Pre-Installed iCloud Software Is a ‘Trojan Horse,’ Says Opening Brief in Appeal vs. Apple

Eight plaintiffs-appellants chose to buy Apple computers, but they didn’t know about and didn’t choose to buy the iCloud software that was automatically installed on their computers when they created their Apple IDs, said their opening brief, dated Wednesday and docketed Thursday (docket 24-715) in the 9th U.S. Circuit Appeals Court. Their appeal seeks to reverse the district court’s dismissal of their fraud complaint against Apple.

The iCloud software, which saves user data, is “a Trojan Horse,” said the brief. Apple designed it “to operate in the background, without notice,” until consumers’ free allotment of 5 GB of storage “is about to be exceeded,” it said. At that point, Apple sends an email telling consumers that to keep iCloud working, they either need to pay for more storage or reduce the data they have been storing, it said.

Apple’s “scheme” violates the law, said the brief. “Building a data backup line of business by hooking consumers into a service that is hidden and then presenting them with the false choice of paying for it or losing stored data is an unfair business practice” under California’s Unfair Competition Law (UCL), it said.

Apple’s conduct is “actionable misrepresentation,” said the brief. Apple sells its computers “without advising its customers of iCloud and its delayed monthly charges,” it said. It also misrepresents to consumers “that they can reduce storage to avoid charges when in fact Apple thwarts them from doing so,” it said.

Apple’s offer of 5 GB of free storage, “while simultaneously thwarting” the consumer’s ability to manage what’s saved and what’s discarded, is a breach of contract, said the brief. But the district court found none of the plaintiffs’ allegations “sufficient to state a claim against Apple,” it said. The “appropriate standard” for reviewing the district court’s order dismissing without leave to amend is “abuse of discretion,” it said.

The case is about Apple’s conduct “in silently pre-installing iCloud" onto its computers, said the brief. The iCloud software would run for free until consumers approached the 5 GB level, it said. That provision is spelled out in the iCloud terms and conditions, but consumers would have had no reason to review those terms and conditions because they hadn’t “knowingly purchased” the iCloud software, it said.

It’s an unfair business practice under the UCL “to back up consumer data without permission,” and then present a “choice” of paying to keep it or taking “affirmative steps” to reduce data to stay within the 5 GB limit, said the brief. Because that choice isn’t real, the representation that one can reduce data “is actually a misrepresentation” that’s “material” to a consumer’s choice to spend a monthly amount, starting at 99 cents, “to continue to back up data,” it said.

Even if no consumer ever read the terms and conditions, that document explains that a consumer is entitled to 5 GB of free storage, said the brief. It also says that if the consumer has stored data in excess of that limit, the consumer can reduce storage so as to stay within the limit, it said. The terms and conditions also explain that if the consumer “has stored so much data as to have purchased a higher level of storage, the consumer can downgrade back to the free 5 GB level,” the brief said.

That constitutes an “explicit promise” that 5 GB of storage will be free, which is breached when Apple substitutes that 5 GB for a paid level of storage, said the brief. It’s also an implied promise “of free storage of the consumer’s choice of 5 GB of data,” other data having been saved elsewhere or deleted at the discretion of the consumer, it said.