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iPhone Antitrust and Computer Fraud Claims Upheld

ScuttleMonkey posted more than 5 years ago | from the everybody-hates-the-big-guy dept.

The Courts 273

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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fp (-1, Flamebait)

Anonymous Coward | more than 5 years ago | (#25251545)

eat my asshole, you fags

No one deserves this more than Apple (5, Insightful)

linzeal (197905) | more than 5 years ago | (#25251557)

They seriously need to be taken down a notch legally so they don't lawyer up at every opportunity.

Re:No one deserves this more than Apple (5, Insightful)

MacDork (560499) | more than 5 years ago | (#25251635)

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.

Re:No one deserves this more than Apple (3, Insightful)

houstonbofh (602064) | more than 5 years ago | (#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?

Re:No one deserves this more than Apple (4, Insightful)

Kagura (843695) | more than 5 years ago | (#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.

Re:No one deserves this more than Apple (4, Insightful)

xouumalperxe (815707) | more than 5 years ago | (#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.

Re:No one deserves this more than Apple (0, Redundant)

Kagura (843695) | more than 5 years ago | (#25252111)

That's a very interesting response. Thanks for the insight.

Re:No one deserves this more than Apple (2, Insightful)

Egdiroh (1086111) | more than 5 years ago | (#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:No one deserves this more than Apple (2, Insightful)

Kagura (843695) | more than 5 years ago | (#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.

Re:No one deserves this more than Apple (0)

samkass (174571) | more than 5 years ago | (#25252189)

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

I'm no expert, but I don't think this is true. Isn't AT&T the only major GSM-based provider in the US? The iPhone certainly doesn't do CDMA, PCS, or whatnot. Besides, I still don't see why it should be illegal for two non-monopolies to tie products together. Apple has less than 1% of the cellphone market and AT&T exists in a competitive environment as well.

Re:No one deserves this more than Apple (0)

Anonymous Coward | more than 5 years ago | (#25252327)

T-Mobile also uses GSM.

Re:No one deserves this more than Apple (0, Troll)

mabhatter654 (561290) | more than 5 years ago | (#25252055)

Apple also has patents on their side. Many of the features ATT has are actually Apple server products, other companies aren't authorized to use those features.

I think iPhone is just fine and the wrong target.. the real target should be all the other horribly disabled phones being sold for full price and crippled not to work with other carriers.

Apple was MOST straightforward about the process from Day One. Prior to this they had sold ZERO cell phones. They chose one company that would give them the IP protection they needed and their customers "Apple's version" of good service. It's not Apple's fault the rest of the market is so awful. AT&T sells lots of other phones, it's only this one Apple phone that is exclusive.

Magnuson Moss Warranty Act of 1975 (5, Informative)

adam (1231) | more than 5 years ago | (#25252195)

They're suing in relation to a breach of the Magnuson Moss Warranty Act of 1975, as well as the Sherman Anti-Trust Act.

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 [house.gov], 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 [gpoaccess.gov]).

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.

Re:Magnuson Moss Warranty Act of 1975 (0, Redundant)

Kagura (843695) | more than 5 years ago | (#25252347)

This was extremely helpful and was exactly the sort of response I was looking for. Thanks!

Re:No one deserves this more than Apple (4, Informative)

SenseiLeNoir (699164) | more than 5 years ago | (#25252213)

Because it breaks the idea of subsidies.I am not sure how these things are like in the USA, but here in the UK, when you buy a phone it is likely to be SIM Locked to the network as the cost of the phone is subsidised to the monthly contract.

I am on T-Mobile (UK) myself.

T-Mobile, Vodafone, Orange and 3, typically do that. They also typically customise the phone in such a way, to usually make it easier to use on their network. The customisations can be subtle in the case of T-Mobile (excluding the N95/VOIP fiasco), where the phone is not vastly modified, to outright butchery in Vodaphone/Orange, and 3.

Nevertheless, once a phone is out of the subsidy period, it is YOUR phone, and legally you should be able to unlock it to all networks. In the case of T-Mobile (and I suspect the others) they will on request (and possibly for a small admin fee) provide you with the sim unlock code, to unlock the phone. I have heard that in many cases, they even gave the code, even before the subsidy term was over.

