The Memo: Apple facing legal action over iCloud prices

The consumer group Which? has launched legal action against Apple, accusing the tech giant of trapping 40 million British customers into paying for its iCloud service. Once the customers are locked in, Apple charges them extortionate prices, or so Which? claims. Essentially, customers receive their first 50GB of storage for free but storing any more than that comes with a charge. The cheapest option is 99p per month for 50GB, but it can cost as much as £54.99(!) per month for 12TB of storage. Prices rose by up to 29% last year. It is almost inevitable that the longer a customer uses Apple’s services, the more data storage they’ll need for things like photos, videos, files, notes, passwords and messages. The corresponding price increase has led to the claim that the company is ripping off its customers. 

Which? filed its claim with the competition appeal tribunal, a judicial body which decides cases involving competition or economic regulatory issues. The lawsuit claims that Apple breached UK competition law by giving its own storage system preferential treatment and trapping customers into its system. It argues that Apple was able to achieve this by using its monopoly over the iOS system to gain an unfair advantage in the cloud storage market. Which? further claims that Apple made it difficult to use alternative providers, therefore trapping customers and making it easier to overcharge for iCloud services. Apple, on the other hand, has rejected claims that its practices are anti-competitive. It suggests that users are not required to use iCloud and many choose third-party services. Apple says it makes it as easy as possible for users to transfer their data outside of the Apple ecosystem, a claim which the consumer group disputes. 

However, since there have been no infringement decisions made under EU or UK law, it will be up to the claimant to prove market abuse was occurring. The consumer group says that the class action involves all UK customers who have paid for iCloud services since 1 October 2015.The Consumer Rights Act 2015 introduced ‘opt-out collective actions’ which enable an organisation to represent customers where large numbers of people have allegedly been affected. As such, eligible customers are part of the claim unless they opt out. 

Which? estimates that its legal action could result in up to a £3 billion payout, with customers receiving an average of £70 each. Apple says it will defend against legal claims, while Which? has urged Apple to change its practices to resolve the issue without the need for litigation. If the case does go to court, it could take years for the case to be settled as it makes its way through the courts. In the USA, a similar lawsuit against Apple began in March this year. The Competition and Markets Authority is also carrying out a broader investigation into cloud services in the UK.