iCloud logo
1 Facebook x.com Reddit
A class-action lawsuit has been filed against Apple, alleging that iCloud users are paying inflated prices for cloud storage by violating antitrust laws.
The class action lawsuit, filed March 1 in the U.S. District Court for the Northern District of California, accuses Apple of violating the Sherman Act and the Clayton Act. The statement said the violations were related to Apple's iCloud operations.
The 37-page document, seen by AppleInsider, was filed by law firm Hagens Berman on behalf of lead plaintiff Julianne Felix Gamboa. The complaint alleges that Apple was able to establish an “unlawful monopoly” through its iOS cloud storage policy.
It is believed that Apple may have required Apple device owners to only use iCloud products to back up certain types of files. This data can include things like application data and device settings, although other types of files can be stored through other cloud providers without problems.
The court film says that iCloud is still under investigation, but so far it appears that “there is no technological or security justification for this restriction of consumer choice.” Instead, the firm states that “the purpose and effect of this restriction on competition appears to be to secure a monopoly on Apple's iCloud product.”
Restricting certain files or data types to just iCloud is considered a problem for consumers because they don't necessarily want to manage multiple storage interfaces, unlike the convenience of a single cloud storage service.
The lawsuit says Apple also acknowledges that cloud storage is “independent of what is stored and treats all file contents the same as a collection of bytes.” It even points to Samsung, Apple's big smartphone competitor, as it offers consumers Samsung Drive but also gives them the option of full backup to Google Drive.
The idea of storing files with restricted access in iCloud for security reasons is also apparently undermined by Apple's use of infrastructure provided by other technology companies, including Google, Microsoft and Amazon.
High profits and little confusion
“Apple's limitations can only be explained consistently as an attempt to stifle competition,” the lawsuit says. After isolating iCloud from competitors, Apple then allegedly charges “ultra-competitive fees” for iCloud plans.
“This is reflected in Apple's gross margins, which are close to 80 percent for iCloud, significantly higher than Apple's already high gross margins companywide,” the lawsuit further states.
The document also claims that gross margins averaged 78% for iCloud and exceeded 80% for the most popular plans under 50GB.
However, in attempting to explain the profit Apple makes at each tier of storage it offers, the complaint mistakenly confuses Apple's annual storage costs per gigabyte of storage with the annual total cost of capacity at each tier.
For some reason, the document claims that Apple pays $1.86 per gigabyte per year for iCloud capacity from 5 to 50 GB, but then the cost per gigabyte per year increases to $74.40 per volume from 200 to 2 TB.
The mislabeling issue aside, the lawsuit still claims that the gross profit per kit far exceeds the gross profit of the entire company. If Apple's competitors could manage things like app data and device settings, they would have a “strong incentive to compete aggressively on price,” which would force Apple to cut spending on iCloud.
Prayer for relief in the complaint includes class action status in court, relief and change in Apple's practices, and prevention of future allegedly illegal practices. A jury trial is also required.
As part of promoting the bid, Hagens Berman created a form inviting people who have purchased an iCloud storage plan to potentially join the class if it is granted class action status.