T-Mobile promised the same deal for the upcoming G1 Android phone, in that it CAN be unlocked once the sub period is over.

I personally buy my upgrades via Carphone Warehouse, as they source it idependantly, so phones are unlocked, and unbranded to T-Mobile, so I get the best of both worlds, a subsidised UNLOCKED phone.

O2, intrestingly do NOT usually simlock their phones, unless its a specific O2 made phone. O2 is the UK's Exclusive network for the iPhone, and the iPhone is the first GENERAL phone O2 provides which IS simlocked.

The point being is that, after the 2 year contract period with AT&T (or O2 in the UK) you STILL will not be able to unlock the iPhone, and use it with other networks, so in effect you still ARE locked into AT&T/O2. It is YOUR GSM phone, that has no TECHINCAL reason why it should not work on any other network, other than plain nastyness by Apple/AT&T/O2.

This may not be totally legal in the UK (and same in the USA), especially as it is sold as a GSM phone. If Apple/O2/AT&T allows to unlock after 2 years, then they are ok, but something tells me that will not be the case.

Note: this may be also why the Pay As You Go version was pulled from O2, as technically you own the phone straight away.

Re:No one deserves this more than Apple (1)

ReedYoung (1282222) | more than 5 years ago | (#25252219)

I do not want my pursuit of happiness impeded by any package-dealing of goods with services. Ever. Even for something as cool as AT&T, because when such is allowed, next thing you know, the only way to obtain something as cool as AT&T will be to also accept something as uncool as an iPhone. Er, strike that; reverse it.

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.

You can Google the judge's opinion if you want, but my opinion is that restriction to any one service provider, or even (hypothetically) to a limited set of service providers, violates the property rights I obtain when I purchase an iPhone. Rights are absolute, as Apple learned when they tried to engage in "strings attached sales" (usage privileges in the guise of outright sales) for a couple extra ducats from AT&T, at the expense of the almighty "user experience." You either have property rights to a thing, or you sell that thing for money, never both. You may not sell it, but then also wield any decision-making power over its use any more than you can eat a cake, then 10 minutes later have that same cake ... in cake form. Ahem. Had they termed the transaction a "lease" or "rental" ... but they did not.

I beg your pardon. (1)

ReedYoung (1282222) | more than 5 years ago | (#25252263)

You can Google the judge's opinion if you want, but my opinion ...

For once, the linked article is also the most pertinent document, in this case the legal document and not a local newspaper's synopsis of same. Hoodathunkit?

Re:No one deserves this more than Apple (0)

Anonymous Coward | more than 5 years ago | (#25252353)

I always found the subsidy argument specious because generally the carrier requires that you sign up for a two year contract which in order to get out of you have to pay a penalty, so I would imagine that would cover the cost of the subsidy.

And, obviously it IS illegal because the antitrust claim was upheld.

Re:No one deserves this more than Apple (1)

aliquis (678370) | more than 5 years ago | (#25252375)

Yeah, just don't buy it if you don't want to accept how it's sold. I for sure wouldn't.

Re:No one deserves this more than Apple (0)

Anonymous Coward | more than 5 years ago | (#25251685)

Except it's probable they didn't willfully brick them, just didn't try to find out what would happen.

Precisely (5, Insightful)

Sparks23 (412116) | more than 5 years ago | (#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.

Re:Precisely (4, Insightful)

MacDork (560499) | more than 5 years ago | (#25251899)

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.

Re:Precisely (5, Insightful)

hobbit (5915) | more than 5 years ago | (#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.

Guess again (1)

geekoid (135745) | more than 5 years ago | (#25252113)

"We know this will brick certain firmware hacks and we will not be taking even the most trivial of steps to prevent that."

and that's fine. If you change your firmware, don't update it. It is not Apples res;ponisibilty to take thing you might do you your iPhone into account.

