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iPhone Antitrust and Computer Fraud Claims Upheld
LawWatcher writes "On October 1, 2008, a federal judge in California upheld a class action claiming that Apple and AT&T Mobility's five-year exclusive voice and data service provider agreement for the iPhone violates the anti-monopoly provisions of the antitrust laws. The court also ruled that Apple may have violated federal and California criminal computer fraud and abuse statutes by releasing version 1.1.1 of its iPhone operating software when Apple knew that doing so would damage or destroy some iPhones that had been 'unlocked' to enable use of a carrier other than AT&T."
They seriously need to be taken down a notch legally so they don't lawyer up at every opportunity.
An Education is the Font of All Liberty
This is excellent news for consumers. About the only area that technology is seriously lacking in, is cell phones. And it isn't because we don't have the capability, the iPhone and Android platforms proves that it isn't the case, but rather it is the cell phone companies.
Taxation is legalized theft, no more, no less.
So that's what gave Jobs the heart attack...
sig has been sent away for a few small repairs...
per the first paragraph, the AT&T/Apple restriction is ok, but they [might have] imposed other limitations after the 2 year contract (umm, which hasn't ended for anyone yet).
Do you even lift?
These aren't the 'roids you're looking for.
What gives is that they're talking about Apple's contract with AT&T, not your contract with AT&T. The reason you can't buy an iPhone and use it with T-Mobile in the US (unless you hack it) is because of Apple's exclusive contract, which currently runs for five years.
If you mod me Overrated, you are admitting that you have no penis.
People on other carriers that want to use the iPhone?
People who were "compelled" to get an ATT account to use the iPhone?
People who didn't get an iPhone because of the exclusivity?
Who *wasn't* damaged?
Just for the record, I have an iPhone, I was already with ATT, and Apple should have figured out that this might have been illegal beforehand.
This is where I get my recommended daily allowance of "Foot in Mouth."
I have a hard time seeing how the iPhone could be considered monopolistic when it has such a small market share; you can't have a monopoly by law unless there are no good alternatives to your product.
On the other hand, I'd love to see an end to the AT&T exclusivity agreement and unlocked iPhones for sale in the USA. I hope this case leads to more than just punitive damages.
How can I believe you when you tell me what I don't want to hear?
The title of the article discussed a motion to dismiss. The article itself was slashdotted, but a motion to dismiss only means that the lawsuit is allowed to continue. The holding only means that the complaint states a legally-cognizable cause of action, and does not address the substantive merits of the plaintiffs' (as it was a class action) case aside from that.
I would like to know if this was filed under the federal antitrust statutes or the California antitrust laws. If it is the former, than the decision would have national implications and Apple may lose significant amounts of money if it is found liable of anti-competitive conduct.
Moreover, if the contract between Apple and AT&T Mobile is ruled in violation of law, does AT&T owe Apple money anyway, or are they just going to sue each other? This will be fun to see.
A NYC lawyer blogs. http://www.chuangblog.com/
Apply iPhones are a small fraction of all smart phones, let alone all phones.
AT&T/Cingulair has at least a couple viable large competitors in most markets in the U.S.
How the heck is this a monopoly?
Help! I'm a slashdot refugee.
Nothing has been "Upheld", all that has happened is that the court denied Apple's 12b6 motions for dismissal. (Failing to state a claim upon which relief can be granted.)
This case is still pre-trial. Discovery has not happened yet. Apple can still file for summary Judgment.
If the complaint survives Apple's inevitable motion for summary judgment, then the case will go to trial. Then there will be appeals.
Wouldn't this ruling apply to Verizon phones also? They're technologically the same as sprint phones, but if you switch from Verizon to Sprint or vice-versa, you can't use your phone on that new network. What's the difference between that situation and wanting to use the iPhone on t-mobile?
Their statement was not 'we are going to brick other people's phones,' but 'if you have messed around in the baseband firmware, we can't promise this upgrade isn't going to break something significantly.'
They didn't set out to brick phones (and quite a few unlocked phones I know of took the firmware upgrade just fine). It was more a 'look, if you did this, you're on your own; we're not promising that this firmware won't completely break your modified phone.'
