for all affected Apple customers, with individual consumers paying an average of $70 I assume it should be done. (about $90), depending on how long you've been paying Apple for iCloud services.

A similar lawsuit alleging Apple illegally monopolized the cloud storage market was filed in the U.S. in March and remains pending after the company failed to strike it down.

In response to the UK lawsuit, Apple spokesperson Tom Parker sent a statement written by the company: Apple believes in giving customers choice. Our users are not necessarily required to use iCloud and many of our users use various third-party alternatives for data storage. We also do our best to make transferring your data as easy as possible, whether it's iCloud or another service. We reject any suggestion that iCloud practices are anti-competitive and will vigorously defend against any and all legal claims if they are not.

Apple claims that iCloud pricing is similar to that of other cloud storage providers. Many of Apple's customers are using alternative storage options, noting that nearly half of customers aren't paying for iCloud+ because they don't need the additional storage or don't want to use the paid service.

Chosen by UK-based consumers

UK claims are being brought by exclusion for UK-based consumers who would otherwise be eligible for inclusion. Consumers who live outside the UK and believe they are eligible to be included should actively participate in the action.

Spokesperson Tommy Handley said eligible Apple customers “include anyone who 'acquired' iCloud service, including free users, during the nine years since the Consumer Rights Act went into effect on October 1, 2015.”

Handley also confirmed that the 3 billion compensation figure accounts for potential denials, redundancies and deaths.

Although it is a not-for-profit organization, the lawsuit is being funded by Litigation Capital Management (LCM), a major global litigation funder, and LCM has said it is committed to ensuring that the lawsuit progresses to its conclusion.

At the same time, Apple is urging the company to resolve the lawsuit without litigation by offering refunds to consumers and opening up iOS to allow users to make “real choices” about cloud services.

In a statement, Which's CEO Anabel Hoult said: By making this claim, Which? It shows big companies like Apple that they can't fool British consumers without repercussions. Taking these legal actions means we can help consumers get the compensation they deserve, deter similar behavior in the future, and create better, more competitive markets.

Assuming Apple doesn't seek an out-of-court settlement, the next step in the lawsuit will depend on whether the CAT is authorized to act as class representative for consumers and allow the lawsuit to proceed as a class.

There has been an increase in class action-style competition litigation against big tech companies in recent years, following a wave of antitrust enforcement on both sides of the Atlantic that is still ongoing in terms of overall outcome and business impact.

Apple has also been the target of a class-action-style antitrust lawsuit filed on behalf of developers last year over App Store fees in the UK.

Last year, a separate lawsuit was filed in the UK against Apple and Amazon, alleging price fixing.

This report has been updated with comments from Apple.

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