âoeUsers who make unauthorized modifications to the software on their iPhone violate their iPhone software license agreement and void their warranty. The permanent inability to use an iPhone due to installing unlocking software is not covered under the iPhoneâ(TM)s warranty.â

followed up with by Phil Schiller, Appleâ(TM)s senior vice president of worldwide product marketing:
âoeItâ(TM)s unfortunate that some of these programs have caused damage to the iPhone software, but Apple cannot be responsible for those consequences"

Considering the software was likely to ahve been done weeks before the release, I find it doubtful it was intentional. Also consider that it didn't brick all hacked iPods, only a few.

Re:Precisely (1)

ShieldW0lf (601553) | more than 5 years ago | (#25252109)

That said, the AT&T exclusivity contact may well verge on antitrust violations; IANAL, so I cannot really speak with any authority on that.

It really wouldn't matter if you were a lawyer or not. A Federal Judge has stated that it is an anti-monopoly violation. Therefore, it is.

Re:Precisely (1)

Torinaga-Sama (189890) | more than 5 years ago | (#25252137)

T-mobile will let you can unlock a Sidekick [engadget.com]. I have no personal experience with AT&T but a googling has told me that they at least used to use Sim cards and therefore should be usable on AT&T.

I have used T-mobile for years because they are the least bastardy carrier that I have a choice to use. As nice as it might be to have an iPhone, I won't switch carriers to have one, and I prefer not to void a warranty that I can't afford to shrug off.

I wish for your last paragraph to come true.

Apologist (0)

Anonymous Coward | more than 5 years ago | (#25252467)

"They didn't set out to brick phones "

You don't know this; you're speculating.

But that aside, apple could have done a check sum and refuse to update the phone if the version was incorrect. But that wouldn't accomplish Apple's goal of serving as a warning to those people who chose not to play with your property the way Apple wants you to.

So please spare us the sophmoric analysis and transparent apologies, because unless you were there, you can't explain away the trivial things apple could have done to prevent this. Seriously.

Re:No one deserves this more than Apple (4, Insightful)

Graff (532189) | more than 5 years ago | (#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:No one deserves this more than Apple (1)

pgillan (1043668) | more than 5 years ago | (#25252115)

I remember reading, back when this was all a thing, that the failure rates for locked iPhones during an update was right about even with the failure rates for unlocked iPhones, implying that the update process itself was responsible for the failures, and whether or not you unlocked or jailbroke your phone was immaterial to whether or not it was bricked. Unfortunately, I can't find that information, so I don't know if that was some sort of urban legend or not.

Personally, I jailbroke my iPhone once, then ultimately decided it wasn't worth the hassle of keeping up with the break/update cycle. And once they released apps, I sort of forgot about it all together.

Re:No one deserves this more than Apple (1)

Aighearach (97333) | more than 5 years ago | (#25252415)

Look up "exploit," moron.

Customization of your own personal property is never an "exploit."

An "exploit" involves some kind of access or damage to somebody *else's* resources.

Re:No one deserves this more than Apple (4, Informative)

HTH NE1 (675604) | more than 5 years ago | (#25251689)

They seriously need to be taken down a notch legally so they don't lawyer up at every opportunity.

Everybody has a right to an attorney. Even a corporation.

(And even an unlawful enemy combatant, but that's another topic for another time.)

Re:No one deserves this more than Apple (0, Troll)

hellwig (1325869) | more than 5 years ago | (#25251751)

Communist.

No wait, that's not communism, but still, you're a communist.

I think his point was that Apple's main method of dealing with problems is to lawyer up, because they feel they are invincible in court. Maybe a couple losses will break that philosophy, and Apple might actually start to think before they act. Apple's main problem is that they think that until Microsoft dissapears, no one can touch them (i.e. see their response to Psystar's anti-competative lawsuit). Apple needs to realize that just cause they aren't the top player (except for the iPod and iTunes) doesn't mean they can get away with anything they want to.

Re:No one deserves this more than Apple (1)

HTH NE1 (675604) | more than 5 years ago | (#25252039)

Communist.

No wait, that's not communism, but still, you're a communist.

I am not a communist. I may be a liar, a pig, an idiot, a communist, but I am not a porn star!

Now my father, he's an Elk, a Mason, a communist, president of the Gay and Lesbian Alliance for some reason, and a Stonecutter.

More Accurate Summary (5, Informative)

Anonymous Coward | more than 5 years ago | (#25251759)

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.