Which actually seems reasonably fair; if someone takes a car and decides to tinker in the brake system and try to come up with their own antilock braking system they feel is better, that's fine. But if they then have an accident, they can't realistically hold the car manufacturer responsible for the ABS they modified.
That said, the AT&T exclusivity contact may well verge on antitrust violations; IANAL, so I cannot really speak with any authority on that. However, restricting phones to specific carriers is pretty much par for the course. T-Mobile doesn't let you use the Sidekick on AT&T, nor the new Google Android phone that just came out. As far as I know, the Instinct is exclusive to Sprint. Etc.
So if they do rule that the AT&T exclusivity contract violates antitrust, I really do hope that decision can crack the practice of carrier exclusives overall. Forcing all phones to be sold unlocked, so that they can be taken to any other carrier with compatible cellular technology, would force carriers to actually focus on providing good service rather than relying on handset exclusives.
--Rachel
The original iPhone WAS subsidized by AT&T. The fact that it was only available with AT&T service, so there was no unsubsidized price listed, doesn't mean there wasn't a subsidy.
I imagine Apple will appeal on this basis at least.
How is this any different than any of the other phones out there that are available exclusively through one provider or another? (Samsung Instinct etc) While I'd love to see the cell phone company walls come down, I don't think Apple is doing anything different than everyone else in this case.
-- Anyone who has never made a mistake has never tried anything new. -- Albert Einstein
And the Tabacco companies told us that Cigarettes are good for you.
Spelling and Grammar errors have been added to this post for your enjoyment
This isn't just about Apple. The document cites, for example, that AT&T Mobility does not (or is not required to) subsidize the cost of the iPhone, contrary to standard industry practice, yet they still charge a $175 early termination fee.
I am with the court on this one! Early termination fees only make sense if the carrier is subsidizing the cost of the handset.
The Warranty Act is related to the product tieing, and bricking of unlocked phones. Essentially (and amongst other things) the MM Warranty Act says that it's illegal for a vendor to sell a product and require a tieing of services. From the FTC's web site:
"Tie-In Sales" Provisions Generally, tie-in sales provisions are not allowed. Such a provision would require a purchaser of the warranted product to buy an item or service from a particular company to use with the warranted product in order to be eligible to receive a remedy under the warranty. The following are examples of prohibited tie-in sales provisions. In order to keep your new Plenum Brand Vacuum Cleaner warranty in effect, you must use genuine Plenum Brand Filter Bags. Failure to have scheduled maintenance performed, at your expense, by the Great American Maintenance Company, Inc., voids this warranty.
They are arguing that tieing to AT&T, and then firmware releases bricking phones that have been unlocked to another carrier is an illegal/tortious act on the part of Apple. They allege Apple has told customers that downloading of unapproved software (but software that should be legal to install, under the MM act, imo) will void their warranty. Furthermore they have a vested financial interest in "approved" software from the Apple store, and obviously refuse to allow unlocking software to be included in that store. They refuse to provide customers who have lawfully canceled their AT&T contracts with unlocking codes so they may use their device with another carrier (again, covered by MM act). The list of allegations goes on. Full text of 15 USC Chapter 50, which is the section of the statute they have sued under (although I believe Title 16 - Commercial Practices, Chapter I - Federal Trade Commission, Subchapter G - Rules, Regulations, Statements and Interpretations under the Magnuson-Moss Warranty Act, Part 700 Section 102 also deals with warranty denials, text here).
They are alleging illegality on the part of Apple in that they monopolized the market for iphone applications, and also apple+AT&T for voice and data service monopolization. And of course the alleged illegality I spoke of above (services ties, denying consumers the ability to break these ties, pushing software updates that intentionally break the phones of users who have circumvented product ties, and then denying warranty coverage for these affected users)
I hope that was somewhat helpful.
I am Jack's complete lack of surprise.
All the Slashdotters who mod people down for pointing out that Apple is, was, and always will be a far more brutal monopoly than Microsoft have been dealt another crushing blow by reality.
Yes, we all know they make nice shiny electronic gadgets. But that doesn't justify their monopolistic behavior, no matter how much someone may hate Microsoft. Two monopolies doesn't make it right, and the GPL-based monopoly the Stallmanistas are trying to create will be no better.
