A U.K. consumer group, Which?, has filed a £3 billion ($3.78 billion) lawsuit against Apple (AAPL), alleging violations of competition laws related to its iCloud storage service. The lawsuit, filed with the Competition Appeal Tribunal, seeks compensation for nearly 40 million U.K. Apple users.
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Should the court rule in favor of the claim, the affected customers may be eligible for refunds of up to £70 each, totaling about £3 billion. This would be a significant financial blow to the tech giant.
Plaintiff Accuses AAPL of Trapping Users
Importantly, the consumer group claims that Apple has “trapped” millions of U.K. users into using iCloud by making it difficult to switch to alternative cloud storage providers. They also argue that the iPhone maker charges excessive prices for iCloud storage, especially once the initial 5GB of free storage is exhausted.
Which? is urging Apple to resolve the matter without litigation by offering refunds to consumers. Also, the group expects AAPL to open up its mobile operating system to other cloud storage providers to allow for greater competition in the market.
In response to the lawsuit, Apple has denied any wrongdoing and stated that its iCloud practices are fair and competitive. The company stated that it enables seamless data transfer for users and pointed out that nearly 50% of them don’t need extra iCloud storage. Further, AAPL argues that its pricing is in line with other cloud storage providers.
Is AAPL Stock a Good Buy?
Turning to Wall Street, AAPL has a Moderate Buy consensus rating based on 24 Buys, eight Holds, and two Sells assigned in the last three months. At $245.35, the average Apple price target implies a 7.51% upside potential. Shares of the company have gained over 19% year-to-date.
