New class-action lawsuit says you pay too much for iCloud

iCloud logo

Filed on March 1, the class action complaint handed to the U.S. District Court for the Northern District of California accuses Apple of violations of the Sherman Act and Clayton Act. The violations, the filing states, are due to Apple's operations of iCloud.

The 37-page filing seen by AppleInsider is from the law firm Hagens Berman on behalf of main plaintiff Julianna Felix Gamboa. The complaint alleges that Apple has managed to establish "an illegal monopoly" due to its iOS cloud-based storage policies.

It is believed that Apple may have required Apple device owners to only use iCloud products to back up certain file types. This data can include things like app data and device settings, though other types of files can be stored via other cloud service providers without issue.

The law film says it is still operating an investigation into iCloud, but so far it seems there are "no technological or security justifications for this limitation on consumer choice." Instead, the firm states the "purpose and effect of this restraint on competition appears to be securing a monopoly for Apple's iCloud product."

By restricting certain files or data types to just iCloud, this is considered to be a problem for consumers since they don't necessarily wish to manage multiple storage interfaces, unlike a convenient single cloud storage service.

The suit says Apple also admits that cloud storage is "agnostic about what is being stored and handles all file content the same way, as a collection of bytes." It even points to Samsung, Apple's big smartphone rival, as it offers Samsung Drive to consumers but also gives them the option to perform full backups to Google Drive.

The notion of storing restricted files on iCloud for security reasons is also apparently undermined, due to Apple's use of infrastructure provided by other tech companies, including Google, Microsoft, and Amazon.

High margins and slight confusion

"Apple's restraints can be coherently explained only as an attempt to stifle competition," the suit states. After insulating iCloud from competitors, Apple then allegedly charges "supracompetitive fees" for iCloud plans.

"This is reflected in Apple's gross margins, which approach 80 percent for iCloud, substantially exceeding Apple's already high company-wide gross margins," the suit further points out.

In the document, it further claims the gross margins were an average of 78% for iCloud, and exceeds 80% for the most popular sub-50GB plans.

However, in trying to explain the margins Apple earns for each tier of storage it offers, the complaint mistakenly confuses the annual per-gigabyte cost to Apple for storage with the annual total cost for capacity at each tier.

For some reason, the document claims that Apple pays $1.86 per gigabyte per year for iCloud capacities from 5GB to 50GB, but then the per-gigabyte-per-year cost increases to $74.40 for between 200GB and 2TB.

Mislabeling issue aside, the suit still insists the gross margin per bundle far outweighs the company-wide gross margins. If Apple's competitors were able to handle things like app data and device settings, they would be "highly incentivized to compete aggressively on price," pressuring Apple to cut iCloud's costs.

The complaint's prayer for relief includes a class-action status from the court, relief and changes in practices from Apple, and the prevention of the supposedly unlawful actions in the future. It also demands a trial by jury.

As part of its publicity for the filing, Hagens Berman has set up a form asking for people who purchased an iCloud storage plan to potentially join the class, if it is granted the class action status.