Apple faces £3 billion lawsuit over iCloud monopoly claims

Apple faces a UK lawsuit concerning iCloud’s alleged monopoly, potentially costing the tech giant £3 billion (approximately $3.8 billion). A consumer rights organization has stepped up to challenge Apple’s cloud pricing and access, claiming millions were unfairly affected by its practices.

A legal claim was filed against Apple by the U.K. consumer group Which?, representing about 40 million users of its iCloud service. The group alleges that Apple’s practices constitute a breach of competition law, effectively “locking” consumers into utilizing iCloud while providing preferential treatment to their own storage solutions. This lack of competition has led to inflated pricing, which, according to Which?, means U.K. consumers were charged “rip-off” prices for what is essentially a dominant service.

According to the claim, Apple encourages users to opt into iCloud for essential data storage, yet simultaneously complicates the process for those wanting to explore competing services. For example, customers are limited in their ability to fully back up data using third-party alternatives. As a result, once users exceed the free 5GB limit of iCloud, they have no choice but to purchase a subscription, progressively leading to higher overall costs.

Which? stated that Apple raised its iCloud subscription fees significantly in 2023, with increases ranging between 20% and 29%. The average compensation the group is seeking per affected consumer is estimated at around £70 (approximately $90), ultimately amounting to a colossal total of nearly £3 billion if successful.

Video: Which?

Under the opt-out collective actions regime established by the Consumer Rights Act of 2015, this lawsuit seeks to represent all U.K. consumers who have paid for iCloud services since October 1, 2015. Those outside the U.K. wanting to join the action must actively opt in. Which?’s spokesman emphasized that the definition of eligible users includes anyone who has used or paid for iCloud services during the last nine years.

The legal challenge is not the first of its kind. A similar lawsuit was initiated against Apple in the United States in March 2024, alleging monopolistic behavior in the cloud storage market. That case remains pending after Apple’s attempts to dismiss it were unsuccessful.

Which? is partnering with international law firm Willkie Farr & Gallagher to pursue the claim, which is being financed by Litigation Capital Management, a global player in litigation funding. The consumer group has publicly encouraged Apple to settle the matter amicably by refunding customers and making iOS more accommodating for third-party cloud services.

Anabel Hoult, the chief executive of Which?, pointed out the significance of this legal action, stating, “By bringing this claim, Which? is showing big corporations like Apple that they cannot rip off U.K. consumers without facing repercussions.” Given the current climate of increased scrutiny on large tech companies, the claim has the potential to set important precedents in consumer rights and market competition.

Apple has officially rejected Which?’s claims, asserting that users are not required to use iCloud, and many rely on a range of third-party services. The company insists that it works diligently to ensure data transfer is straightforward, regardless of the provider. Notably, Apple claims that nearly 50% of its customers do not require an iCloud+ subscription, asserting that their pricing aligns with other cloud storage options.

The next critical step in this legal saga awaits the decision from the Competition Appeal Tribunal concerning whether Which? can proceed as a class representative for consumers. This determination will dictate the future of the lawsuit and could influence broader discussions regarding competition and consumer protections within the tech industry.

As the legal battle unfolds, it highlights the growing scrutiny Big Tech faces regarding its market dominance and pricing strategies. Following a series of recent antitrust enforcement actions globally, this lawsuit serves as another chapter in the ongoing dialogue about fairness in the digital market.

Featured image credit: Medhat Dawoud/Unsplash