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iPhone Antitrust and Computer Fraud Claims Upheld 273

Posted by ScuttleMonkey
from the everybody-hates-the-big-guy dept.
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."
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iPhone Antitrust and Computer Fraud Claims Upheld

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  • by linzeal (197905) on Friday October 03, 2008 @05:10PM (#25251557) Homepage Journal
    They seriously need to be taken down a notch legally so they don't lawyer up at every opportunity.
  • Good (Score:5, Insightful)

    by Darkness404 (1287218) on Friday October 03, 2008 @05:10PM (#25251563)
    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.
  • clarification (Score:2, Insightful)

    by larry bagina (561269) on Friday October 03, 2008 @05:13PM (#25251595) Journal
    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).
  • by linhares (1241614) on Friday October 03, 2008 @05:16PM (#25251605)
    Steve seems to have got the same power-grabbing fever that Baby Bush [wikipedia.org] has.
  • by Bobartig (61456) on Friday October 03, 2008 @05:20PM (#25251629) Homepage

    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.

  • by MacDork (560499) on Friday October 03, 2008 @05:20PM (#25251635) Journal
    They would certainly deserve it for willfully bricking unlocked iPhones the way they did, but this is the US were talking about. The only people who will see any benefit are the lawyers. The rest of the world will get a voucher at the Apple store online or some other equally lame appeasement.
  • by houstonbofh (602064) on Friday October 03, 2008 @05:26PM (#25251675)

    They would certainly deserve it for willfully bricking unlocked iPhones the way they did, but this is the US were talking about. The only people who will see any benefit are the lawyers. The rest of the world will get a voucher at the Apple store online or some other equally lame appeasement.

    $2.5 million in attorney fees, and everyone in the class gets a free iTunes download... Anybody willing to bet? Come on, anyone?

  • by Anonymous Coward on Friday October 03, 2008 @05:29PM (#25251705)

    This is not a scenario to the iPhone. Similar exclusivity deals have been made with plenty of other phones and you'll find this kind of practice all over the place.

    For whatever reason, people are so crazy over the iPhone that they feel its their right to have one on their own terms while there are plenty of more open alternatives on the market.

  • Precisely (Score:5, Insightful)

    by Sparks23 (412116) * on Friday October 03, 2008 @05:41PM (#25251783)

    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.

  • by colganc (581174) on Friday October 03, 2008 @05:46PM (#25251825)
    If you hate it so much, don't buy their product. They would get the message really quick then.
  • by Kagura (843695) on Friday October 03, 2008 @05:48PM (#25251841)
    I think the iPhone/AT&T locking is terrible. However, how does releasing a phone that is only licensed to work with a single cell carrier who is subsidizing part of the cost have to do with being a monopoly? Even if they weren't subsidizing the cost, why is this against the law?

    Note that I'm not saying it SHOULDN'T be against the law. Rather, I'm asking how it can be considered illegal under the laws we have today. I'm curious about the legal standpoint on this issue.
  • by SpcCowboy (1303133) on Friday October 03, 2008 @05:52PM (#25251873)
    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.
  • by Graff (532189) on Friday October 03, 2008 @05:54PM (#25251889)

    They would certainly deserve it for willfully bricking unlocked iPhones the way they did, but this is the US were talking about.

    The thing is that these phones were unlocked through exploits which placed the iPhones in a indeterminate state as far as updates went. It was a crapshoot whether or not an update would cause the phone to be unbootable. Everyone who unlocked their iPhone either understood this or didn't know enough about what they were doing and shouldn't have been doing it in the first place.

    If you hack ANYTHING then you should have no expectations that it will continue to be stable across software updates. You've made the choice to modify your device, you live with the fact that you may have broken it irreversibly. Now in the case of the iPhones it turns out that almost all of them were NOT bricked, they just had to be coaxed back to the factory software and you were good to go. There's even NEW unlocking software that you can apply for the latest version of the operating system. Of course the same caveat still applies: hack your device and you might ruin it.

  • Re:Precisely (Score:4, Insightful)

    by MacDork (560499) on Friday October 03, 2008 @05:55PM (#25251899) Journal

    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.'

