Apple is facing a near-£3bn lawsuit over claims it breached competition law by effectively locking millions of UK consumers into its cloud storage service at “rip-off” prices.
The legal claim is being brought by Which?. The consumer group claimed that about 40 million Apple customers in the UK could be entitled to a payout averaging £70 each if the action is successful.
However, Apple said it rejected the Which? accusations and would “vigorously defend” itself against any legal claim.
A similar lawsuit relating to this issue was launched against Apple in the US in March this year but has not yet concluded.
Which? has instructed an international law firm and said the class action involved all UK consumers who had paid for iCloud services since 1 October 2015.
Built into every Apple device, iCloud is the US tech company’s cloud storage service that lets people keep photos, files and other data securely online so they are backed up and available when needed.
Users get 5GB of storage for free, but to get more, they must pay, with a range of plans costing from 99p a month to £54.99 a month. Plan prices were increased by up to 29% last year – a rise described by some media outlets as a “shock price hike” affecting millions of people.
The Which? legal claim was filed with the competition appeal tribunal – a specialist UK judicial body that decides cases involving competition or economic regulatory issues.
The lawsuit argued that Apple had breached UK competition law “by giving its iCloud storage service preferential treatment, ‘trapping’ customers with Apple devices into using iCloud”.
It said Apple’s iOS mobile operating system “has a monopoly … and it is incumbent on Apple not to use that dominance to gain an unfair advantage in related markets, like the cloud storage market”.
Which? said Apple had been encouraging users to sign up to iCloud “while simultaneously making it difficult to use alternative providers, including because Apple does not allow customers to store or back up all of their phone’s data with a third-party provider”.
The consumer group also claimed that the resulting lack of competition had “led to consumers being overcharged”.
Monthly iCloud subscription fees for UK consumers were increased by between 20% and 29% in June 2023.
Which? said it was seeking damages for all affected Apple users, and estimated individual consumers “could be owed an average of £70, depending on how long they have been paying for the services during that period”.
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The consumer group is making use of the so-called “opt-out collective actions” regime introduced by the Consumer Rights Act 2015, under which an organisation can represent consumers where large numbers of people have allegedly been harmed. All those eligible are automatically included in the claim unless they choose to opt out.
Which? has instructed the law firm Willkie Farr & Gallagher, with the claim funded by Litigation Capital Management, a leading provider of “dispute finance”. But Which? said it was urging Apple “to resolve this claim without the need for litigation by offering consumers their money back and opening up iOS to allow users a real choice for cloud services”.
Anabel Hoult, the consumer group’s chief executive, said: “We believe Apple customers are owed nearly £3bn.”
In a statement, Apple said: “Our users are not required to use iCloud, and many rely on a wide range of third-party alternatives for data storage.
“In addition, we work hard to make data transfer as easy as possible – whether it’s to iCloud or another service. We reject any suggestion that our iCloud practices are anti-competitive and will vigorously defend against any legal claim otherwise.”
The company said nearly 50% of its customers do not need nor pay for an iCloud+ subscription. It added that its pricing was in line with that of other cloud storage providers, saying that its monthly 6TB plan costs £26.99, whereas Proton’s costs £33.28.
Source: theguardian.com