 

Re:No one deserves this more than Apple (1)

IdahoEv (195056) | more than 5 years ago | (#25251773)

As a full-time Apple user with three macs and an iPhone ... I couldn't agree more.

I love their products, I hate their politics and Gestapo behavior with respect to consumers and the market.

The NDA gag-order on the iPhone SDK got dropped**, and in the same week their monopolistic practices got nailed by the courts. Happy Apple consumer.

**out of fear of developers going to Android, no doubt.

Re:No one deserves this more than Apple (4, Insightful)

colganc (581174) | more than 5 years ago | (#25251825)

If you hate it so much, don't buy their product. They would get the message really quick then.

Re:No one deserves this more than Apple (2, Insightful)

IdahoEv (195056) | more than 5 years ago | (#25251981)

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.

Re:No one deserves this more than Apple (2, Insightful)

SanityInAnarchy (655584) | more than 5 years ago | (#25252143)

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.

Re:No one deserves this more than Apple (2, Funny)

chromatic (9471) | more than 5 years ago | (#25251993)

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

Macholm Syndrome?

AT&T may be due for some smackdown as well (2, Informative)

LionMage (318500) | more than 5 years ago | (#25252017)

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.

A crushing blow for Slashdot (4, Insightful)

Anonymous Coward | more than 5 years ago | (#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.

Re:No one deserves this more than Apple (1)

DragonWriter (970822) | more than 5 years ago | (#25252363)

They seriously need to be taken down a notch legally so they don't lawyer up at every opportunity.

Uh. Being taken down a notch legally makes a company (or person) generally more prone to "lawyering up", in any reasonable sense of the phrase, early and pre-emptively in any future circumstances where legal action might potentially occur. So I don't follow the logic, here.

Good (5, Insightful)

Darkness404 (1287218) | more than 5 years ago | (#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.

Re:Good (3, Interesting)

houstonbofh (602064) | more than 5 years ago | (#25251691)

People forget that when it comes to phones, "we" are not the customer. Verizon is the customer, and we are the product.

Re:Good (1, Interesting)

Anonymous Coward | more than 5 years ago | (#25251805)

Only if you buy into the idiotic US business model. If we had things working the way they do in some countries, the consumer would be empowered to run any device on any network they want.

Re:Good (2, Funny)

Shadowlore (10860) | more than 5 years ago | (#25251719)

Sure, because the telcos have been the epitome of advancing the technology, and implementing technology. Their extremely honest willingness to let you use your bandwidth as you see fit, to let you use VOIP w/o extra pain and cost, to bill you such a very low rate for basic text messages that pager companies were letting you send a decade or more ago prove that it isn't the telcos putting down the rules on their networks, but the dastardly cell phone makers refusing to implement such cool technology.

Re:Good (4, Interesting)

IdahoEv (195056) | more than 5 years ago | (#25252027)

Their extremely honest willingness to let you use your bandwidth as you see fit, [etc.]

...and their ability to keep up with the industry in other countries. A couple years ago I was shocked to hear that Korean, Scandinavian, and Japanese homes were regularly getting inexpensive > 100 Mb/s data lines. Last week, /. reported that Japanese telcos are rolling out Gigabit fiber for $55/mo.

And yet this week one of my clients is still struggling to get a reliable 1 Mb/s connection to their office, right here in the middle of Los Angeles. They are currently paying $150/mo for a DSL line that ain't working. Even if it worked, that's almost a factor of 3000 increase in the cost per Mb/s relative to the new stuff in Japan.

 

Yay! (1)

atari2600 (545988) | more than 5 years ago | (#25251585)

I'll wait for my 2$ apple store credit to show up. The article (sigh ipaper, cannot copy and paste) says the contractual obligation isn't just two years but five years if you count the data services/plan. What gives?

Also Googling for "iphone antitrust ruling" gives interesting results. (Rambus and MS? wth?).

Re:Yay! (5, Informative)

Free the Cowards (1280296) | more than 5 years ago | (#25251615)

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.

Re:Yay! (-1, Offtopic)

Anonymous Coward | more than 5 years ago | (#25251853)

What about Sony and Xbox, who release software updates that brick hacked consoles? Doesn't this ruling suggest that Sony and Xbox's behavior is also illegal?

