Apple hit by Which? with £3bn legal claim that iCloud service charges are ‘anti-competitive’

Thursday at 09:46 AM

Consumer rights advocate Which? is pursuing a £3bn legal action against Apple on behalf of millions of UK consumers it claims are locked into the technology giant’s iCloud storage platform.

Which? has instructed law firm Willkie Farr & Gallagher (UK) LLP to oversee the legal proceedings, in the hope of securing a share of the £3bn for 40 million UK iCloud users it claims have been unfairly locked into using Apple’s cloud storage service by its “rip-off” pricing since 1 October 2015.

Specifically, it is claimed that Apple has breached competition law by “favouring its own cloud storage services” on iOS devices, and by failing to resolve technical restrictions that lock users into the iCloud platform, while making it difficult for users to seek out alternative providers.

For the case to proceed, Which? needs to obtain permission from the Competition Appeal Tribunal so it can act as class representative, and pursue the claim on behalf of the millions of UK consumers it claims are affected.

“Which? believes taking this action is essential to changing the behaviour of huge companies like Apple that use their market dominance to engage in anti-competitive practices that reduce choice and drive up prices for consumers,” said the company, in a statement.

“iOS has a monopoly and is in control of Apple’s operating systems, and it is incumbent on Apple not to use that dominance to gain an unfair advantage in related markets, like the cloud storage market. But that is exactly what has happened.”

One way it is alleged that Apple does this is by prohibiting iCloud users from backing up their phone’s data with a third-party provider, and making them pay to store any additional data that goes over the free 5GB limit it offers users.

Consumers overcharged

This situation has, according to Which?, resulted in consumers being overcharged, on the basis that Apple has increased the price of using iCloud by between 20% and 29% across its storage tiers in 2023.

According to the organisation’s calculations, each affected iCloud user could be due compensation in the region of £70, with Which? urging Apple to resolve the claim without litigation by simply refunding users this money.

Anabel Hoult, chief executive of Which?, said the legal action is about much more than trying to recoup the monies it claims iCloud users have overpaid to Apple over the years.

“By bringing this claim, Which? is showing big corporations like Apple that they cannot rip off UK consumers without facing repercussions,” she said.

“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.”

In a statement to Computer Weekly, an Apple spokesperson responded to the claim by denying that Apple users are forced to use iCloud.

“Apple believes in providing our customers with choices,” the spokesperson 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.”

News of the claim comes at a time when the anti-competitive behaviour of other cloud-touting technology giants, namely Microsoft and Amazon Web Services, is under scrutiny from competition watchdogs in various countries.

That includes in the UK, where the Competition and Markets Authority (CMA) is known to be preparing to release the preliminary findings from its ongoing investigation into the UK cloud infrastructure services market in the coming weeks.

Katherine Kirrage, digital markets and competition partner at law firm Osborne Clarke, said the timing of this legal action against Apple is interesting, as the CMA is set to gain even stronger regulatory power over the UK’s digital markets, under the terms of the Digital Markets Competition and Consumers Act (DMCCA).

“As the CMA awaits its DMCCA powers early next year, this action by Which? is an example of the multiple ways in which companies are bringing competition law complaints,” she said.

“These range from lobbying for regulation of players such as Apple, to bringing standalone litigation aimed, not only at winning damages, but also changing future conduct. Litigation is likely to become an increasingly important part of the regulatory landscape, particularly in digital markets.”

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