Apple faces lawsuit over alleged iCloud customer lock-in and excessive pricing

A legal claim has been initiated against Apple, alleging that the company has effectively confined 40 million British customers to its iCloud service and imposed “rip off prices” on them. The consumer advocacy group Which?, which initiated this legal action, states that if successful, it could lead to a £3bn payout, with individual customers potentially receiving approximately £70 each. Apple has refuted the assertion that its practices are anti-competitive, stating that users are not compelled to utilize iCloud. The company noted that numerous customers use third-party alternatives and maintains that it “works hard to make data transfer as easy as possible.” Toby Starr, from the legal firm Humphries Kerstetter, informed the BBC that this case represents another instance of the “growing tide of large class actions against big tech” which has “operated without sufficient constraint.” Other entities facing legal claims at the Competition Appeal Tribunal, the same court, include Facebook, Google, the gaming giant Steam, and the UK’s primary mobile providers. Mr Starr commented, “Although most of these claims are in their infancy and take a long time to resolve, there will be more decisions coming out over the next couple of years and there will be settlements – these will start to affect the tech giants’ businesses.” Individuals using Apple products receive a limited amount of complimentary digital storage, after which they are prompted to subscribe to the iCloud service for backing up photos, videos, messages, contacts, and other data stored on their devices. The monthly costs for this storage vary, starting from £0.99 for 50GB of space up to £54.99 for 12TB. Apple restricts rival storage services from gaining complete access to its products. The company asserts this is due to security considerations, though it also contributes to its substantial revenues. Which? contends that, for a nine-year period commencing in 2015, Apple has effectively confined users to its services and subsequently imposed excessive charges. Anabel Hoult, the chief executive of Which?, stated, “By bringing this claim, Which? is showing big corporations like Apple that they cannot rip off UK consumers without facing repercussions.” She added, “Taking this legal action means we can help consumers to get the redress that they are owed, deter similar behaviour in the future and create a better, more competitive market.” Apple has vehemently denied the allegations made by Which?. In a statement, the company declared, “We reject any suggestion that our iCloud practices are anti-competitive and will vigorously defend against any legal claim otherwise.” Which? indicated that Litigation Capital Management would fund the legal action, and the consumer group has retained the international law firm Willkie Farr & Gallagher. Which? clarified that the firm would receive fees as the case advanced, with further payments contingent on its success, but would not be entitled to a percentage of any awarded damages. Alan Davis, associated with the law firm Pinsent Masons, commented that a greater number of similar cases are highly probable in the future. He informed the BBC, “It is inevitable that further claims of this nature will continue to be brought given the very high value of the aggregate damages and the role of and incentive for litigation funders to support these claims which might not otherwise be brought without that financial support.” He further noted that without any infringement decisions under EU or UK competition law, the burden would fall on the claimant to demonstrate that the alleged market abuse was indeed occurring. Nevertheless, he highlighted that the regulator had previously declared a broader inquiry into cloud services within the UK. Legal proceedings against major technology companies often span several years as they progress through the judicial system. Which? has called upon Apple to resolve this matter “without the need for litigation,” advocating for the technology giant to provide refunds to consumers and to enhance market competition. Copyright 2024 BBC. All rights reserved. The BBC bears no responsibility for the content found on external websites. Information regarding our external linking policy is available.