Apple Inc. AAPL is facing a proposed class-action lawsuit, which accuses the tech giant of monopolizing digital storage for its customers.
What Happened: Filed on Friday in the Northern District of California, the lawsuit claims that Apple is imposing “surgical” restrictions that prevent customers from effectively using any service except its iCloud storage system.
According to the lawsuit, iCloud is the only service that can host certain data from Apple’s phones, tablets, and computers, including application data and device settings. The plaintiffs argue that this practice has “unlawfully tied” the devices and iCloud together.
The lawsuit also alleges that Apple’s arbitrary prohibition on hosting Restricted Files distorts the competitive landscape, favoring iCloud over all rivals. This has made it impossible for potential cloud competitors to offer Apple’s device holders a full-service cloud storage solution.
“Apple's restraints on cloud storage, as alleged herein, violate the Sherman Act and thus are ‘unlawful’ for purposes of the UCL [California's Unfair Competition Law],” the lawsuit read. “Apple's restraints also violate the "unfair" prong of the UCL because they constitute at least an incipient violation of the antitrust laws, violate the policy and spirit of the antitrust laws, threaten to harm competition, and are substantially injurious to consumers.”
With iCloud holding approximately 70% of the market share in cloud storage for Apple users, the plaintiffs also claim that this high market share has led to skyrocketing prices, which are “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 stated.
The plaintiffs are proposing a class-action suit with tens of millions of members, all of whom are iCloud platform users.
The news was first reported by The Hill. Apple did not immediately respond to Benzinga’s request for comments.
Why It Matters: This lawsuit is the latest in a series of legal challenges against Apple’s alleged monopolistic practices. In January, Apple faced a $1 billion lawsuit in the UK over its App Store fees. The lawsuit, brought forth by over 1,500 app developers, accused Apple of imposing unfair charges. The tech giant requested the London tribunal to dismiss the lawsuit.
More recently, in February, Epic Games won a $700 million antitrust lawsuit against Google. Following this victory, Epic Games CEO Tim Sweeney expressed his intention to take on Apple’s decision to ban web apps. Sweeney, a vocal critic of Apple and Google’s stronghold on the mobile apps store, has been leading the charge against their alleged monopolistic practices.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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