Class action suits against Google and Apple

Article by Afeefa Salehmohamed

Recently, the Supreme Court agreed to hear a class action against Google based on data privacy breach issues. It is alleged that Google tracked millions of iPhone users, secretly and illegally, amounting to a breach of privacy.

Google has been accused of illegally using “iPhone users’ personal data by tracking internet browsing histories” to “targeted advertising services” for more profits. Richard Lloyd, who is leading the class action suit, said “Google makes billions of pounds in revenue from advertising based on our personal data every year” and he maintains that they should be held accountable for “profiting from the misuse of personal data.” It is estimated that iPhone users could seek a remedy of more than £3 billion if the trial succeeds, for misuse of their personal data between 2011 and 2012.

Google’s lawyer, Anthony White, submitted that under English law, claimants could seek redress only if they have suffered damages, which is not the case in this situation. He also said, “It is not my case that loss of personal data may not have serious consequences, but it may not always do so in a way that attracts compensation.” He also maintained that rewarding a uniform compensation to all claimants is a failure to take into account each user’s “differing phone usage.”

Google has submitted that a breach of statutory duty does not constitute a breach unless the person suffered some harm, thus the severity of the breach needs to be taken into account. Before any damages are awarded, Google agreed in the Court of Appeal that the “threshold of seriousness” needs to be met. Under s13 of the Data Protection Act 1998 “Any individual who suffers damage by reason of any contravention by a data controller of any of the requirements of this Act is entitled to compensation from the data controller for that damage.” For the purposes of the formerly-mentionedsection, ‘damages’ constitute of both material and non-material, which leads to the idea that “not every contravention would cause damage.” This means that in this case, as Google’s lawyer argued, no harm was caused to the plaintiffs by this breach, thus there can be no damages. This “contravention” does not cause damage. Seriousness of harm should be given more weight than seriousness of breach. This concept essentially means that in this particular case, instead of focussing on the breach—the illegal use of private information—the focus should rather be on how harmful it was to illegally use the private information.

Julian Copeman, partner at Herbert Smith Freehills said that if the judgment is given in favour of claimants, UK Courts will “see the floodgates open to a tsunami of representative data class actions.” It is predicted that in its judgment, the Supreme Court will be addressing the “threshold of seriousness” for claims, if it is removed, floodgates will indubitably open and the “biggest barrier will be removed”. However, if it is kept or even raised, it will be more favourable to businesses and it will be even more difficult for class actions to succeed. The Confederation of British Industry–a trade body–highlights the “detrimental” effects of damages being awarded, with the risk of prompting settlements, “regardless of the merits of a case.” Rafi Azim-Khan, head of privacy at law firm Pillsbury says that this case will be “ground-breaking” since the outcome of the success of this case will cause “bank-breaking financial hit.”

The case with Google will be an interesting one. There are only two outcomes. The first is that it will be in favour of claimants, and it will open the floodgates, as discussed above. The second is that the ‘threshold of seriousness’ will be raised, thus benefitting businesses. Most importantly, it will set a precedent on how much should the law hold the giant tech companies accountable for the numerous breaches, albeit harmless.

Apple:

Apple, another tech giant, is also facing a class action. It is being claimed that Apple overcharged around 20 million customers in App Store purchases. Apple usually charges a fee of 30% over paid apps, which is its ‘standard’ fee. It is being coined as “excessive” and “unlawful”.

Apple issued a statement in its email that “the commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces.” It maintains that 84% of its apps are free and that it doesn’t charge developers, unless they are “selling a digital good or service”, and thus they are then eligible for “a commission rate of 15%.” Apple called this lawsuit “meritless” and said they “welcome the opportunity to discuss with the court” their “unwavering commitment to consumers and the many benefits the App Store has delivered to the UK’s innovation economy.”

Rachael Kent, the lead claimant in this class action, stated that UK customers are being impacted when Apple is abusing its dominance in the app store market. Earlier this year, Apple reduced its fee from 30% to 15% for new developers, as well as those developers who make around $1 million annual revenue from their apps. Apple allegedly deliberately uses its own payment processing system, to shut out any competition, thus making an enormous profit, albeit unlawful. A US Congress inquiry from last year estimated that “Apple’s annual global revenue from the App Store is at least $15 billion per year,” when it costs the company only around $100 million to run the platform, said Rachael Kent. Apple’s anti-competitive behaviour helps achieve this massive revenue.

It is estimated that UK users of iPhone or iPad who purchased paid apps since October 2015 will be eligible to a compensation, thus Apple having to pay an estimated total of £1.5 million, or even more.

This case, as the one above is a very interesting one. Antony Maton–an intervener on behalf of Which?–stated that the successful UK Supreme Court decision on a class action brought against MasterCard “gave the green light for collective actions to be brought on a straightforward and easily understood basis.” However, as already discussed above, a class action against Google also awaits decision. The outcome of the Google ‘breach-of-privacy’ case might have an effect in the decision of the Apple case.