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iCloud is Apple's online storage service
Apple is facing legal action accusing it of locking 40 million UK customers into its iCloud service and charging them “rip-off prices”.
Consumer group Which? claims the legal action – which it launched – could result in a £3bn payout if successful, with the average customer receiving around £70.
Apple has rejected the suggestion that its practices are anti-competitive, saying users are not forced to use iCloud. It said many customers rely on third-party alternatives and insists it “works hard to make data transfer as simple as possible.”
It is another example of “the growing wave of large-scale class action suits against big tech” that has “operated without sufficient constraint”, Toby Starr of law firm Humphries Kerstetter told the BBC.
Facebook, Google, gaming giant Steam and the UK's major mobile providers are among others facing legal action at the same court, the Competition Appeal Tribunal.
“While most of these claims are in their infancy and will take a long time to resolve, more decisions will be made over the next two years and there will be settlements – those- These will start to affect the businesses of the tech giants,” Starr said.
A price to pay
Users of Apple products get a small amount of digital storage for free, then are encouraged to pay to use its iCloud service to back up photos, videos, messages, contacts and other content stored on their device.
Prices for this storage range from £0.99 per month for 50GB of space to £54.99 per month for 12TB.
Apple does not allow competing storage services full access to its products.
He says it's for security reasons, but it also contributes to the company's huge revenue.
Which? says that over a nine-year period dating back to 2015, Apple effectively locked people into its services – then overcharged them.
“By making this claim, Which? is showing big companies like Apple that they cannot rip off British consumers without facing repercussions,” said the body's chief executive, Anabel Hoult.
“Taking this legal action means we can help consumers get the relief they are owed, deter similar behavior in the future, and create a better, more competitive marketplace.”
Apple has strongly denied Which's accusations.
“We reject any suggestion that our iCloud practices are anti-competitive and will vigorously defend against any legal claims to the contrary,” it said in a statement.
“Very high value damage”
Which? says the legal action will be funded by Litigation Capital Management and that the consumer group has retained international law firm Willkie Farr & Gallagher.
Which? said the firm would receive fees as the case progressed, and would get additional payments if successful – but would not receive any percentage of any damages.
Alan Davis, of law firm Pinsent Masons, said there would most likely be more similar cases in the future.
“It is inevitable that further claims of this nature will continue to be brought given the very high value of the overall damages and the role and incentive of funders in supporting these claims which otherwise could not be brought without this financial support,” he said. told the BBC.
He added that the absence of any infringement finding under EU or UK competition law meant the onus would be on the claimant to prove that the market abuse it claimed actually occurred took place.
However, he pointed out that the regulator had announced a wider investigation into cloud services in the UK.
Lawsuits against big tech companies can take years to resolve in court.
Which? urged Apple to resolve this issue “without resorting to litigation” and wants the tech giant to give consumers their money's worth and open up more competition.