As darkmeridian said above, this is just denying a MTD. MTDs are filed in every case, ever, and they are denied in the vast majority of them.
Nothing to see here, move along.
Thanks a lot for linking to an article that puts perfectly good plaintext info into a craptastic, poorly supported, embedded flash image that won't even load in 64-bit linux. Scribd sucks so badly it makes black holes jealous. There's already a document format for the internet, fuckers - it's called HTML. Might look into it.
Causation can cause correlation
I hope Apple and AT&T get so ripped to shreds over this that nobody else will ever try this monopoly shit again out of fear that it could happen to them too!
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
Er, it's easy to make software that irreparably damages embedded systems. We're not talking about software that runs in nice safe wrap-you-in-bubblewrap PCs any more.
Send the wrong configuration down to a CPLD or FPGA device and you can configure the voltage inputs to be (say) 1.2 volts when a 5v signal is being applied. Kiss bye-bye to that oxide layer in minutes (or seconds). If the part that's now burnt out is only used during configuration, or even just rarely (say a low-power situation), it may not be obvious that you're SOL.
Along comes a new configuration (the Apple one) and Boom!(TM) - dead hardware.
I don't know if the iphone contains configurable parts with that sort of vulnerability (like FPGA's) - I do know it contains an embedded system for the baseband receiver which needed to be configured for that update.
Embedded processor systems like these are *much* more vulnerable to the halt-and-catch-fire because they're expected to be configured in a certain way, and the QA is rarely done to make them bulletproof, like traditional processors.
As far as I can see, Apple were only being reasonable: it's entirely possible for the hacked reconfiguration of the GSM baseband system to have completely screwed it up (because it probably didn't dot every 'i' and cross every 't' - it was a trial-and-error job after all), and the problem to only become apparent when a new "proper" configuration was attempted.
So, pretty *not* precisely, IMHO. For what it's worth, I've blown CPLDs up on one project and months later come back to use the same board on another project and found out it was no longer reconfigurable. It worked fine in the configuration it had, but as soon as I reconfigured, no dice.
Simon.
Physicists get Hadrons!
Sorry to reply to my own post, but:
Wikipedia (of course!) talks about HCF - style instructions, and also mentions the killer poke specifically as "a killer poke is a method of inducing hardware damage (i.e., actual physical, irreversible damage) on a machine and/or its peripherals by the insertion of invalid values, via e.g. BASIC's POKE command, into a memory-mapped control register."
Physicists get Hadrons!
It's common /. knowledge that Apple + AT&T lock-in is pure evil - I agree with this knowledge, fwiw.
And it was evil of Apple to break hacking iPhones restricting user freedom.
On the other hand, maybe....
1. Apple saddles up AT&T to break into the phone market.
2. AT&T goes for it. Apple Board of Directors is appeased; if iPhone fails somehow, how were stockholders not protected by the new venture, given Apple's attempt to partner with the phone giant?
3. Many people are offended and alienated by this, however, the fact remains:
4. iPhone sales are a tech phenomenon.
5. Apple keeps AT&T happy by breaking hacked iPhones. See point 4 for how this affects Apple's bottom line. Note that AT&T never publicly complained.
6. Apple waits for it to be the court's fault that they have to open things up for other carriers.
7. Apple expands its iPhone market without violating the AT&T agreements for hegemony.
If you've spent much time at all in Silicon Valley, this kind of thinking and planning isn't so outlandish.
And truth is most often stranger than fiction in the tech industries.
Pathological kinda promises Path + Logical - but instead, you get stuck with pathetic.
Seriously? Are you serious? Because there's an f'ing law against artificially tying products to services. It's illegal under current legal definitions because there's a law against it. Jesus.
No, there's only a law against tying if the party doing it has a dominant market share. The relevant market here is PDA phones, and Apple sure as hell doesn't have a monopoly in the PDA market. Maybe you should know your law before you start railing on others.
Slashdot "libertarians": Small government for me, big government for those I disagree with. -1, I disagree with you
But people are not calling their bluff so far.
Forcing people to buy one product in order to be able to buy another is a classroom example of an anticompetitive practice, which is banned in most civilized places, unfortunately most Apple fanboys are so wide eyed playing with their expensive toys that they fail to see they are being abused by the unholy alliance of phone maker and mobile telephony provider.