Re:Yay! (1)

everyday17 (1032612) | more than 5 years ago | (#25252355)

What about Sony and Xbox, who release software updates that brick hacked consoles? Doesn't this ruling suggest that Sony and Xbox's behavior is also illegal?

Sony and Microsoft aren't saying that if you want to use their online services you have to use a certain ISP, and besides the primary thing that people hack consoles for is to play copied games illegally. People hacking iPhones generally aren't using them to do anything illegal.

Re:Yay! (1)

thatskinnyguy (1129515) | more than 5 years ago | (#25251785)

says the conjugal obligation isn't just two years but five years if you count the data services/plan.

That's just how I parsed it. And quite frankly, it doesn't change my interpretation of the sentence one bit.

clarification (2, Insightful)

larry bagina (561269) | more than 5 years ago | (#25251595)

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).

Re:clarification (3, Interesting)

Anonymous Coward | more than 5 years ago | (#25251715)

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).

If someone purchases an iPhone and ends their two year contract after they pay the applicable fees associated with an early ended contract, is it against "computer fraud and abuse" to not allow them to use their hardware?

Recently Sprint was forced into allowing its customers to unlock their phones [cnet.com]. So, applying that logic, if I own an iphone (and am not renting it from AT&T, is it not an abuse of law to release a patch to hardware which intentionally damages my property?

Sorry if that didn't make sense.

Re:clarification (0, Flamebait)

mr_matticus (928346) | more than 5 years ago | (#25251901)

If someone purchases an iPhone and ends their two year contract after they pay the applicable fees associated with an early ended contract, is it against "computer fraud and abuse" to not allow them to use their hardware?

I don't know what you mean by "computer fraud and abuse", but if you pay the termination penalties, you have the legal right to unlock your phone. This does not mean that either AT&T or Apple have a legal obligation to help you do it.

So, applying that logic, if I own an iphone (and am not renting it from AT&T, is it not an abuse of law to release a patch to hardware which intentionally damages my property?

No, because it does not damage your property. I am assuming "patch to hardware" means "software update", because I am aware of no such hardware patching. The software is Apple's property; your ownership of the copy does not include any right of modification, subject to your physical modification of the chip it's stored on. Your installing the software update is entirely voluntary. The software update causes no damage, as the device works as intended afterward (bugs not included).

It is a colossal abuse of common sense, however, to install a software update, as an unlocked user, without waiting for confirmation as to whether it can be unlocked again afterward.

Re:clarification (1)

fbjon (692006) | more than 5 years ago | (#25252079)

I think they should help, actually. In that situation you've bought the phone for it's full price, effectively, and if it's not unlocked, it's not a functioning product.

Oh Apple (-1, Troll)

sexconker (1179573) | more than 5 years ago | (#25251601)

Time to pay some people off, then back date your stock options, Steve.

Re:Oh Apple (0)

Anonymous Coward | more than 5 years ago | (#25251687)

How does this count as funny...it's not even relevant!

Who gets to be in the Class? (3, Insightful)

Bobartig (61456) | more than 5 years ago | (#25251629)

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.

Re:Who gets to be in the Class? (2, Insightful)

Anonymous Coward | more than 5 years ago | (#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.

Re:Who gets to be in the Class? (1)

HTH NE1 (675604) | more than 5 years ago | (#25251737)

Precedent has to be set somewhere. You just have to pick a battle you think you have the best chance to win.

Re:Who gets to be in the Class? (2, Interesting)

peragrin (659227) | more than 5 years ago | (#25251793)

That is what really gets me. AT&T and Apple's deal isn't abnormal in the cell phone industry. Certain phones don't show up in certain regions because of such deals.

The big plus of this whole lawsuit is that all this will be made public and the cell phone industry will be forced to change. Like Apple broke open music downloads by forcing an industry to be more open (and closed), maybe this lawsuit will break open the cell phone industry. Of course it won't be apple leading the charge but defending the old ways but hey you must start somewhere.

