Apple Faces $1.2 Billion Lawsuit Over Child Safety Feature

Key Development: Apple Inc. AAPL has been hit with a $1.2 billion lawsuit, filed on Saturday in U.S. District Court in Northern California. The complaint centers on Apple’s decision to discontinue its feature aimed at detecting child sexual abuse material (CSAM).

Details of the Case: The lawsuit was brought forth by a 27-year-old woman, who is using a pseudonym, claiming that Apple failed to uphold its commitment to protect abuse victims, according to a report by The New York Times.

She alleges that images of her abuse were stored on iCloud, and Apple’s policies have allowed this content to proliferate online. The suit is seeking not only a change in Apple’s practices but also compensation for up to 2,680 victims.

In stark contrast to competitors like Alphabet Inc.’s GOOG GOOGL Google and Meta Platforms, Inc.’s META Facebook, which have reported higher instances of abusive content, Apple has historically maintained a lower incidence rate, attributing this to its strong stance on user privacy.

Moreover, child advocacy groups have expressed disappointment, arguing that Apple should take more decisive action to combat online abuse.

Related Legal Developments: In a similar case from August, lawyers representing a nine-year-old victim filed suit against Apple in North Carolina, alleging that the child received CSAM through iCloud. Apple has sought to dismiss this lawsuit based on Section 230 protections, yet recent court rulings might impact this defense.

Apple spokesman Fred Sainz asserted that the company remains dedicated to fighting child abuse without compromising user privacy: “We are urgently and actively innovating to combat these crimes while ensuring security and privacy for all our users.” However, there has been no immediate response from Apple to Benzinga’s request for comments.

Importance of the Issue: This lawsuit emerges following Apple’s decision in 2022 to abandon a previously planned system intended to scan iCloud images for CSAM, which had been announced in 2021. The plan involved using a hashtag system for detection on devices.

In September of the past year, Apple cited privacy concerns and potential unintended consequences as reasons for dropping the plan. Earlier this year, significant tech figures, including Mark Zuckerberg, testified before a Senate hearing focused on child safety, indicating an increasing concern across the technology sector regarding the issue. Additionally, Apple is contending with other legal matters, including a lawsuit from an employee alleging privacy violations.

On a financial note, Apple reported fourth-quarter revenue of $94.9 billion, exceeding analyst predictions of $94.56 billion.

Market Performance: Apple’s shares fell 0.082% on Friday, closing at $242.84. In after-hours trading, the stock dipped an additional 0.22%, settling at $242.30. Since the start of the year, Apple shares have skyrocketed by 30.81%, slightly surpassing the Nasdaq 100 index’s increase of 30.7%, according to Benzinga Pro data.

The average price target for Apple stock, based on evaluations from 31 analysts, is $242.26, with a top estimate of $300 from Wedbush dated November 29. Recent assessments from Wedbush, Morgan Stanley, and Maxim Group average $262.67, suggesting a potential increase of 8.4%.

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Disclaimer: This content was partially produced with AI tools and was reviewed and published by Benzinga editors.