As soon as some of them begin to wake up and smell the coffee complaints will follow and will, hopefully, end this most abusive "business model"...
IANAL but write like a drunk one.
Do other carriers have EXCLUSIVE phones? Yes. although its hard to notice when they release 3 new phones a week.
Can I buy a Nextel phone to use on Verizon's network? No.
When a Windows update crashes because a third party diver was installed does Microsoft get sued? No.
Product & Service tie-ins are not illegal.
Magnusson-Moss just involves restrictions on WARRANTIES , i.e. opting-out of a service tie-in, or using an alternative source, cannot void a warranty.
Just take a look at enterprise software products (e.g. Oracle's database, Microsoft's SQL Server, IBM's anything) which have been sold this way since the 1970's:
- Usually they are sold by a license fee and then a 21%-of-license fee support/maintenance contract annually, with the first year being mandatory.
- If you cancel your support contract after the first year, then the vendor has the right to terminate your support for *all* products you own by that vendor, and if you renew it, you have to renew it for *all* products, and pay retroactive fees with a penalty for the time you weren't in support.
Both of these entitle you to product upgrades & support resources (ie. email, phone, bug fixes and maybe a support-representative on site if you're big enough). But they don't void your warranty if you cancel it (a lot of enterprise software is under customized warranty -- long-term or even perpetual, depending on negotiations).
-Stu
Back in the late 19th century when the landline telephone network was relatively new, the telephone industry naturally looked quite a bit different than it does today.
1. You couldn't simply buy a new telephone in any store, you could only rent one from AT&T along with a monthly service plan.
2. You could only use AT&T phones on their network. No other third-party phones or devices were allowed. They would repossess your phone if they caught you doing anything "unauthorized."
3. There was no other phone company to choose from, so if you wanted a telephone, you were stuck with AT&T.
This is in stark contrast to today's high-tech wireless cell phone industry, where you are only subject to a few comparatively minor restrictions if you would like to use the most advanced phones currently on the market, the iPhone.
1. You can't simply buy a new iPhone in any store, you can only purchase one from AT&T along with a monthly service plan.
2. You can only use AT&T/Apple-approved software on the iPhone. No other third-party software or applications are allowed. They will brick your phone if they catch you doing anything "unauthorized."
3. There is no other cell carrier to choose from, so if you want an iPhone, you are stuck with AT&T.
What bleak times those must have been!
(P.S. Before I'm deluged with pedantic replies: yes, there are indeed other cell phones than the iPhone and cell phone providers than AT&T on the market. I'm just having a bit of irony here, let me be.)
Umm, warranty law specifically makes reference to it being illegal for a vendor to sell a product and require a service tie-in. Just what part of the law would you really know, sir? Magnusson-Moss had lots more in it than just warranty.
Great, another jailhouse Slashdot lawyer. Well I am an actual lawyer, since you called out my knowledge. As Stu points out, MMWA, as the name suggests, is a restriction on warranty law, not tying products and services together, which celcos have been doing for years, Sparky.
As is typical here, Slashdot submitters and commentators, so critical of judges not knowing tech, know nothing about how the law works. A 12b(6) motion is Apple arguing "you cannot sue for that." The motion is challenging solely on legal grounds - for the purposes of the law, all the facts are considered true. In other words, the facts aren't even being considered in a 12b(6) hearing. The motion was denied, but that is a long, long way from the plaintiffs winning. And they will likely lose a summary judgment, which considers the facts, or lack of them, supporting the suit.
Disclaimer: IAALBNYL. (I am a lawyer but not your lawyer) This is not legal advice, so don't rely on it. Not that you can tell most of the know-it-all jerks on Slashdot anything anyway. If you told them the time of day they'd probably argue with you. But I digress. Do not rely on this as legal advice.
Slashdot "libertarians": Small government for me, big government for those I disagree with. -1, I disagree with you
My wife works for Microsoft and the tricks they get up to make this seem very tame, she works in 'Strategic Planning' and all they do all day is work out how to trip up Google et al rather than create or innovate. It's funny to be a bystander and here the stories.