Re:Who gets to be in the Class? (5, Informative)

mr_matticus (928346) | more than 5 years ago | (#25251765)

D. None of the above.

People who bought the iPhone and are allegedly stuck with AT&T for five years as a result, despite having agreed to a two-year contract.

The exclusivity agreement, according to the complaint, prevents any iPhone customer from going anywhere else once their contract is up. The problem is that (a) no one's contract has expired, so there is no evidence for or against Apple and AT&T as to what happens at that time, (b) there are already tools to unlock the iPhone and use the device on other networks, which, after the AT&T contract and the product warranty expires, Apple could not care less about for end users, and (c) the "legal action" discussed does not extend to people unlocking their handsets for the purpose of lawfully connecting them to another provider's network.

This, furthermore, is not a finding of fact or law. It is not an opinion. It is simply a rejection of a dismissal motion. It by no means suggests the final outcome, nor does it endorse any of the allegations made by the plaintiffs. It is entirely possible that this suit will be dismissed further along in the discovery process, dismissed during trial, or that Apple/AT&T will win at trial. It will likely provide nothing of value to consumers either way, with the possible exception of an announcement of an "official" unlocking tool for customers whose initial contracts have expired.

It is important to note that such a tool being offered upon completion of your term commitment would entirely moot this case.

Re:Who gets to be in the Class? (1)

SenseiLeNoir (699164) | more than 5 years ago | (#25252259)

You hit the nail on the head. You have signed up to a 2 year compulsory contract, yet you have (at least) a 5 year hidden contract, as you will NOT be able to use the phone on any other network, shoudl you wish to move. (this is on the assumption that after their exclusive deal is up, they will actually allow firmware updates to unlock the simlock, which I seriosuly doubt).

So yes, it stiffles competition, as people are likely to remain on AT&T just to use their iPhone, even after the 2 years is up.

Wait... what? (4, Interesting)

pushing-robot (1037830) | more than 5 years ago | (#25251661)

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.

Re:Wait... what? (1)

sexconker (1179573) | more than 5 years ago | (#25251671)

Apple's marketing seems to state pretty strongly that there are no good alternatives for to the iPhone.

Re:Wait... what? (0, Troll)

larry bagina (561269) | more than 5 years ago | (#25251707)

and slashdot readers seem to state pretty strongly that the iPhone is lame and not nearly as good as open moku ^W ^W android

Re:Wait... what? (2, Funny)

LandDolphin (1202876) | more than 5 years ago | (#25251897)

And the Tabacco companies told us that Cigarettes are good for you.

Re:Wait... what? (0)

Anonymous Coward | more than 5 years ago | (#25252003)

They are good for you. They are also extremely bad for you. The negatives outweigh the positives by a long shot. They didn't say "cigarettes are good for you." Rather, they lied and said "cigarettes aren't bad for you." There is a difference.

Re:Wait... what? (1)

sexconker (1179573) | more than 5 years ago | (#25252473)

They often said that cigarettes were good for you.
They even trotted out doctors to say it for them.

There was a thing called 1950, you know.
Get off my lawn.
Etc.

And no. They aren't good for you.
What positives are there?

You're more likely to have a lighter/matches on you in emergency situations?
You get your fix and it calms you down?
You look cool?

Carry a lighter and don't smoke.
Don't get addicted in the first place and you won't need the fix, and you'll be generally calmer.
And it seems to me that smoking finally turned the corner from cool to trashy a while back.

Re:Wait... what? (0)

Anonymous Coward | more than 5 years ago | (#25252035)

Brilliant marketing scheme! I can't wait for it to catch on...

"Always Coca-Cola, unless you want a Pepsi. That's okay too."

Re:Wait... what? (1)

rimugu (701444) | more than 5 years ago | (#25251743)

IANAL
Anti-monopolistic is not just to eliminate current monopolies, but to prevent creation of new monopolies and punish ANTI-COMPETITIVE practices.

Re:Wait... what? (1)

azakem (924479) | more than 5 years ago | (#25252025)

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.

