Apple Inc. is reportedly facing a proposed class action lawsuit in the Northern District of California, for creating unfair conditions that has monopolized digital cloud storage through its iCloud platform, according to Bloomberg Law.
The lawsuit filed on Friday accuses Apple of implementing “surgical technological restraints” that compel its iPhone and iPad customers to use its iCloud storage system to back up their data. By doing this, the company has achieved market dominance by “rigging the competitive playing field” against other cloud providers. It also claims that Apple has unlawfully “tied” two products together — specifically, its mobile devices and iCloud.
“Apple’s arbitrary prohibition on hosting Restricted Files fundamentally distorts the competitive landscape to privilege iCloud over all rivals. As a result of this restraint, would-be cloud competitors are unable to offer Apple’s device holders a full-service cloud-storage solution, or even a pale comparison,” the lawsuit reads.
“Sure, rivals can host photos, videos, and certain other data files. But they cannot host all of the data users want to back up, including for device restoration. This gives iCloud an enormous structural advantage against all would-be competitors. A consumer that uses a competing cloud platform to store photos will still need iCloud for Restricted File storage. As Apple knows, this is an unattractive option.”
The lawsuit further points out that iCloud makes up for roughly 70% of the market share in cloud storage for Apple users, that has allowed the market share prices to skyrocket, because it has been “undisciplined by competition.”
“Apple has marked up its iCloud prices to the point where the service is generating almost pure profit. Apple’s ability to sustain these prices is a testament to its monopoly power,” the lawsuit added.
In addition, the plaintiffs also claim that Apple has violated California’s Unfair Competition Law (UCL) by engaging in “unlawful, unfair, or fraudulent” business practices, including tying and restraining competition among cloud-storage platforms, which would otherwise inure to the benefit of consumers.
The proposed suit, which hasn’t yet been granted class action status, is represented by Hagens Berman. It aims to cover tens of millions of potential customers in the U.S., all iCloud platform users, who bought iCloud plans and were overcharged and have been affected by the so-called monopolistic practices.
