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Does archived mail in iCloud count towards your iCloud storage allowance?

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It does indeed - all mail that 'exists' is taking up space and therefore counts towards your allowance limit. The only way to free up space is to delete things fully.

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According to Apple,

When you sign up for iCloud, you automatically get 5GB of free storage. And that’s plenty of room, because of the way iCloud stores your content. Your purchased music, apps, books, and TV shows, as well as your Photo Stream, don’t count against your free storage. Since your mail, documents, Camera Roll, account information, settings, and other app data don’t use as much space, you’ll find that 5GB goes a long way. And if you need more storage, you can easily purchase a storage upgrade right from your device.

So yes, mail counts against your storage allowance, but photos, music, apps, books, and TV shows do not.

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