    Their statement went more along the lines of "We know this will brick certain firmware hacks and we will not be taking even the most trivial of steps to prevent that." They could have simply checked the OS and refused to install on a modified phone. Not only did they not do that, but Apple had the great big brass gonads to SAY they were not going to do that INTENTIONALLY. That goes beyond negligence. That's willful destruction. I'd Google the statement, but there's been so much iPhone hype since then, it is proving difficult to find.

  • by IdahoEv (195056) on Friday October 03, 2008 @06:05PM (#25251981) Homepage

    If you hate it so much, don't buy their product.

    I'm a little entrenched and short on options for that approach. I have about 15 years of time, experience and thousands in software invested in working with their platform(s).

    Products I love from a company with some policies I hate is still a better than my other option: products I hate from a company I also hate.

    If I spent a few thousand to get new copies of all my Adobe stuff, I could in principle switch my business over to Windows. Hooray. Then I'd detest my own job, too. I work with Windows daily (at clients' offices) and by the end of an hour I'm ready to pull my own fingernails out. An ineffectual political statement ain't worth that.

    They would get the message really quick then.

    I highly doubt that the departure of one geek would change anything. The fact that I already use Linux for servers instead of OS X server doesn't seem to have influenced Apple a hell of a lot. Why should I expect that switching desktops would have any more effect? I'm just one guy.

    I suppose I could become a lumberjack and avoid computers altogether, but I don't own enough lingerie for that.

  • by xouumalperxe (815707) on Friday October 03, 2008 @06:11PM (#25252023)
    From reading at least part of the "article", what I gathered was the whole "oh look, you only have to sign for 2 years" while in fact there was a standing agreement between Apple and AT&T that Apple wouldn't provide access to other carriers for at least five years was a big no-no.
  • by Egdiroh (1086111) on Friday October 03, 2008 @06:14PM (#25252047)
    I am not a lawyer and I am not in this case. But I suspect there are two things coming into play here.

    1.) These phones CAN work on all those networks. So this restriction is completely artificial.

    2.) People already complain about the locking of iTunes to Apple Portable Players (iPod, iPhone). People complain about locking phones to networks. So the expansion to Itunes locked to apple players locked to AT&Ts network, probably just takes it a step to far, especially in light of reason 1.
  • Re:Precisely (Score:5, Insightful)

    by hobbit (5915) on Friday October 03, 2008 @06:18PM (#25252089)

    "Apple has discovered that many of the unauthorized iPhone unlocking programs available on the Internet cause irreparable damage to the iPhone's software, which will likely result in the modified iPhone becoming permanently inoperable when a future Apple-supplied iPhone software update is installed"

    (From http://www.google.com/search?btnI=I'm%20Feeling%20Lucky&q=iphone+apple+statement+firmware+modified [google.com])

    It's really not Apple's job to be writing workarounds for jailbroken phones (and exhaustively testing them -- what if the workarounds adversely affected unjailbroken iPhones?)

    However, I would argue it is Apple's job to design the iPhone such that no changes (other than physically invasive ones) can ever cause the phone to be "permanently inoperable". And if they can't provide information to the user on how to reset the iPhone to factory defaults, they should bear the burden of repairing it.

  • by Kagura (843695) on Friday October 03, 2008 @06:19PM (#25252101)

    These phones CAN work on all those networks. So this restriction is completely artificial.

    There are SO many things in the cell phone industry that are arbitrary restrictions (like $0.50 text messages after you max your limit). Many other industries have this as well, like purposefully underclocked processors, and so forth. None of these are illegal, so I don't see why artificially tying the iPhone to AT&T would be considered illegal under current legal definitions.

  • by SanityInAnarchy (655584) <ninja@slaphack.com> on Friday October 03, 2008 @06:23PM (#25252143) Journal

    I have about 15 years of time, experience and thousands in software invested in working with their platform(s).

    First of all, I imagine at least a few hundred of those thousands are from things which simply aren't needed on other platforms. I'm talking about things like AppZapper here -- Apple has this community of shareware that just looks weird, coming from Windows and Linux.

