Apple Faces $1.2B Lawsuit Over Child Sexual Abuse Material Detection On iCloud — Tech Giant Says, 'Urgently And Actively Innovating'

Apple Inc. AAPL is facing a $1.2 billion lawsuit filed on Saturday in U.S. District Court in Northern California for discontinuing its child sexual abuse material detection feature.

What Happened: The plaintiff, a 27-year-old woman using a pseudonym, alleges that Apple broke its promise to protect victims like her, reported The New York Times.

She claims that images of her abuse were stored on iCloud, and Apple’s decision allowed the material to be widely shared. The lawsuit seeks changes to Apple’s practices and compensation for up to 2,680 victims.

Unlike competitors such as Alphabet Inc.'s GOOG GOOGL Google and Meta Platforsm, Inc.'s META Facebook, Apple has historically reported far fewer instances of abusive material, citing its commitment to user privacy.

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However, child safety advocates have criticized the company for failing to take stronger action to curb the spread of such content.

In a related case in August, a nine-year-old victim’s attorneys sued Apple in North Carolina, alleging strangers sent her CSAM via iCloud. Apple has filed a motion to dismiss, citing Section 230 protections. However, recent court rulings may challenge Apple’s defense.

Apple spokesman Fred Sainz stated the company is committed to combating child sexual abuse material while maintaining user privacy. "We are urgently and actively innovating to combat these crimes without compromising the security and privacy of all our users."

Apple did not immediately respond to Benzinga’s request for comments.

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Why It Matters: The lawsuit stems from Apple’s decision in 2022 to abandon a plan to scan iCloud images for CSAM.

Initially announced in 2021, the plan aimed to detect CSAM using a hashtag system on devices.

In September last year, Apple explained its decision to abandon CSAM detection plans, citing privacy concerns and potential unintended consequences.

Earlier this year in January, tech leaders including Mark Zuckerberg and others testified at a Senate hearing on child safety, showing a growing industry focus on this issue. Meanwhile, Apple is facing other legal challenges, such as a lawsuit from an employee alleging privacy violations.

In October, Apple reported fiscal fourth-quarter revenue of $94.9 billion, surpassing analyst expectations of $94.56 billion.

Price Action: Apple’s stock dipped 0.082% on Friday, closing at $242.84, with an additional 0.22% drop in after-hours trading, bringing it to $242.30. Year-to-date, Apple shares have risen 30.81%, narrowly outpacing the Nasdaq 100 index's 30.7% gain during the same timeframe, as per Benzinga Pro data.

Apple’s consensus price target, derived from evaluations by 31 analysts, is $242.26, with the highest target of $300 set by Wedbush on Nov. 29. Recent ratings from Wedbush, Morgan Stanley, and Maxim Group average $262.67, suggesting a potential upside of 8.4%.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.