Google and Apple Face Major UK Class Actions Over Data Privacy and Competition Issues

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

Google’s lawyer, Anthony White, submitted that under English law, claimants may seek redress only if they have suffered damage, which he argues is not the case here. He 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 argued that awarding uniform compensation to all claimants fails to account for 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, meaning the severity of the breach must be considered. Before awarding any damages, Google agreed in the Court of Appeal that the “threshold of seriousness” must be met. Under section 13 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 this section, “damage” includes both material and non‑material loss, which supports the idea that “not every contravention would cause damage.”

This means that, as Google’s lawyer argued, this breach caused no harm to the plaintiffs, and therefore no damages can be awarded. The “contravention” does not cause damage. Seriousness of harm should be given more weight than seriousness of breach. In this case, the focus should be on how harmful the illegal use of private information was, rather than the breach itself.

Julian Copeman, partner at Herbert Smith Freehills, said that if the claimants win, UK courts will “see the floodgates open to a tsunami of representative data class actions.” The Supreme Court is expected to address the “threshold of seriousness” for claims. If it is removed, floodgates will undoubtedly open and “the biggest barrier will be removed”. However, if it is kept or raised, it will favour businesses and make class actions even harder to win. 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 Pillsbury, says that this case will be “ground‑breaking” and that a successful claim could cause a “bank‑breaking financial hit”.

The case against Google will be interesting. There are only two outcomes. The first is that judgment will favour the claimants, opening the floodgates as discussed above. The second is that the “threshold of seriousness” will rise, benefiting businesses. Most importantly, the case will set a precedent for how far the law should hold giant tech companies accountable for numerous breaches, even if they appear harmless.

Apple

Apple, another tech giant, is also facing a class action. The claim is that Apple overcharged around 20 million customers for App Store purchases. Apple usually charges a 30% fee on paid apps, its standard rate. This is being described as “excessive” and “unlawful”.

Apple said 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 does not charge developers unless they are “selling a digital good or service”, in which case they are eligible for “a commission rate of 15%.” Apple called the lawsuit “meritless” and said it “welcomes the opportunity to discuss with the court” its “unwavering commitment to consumers and the many benefits the App Store has delivered to the UK’s innovation economy.”

Rachael Kent, the lead claimant, said UK customers are being harmed when Apple abuses its dominance in the App Store market. Earlier this year, Apple reduced its fee from 30% to 15% for new developers and for developers who make around $1 million in annual revenue from their apps. Apple allegedly uses its own payment‑processing system to shut out competition, thus making enormous profits, albeit unlawfully. A US Congress inquiry last year estimated that “Apple’s annual global revenue from the App Store is at least $15 billion per year.” In comparison, Rachael Kent said it costs the company only around $100 million to run the platform. Apple’s anti‑competitive behaviour helps achieve this massive revenue.

UK users of iPhones or iPads who purchased paid apps since October 2015 may be eligible for compensation, meaning Apple may have to pay an estimated £1.5 billion, or more.

This case, like the one above, is very interesting. Antony Maton, an intervener on behalf of Which?, said the successful UK Supreme Court decision in 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 discussed above, a class action against Google is also awaiting a decision. The outcome of the Google breach‑of‑privacy case may influence the decision in the Apple case.