Lawsuit Accuses Apple Of Rigging The Competition With iCloud's 5GB Storage Plan
A class-action lawsuit filed in the US District Court for the Northern District of California alleges that Apple has created an "illegal monopoly" with its iCloud storage service. According to the lawsuit, "iCloud is no better (and often inferior" to alternative cloud storage services, but through "surgical technological restraints," Apple has turned iCloud into a dominant cloud platform, ultimately resulting in consumers paying more to back up their devices.
"Apple has achieved market dominance by rigging the competitive playing field so that only iCloud can win...While competing cloud providers can access and host certain iPhone and iPad data (e.g., photos and videos), Apple arbitrarily sequesters a set of files (mainly app data and device settings) and denies all but iCloud permissions to host them," the lawsuit states.
According to the lawsuit, as a result of Apple's tactics, rival cloud storage platforms like Dropbox, Sync.com, and others are effectively prevented from offering a full service alternative; they can only host videos, photos, and certain other data files, but not all of the data that users might want for a wholesale device restoration.
"As Apple knows, this is an
unattractive option. It requires juggling multiple cloud accounts with multiple interfaces and splitting files between them. This is far less convenient than using a single cloud storage service capable of storing all file types in one location. Through the restraints challenged in this lawsuit, Apple has ensured that only iCloud can perform this basic function," the lawsuit states.
The lawsuit further alleges that a plausible reason for this tactic does not exist, whether it be technological or rooted in security. Instead, the lawsuit claims the Apple's restraints only exist to stifle competition, which it says is reflected in Apple's 80% gross margin for iCloud. That's nearly twice as high as Apple's company-wide margin, the lawsuit points out.
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For anyone who is not familiar with iCloud, Apple offers users 5GB of storage for free, which also includes automatic syncing and access to a user's data across all devices. If that's not enough, there are several iCloud+ plans that users can purchase. They cost $0.99/month for 50GB, $2.99/month for 200GB, $9.99/month for 2TB, $29.99/month for 6TB, and $59.99/month for 12TB. Each of the paid tiers also comes with additional perks, such as the ability to share iCloud storage with up to five family members. Additionally, up to 2TB of iCloud storage is included in the company's Apple One plans.
According to the lawsuit, most Apple users find the 5GB of iCloud storage insufficient and end up purchasing a paid plan, with 50GB being the most popular among those.
"Apple is marking up its marginal costs by staggering amounts. For the 5 to 50GB tier, Apple pays Google $1.86 annually per GB for storage infrastructure, and charges consumers $11.88. For the 50 to 200GB tier, it pays Google $7.44 annually per GB and charges consumers $35.98. And for the 200GB to 2TB tier, Apple pays Google $74.40 annually per GB and
charges consumers $119.99," the lawsuit states.
The iCloud lawsuit (PDF) refers to this price structure as yielding "eye-watering gross margins." There's more to digest in the 37-page filing. The law firm representing the class action lawsuit (Hagens Berman) also set up a page for iCloud users to join the lawsuit.
