Apple Rigged Competition to Win Cloud Storage Monopoly, Class Action Alleges

Apple “stifled” the competition in the cloud storage market to gain a monopoly and secure itself billions in annual revenue for its own service iCloud, a new class action lawsuit alleges.

Plaintiff Julianna Felix Gamboa filed the proposed class action lawsuit against Apple Inc. on March 1 in a California federal court, alleging violations of state and federal antitrust laws.

Gamboa is an iCloud customer who alleges she overpays for the Apple cloud storage service due to the fact it created a monopoly through blocking out the competition. 

“Apple does not dominate cloud storage on its devices due to any shortage of would-be competitors,” she says. “From a security and functionality standpoint, iCloud is no better (and often inferior) to other cloud storage platforms. 

“Instead, Apple has achieved market dominance by rigging the competitive playing field so that only iCloud can win.”

iCloud a boon for Apple  

Apple is probably best known for its computers and smartphones. 

But as well as making devices, Apple also generates massive revenue through apps and services like iCloud, the lawsuit states.

According to the lawsuit, since it was introduced in 2011, iCloud has become a “profit center” for Apple, generating billions in annual revenues. Gamboa says iCloud dominates all other cloud platforms accessible on Apple devices, with a market share she estimates as more than 70 percent.  

Apple has a gross profit margin of nearly 80 percent for iCloud, Gamboa alleges. 

“In other words, 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.”

Apple blocks companies from hosting back-up data 

Gamboa says iCloud does this by blocking other cloud providers from hosting certain files that are needed to restore a device when it is replaced. 

This means, while rival companies can host photos, videos, and other data files, they can’t — because of Apple’s “arbitrary restrictions” — host all of the data users want to back up, including for device restoration. 

“A consumer that uses a competing cloud platform to store photos will still need iCloud for Restricted File storage,” Gamboa says. “As Apple knows, this is an unattractive option.”

A violation of competition laws, class action alleges

The lawsuit seeks to represent a nationwide class of consumers who purchased iCloud storage plans and were overcharged.

Gamboa alleges Apple has violated the Sherman Antitrust Act and California’s Unfair Competition Law. 

“Apple’s restraints can be coherently explained only as an attempt to stifle competition, and that is their manifest effect,” she says. “Apple’s restraints, cloud storage on Apple mobile devices would be better, safer, cheaper, and more prevalent, all to the benefit of consumers.”

Gamboa is seeking certification of the class action, damages, fees, costs and a jury trial. 

The plaintiffs and proposed class are represented by Ben M. Harrington, Benjamin J. Siegel and Gayne A. Kalustian-Carrier of Hagens Berman Sobol Shapiro LLP.

The Apple cloud storage class action lawsuit is Gamboa et al v. Apple Inc., Case No. 5:24-cv-01270 , in the U.S. District Court for the Northern District of California.