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I'm sorry about the issue. iCloud is for backing up your data online to iCloud (Apple server.) iCloud only gives you free backup storage of 5GB size; for more, you have to upgrade. You can turn off iCloud, then it won't ask you to upgrade your storage any more: Go to Settings -> iCloud, then scroll down to bottom, then tap on Sign out and confirm. Reference:
- If you'd like to back up your iPhone, then you can connect it to a computer, then use the iTunes program on the computer to back up:
- More information about backups:
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