    Second, OS X hasn't been out 15 years. Since OS X, if your experience is more than skin deep, you know Unix. And I'm really not sure how much OS9 has in common with OS X, in terms of your skillset.

    Finally, the stuff you have doesn't magically stop working, just because your next computer/gadget doesn't come from Apple.

    Products I love from a company with some policies I hate is still a better than my other option: products I hate from a company I also hate.

    This assumes you've completely abandoned a third option: products from no company at all.

    It does look like Adobe has you by the balls, though, which isn't a good place to be.

    I highly doubt that the departure of one geek would change anything.

    Are you sure you're the only one thinking this?

    A major cellphone provider in my area didn't support shortcodes for text messages. That's a serious feature, but they claimed they had never heard anyone ask for it before he called -- they didn't really know it existed.

    So I would say, even if it is just one person, one person is better than none.

  • by Anonymous Coward on Friday October 03, 2008 @06:51PM (#25252351)

    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.

  • Bad summary (Score:4, Insightful)

    by torstenvl (769732) on Friday October 03, 2008 @07:03PM (#25252449)

    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.

  • Re:Precisely (Score:3, Insightful)

    by kybred (795293) on Friday October 03, 2008 @08:09PM (#25252851)

    T-mobile will let you can unlock a Sidekick [engadget.com].

    You'll be able to use your Sidekick as a phone, but will lose alot of the Sidekick functionality. T-Mobile uses Danger's [danger.com] servers for that functionality and those servers won't be accessible from the AT&T network.

  • by defile39 (592628) on Friday October 03, 2008 @08:24PM (#25252965)
    It's an exclusive dealing contract - not necessarily a bad thing, but looking at the effect on competition, seemingly competition is hindered more than efficiencies are created. I don't think that the bricking of the iPhone is a big deal (but I haven't read the binding EULA, so I don't know if that kind of action is contractually authorized in the agreement). The big story here is, if this is affirmed, you will likely be able to get an iPhone on any number of carriers. This is actually GREAT for Apple as well (more sales). This is horrible for ATT, however.
  • by unassimilatible (225662) on Friday October 03, 2008 @09:15PM (#25253243) Journal
    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.
  • by DurendalMac (736637) on Friday October 03, 2008 @11:00PM (#25253705)
    Willfully bricking? Prove that. Go ahead. Try. You can't. Why? Because there's zero evidence that it was willful. Why in the hell should Apple test out every unsupported hack with firmware updates? Why should people who hack their hardware in warranty-voiding ways complain when bad things happen in updates? Yes, it does suck that Apple is locked to AT&T, but people knew that going in.
  • by jotaeleemeese (303437) on Friday October 03, 2008 @11:26PM (#25253827) Homepage Journal

    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"...

  • by Digana (1018720) on Saturday October 04, 2008 @12:04AM (#25254007)

    Two monopolies doesn't make it right, and the GPL-based monopoly the Stallmanistas are trying to create will be no better.

    Total flamebait, and I've bitten.

    To say that the GPL promotes a monopoly is just so wrong that I won't even take the time to point out why it's so wrong. Just think before you say such obvious blather. I will attack the implication of rms here, since the GPL has far extended beyond him and there are people who fundamentally disagree with a number of things rms says and still use the GPL nonetheless (e.g. Linus), because rms isn't the GPL and the GPL isn't rms.

  • by TRRosen (720617) on Saturday October 04, 2008 @12:48AM (#25254211)

    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.

  • by shmlco (594907) on Saturday October 04, 2008 @07:06AM (#25255313) Homepage

    "Part of the agreement involves not making a CDMA version."

    Ah. So now Apple is expected to spend a bunch of R&D dollars designing and building and certifying new hardware, just so Joe Verizon can have an iPhone?

    Where's the AT&T GSM Android G1, BTW? Or the AT&T Instinct? I'm on AT&T, and it's not fair at all that I'm FORCED to sign a contract with T-Mobile or Sprint just to get one of those phones.

    In fact, it's so unfair I should SUE!

  • Microsoft vs Apple (Score:2, Insightful)

    by flipperdoo (1321953) on Sunday October 05, 2008 @02:23PM (#25266291) Homepage
    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.

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