IANAL, but... there are still a few categories of anti-competitive arrangements that are considered per se illegal, such as price fixing and market division. If the plaintiffs could get the court to see this as some kind of egregious refusal to deal then they wouldn't have to deal with the market share problem. If that fails, the government could still shoot for abbreviated rule of reason review and put the burden on Apple and AT&T to show a plausible pro-competitive justification for their arrangement. I don't know enough about this stuff to even guess how it will turn out though.

This is just a preliminary finding. (5, Interesting)

darkmeridian (119044) | more than 5 years ago | (#25251735)

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.

Re:This is just a preliminary finding. (0)

Anonymous Coward | more than 5 years ago | (#25252185)

You are absolutely right - it is only a rejection of a motion to dismiss or compelled arbitration. In other words, the courts have upheld nothing other than that it believes the claim has enough merit to warrant a lawsuit. Something tells me though that Apple & AT&t will still win it in the end though.

Antimonopoly? (4, Interesting)

MMC Monster (602931) | more than 5 years ago | (#25251753)

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?

Re:Antimonopoly? (-1, Troll)

Anonymous Coward | more than 5 years ago | (#25251811)

People are fucking stupid is why.

Re:Antimonopoly? (1)

squiggleslash (241428) | more than 5 years ago | (#25251839)

They're a 0% percentage of smartphones. Jobs redefining the term doesn't make a phone whose software is controlled by the manufacturer a "smartphone".

Will the Psystar law suit end going the same way?? (1)

Joe The Dragon (967727) | more than 5 years ago | (#25251763)

Will the Psystar law suit end going the same way?? as apple is locking mac os to it's hardware and useing software locks like how apple is locking the I-phone to ATT sim cards.

Re:Will the Psystar law suit end going the same wa (0)

Anonymous Coward | more than 5 years ago | (#25252457)

It already has. [groklaw.net]

What about CDMA phones? (3, Interesting)

jakethejuggalo (718693) | more than 5 years ago | (#25251777)

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?

Re:What about CDMA phones? (1)

cdrguru (88047) | more than 5 years ago | (#25252335)

I have a Windows application that I used for many years that is technologically the same as any other Windows application today - both run on the x86 processor. However, for some reason that is a complete mystery it does not work today. Funny, it worked fine in 1995. Could there be some subtle difference, other than the base underlying technology between windows 3.1 and Windows Vista?

That is pretty much what you are saying. CDMA has been heavily customized by the carriers so there is no carrier-to-carrier compatibility once you leave the lowest level of specifications. Attempting to activate a CDMA phone on anything other than the carrier the phone's software is loaded for is an exercise in frustration. It isn't going to work.

GSM is different. Quite different. There have been far fewer carrier specific changes for phones. You can claim that the carriers should not have made the CDMA extensions they did, but the time for that has past. The question now should be will carriers in the US make carrier-specific extensions to GSM that require custom carrier-specific software in the phones? If the CDMA/TDMA rollout in the US is any indication, they will do so to differentiate network services and provide additional features to customers. Of course, this will completely negate any ability to move phones (GSM or CDMA) between carriers in the future.

No, I do not know if the carrier-specific CDMA extensions are documented anywhere public. I suspect they are not and it is all considered trade secret. Qualcomm would know.

Point five is false. (2, Interesting)

argent (18001) | more than 5 years ago | (#25251829)

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.

Monopoly (1)

DrYak (748999) | more than 5 years ago | (#25252075)

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.

There's only one single company - ATT - through which Apple's iPhone is available, due to an exclusive contract signed between the maker and the service provider.
What does best qualify as a monopoly ?

I can't imagine how could Apple appeal on that.

Compare this to Europe, where anti-trusting laws where applied.
Here in Switzerland, the iPhone is available in subsidized form from 2 of the 3 phone operators. And in addition is available in unsubsidized form with "bring your own sim" no phone plan at-all.
You have 3 different solutions to get a phone.
Meanwhile, in the US you're forced to one single solution. It is a monopoly.

They could appeal about the firmware, by trying to show that there was no *intent* to brick the phone. That was an accident, and was inevitable due to the fact that they couldn't test the firmware against all the various after market modification that the users did themselves.
- They officially stipulate that they don't support those modification.
- The upgrade featured a warning that this could happen.
They may have some ground to appeal that point.

English: do you speak it? (1)

argent (18001) | more than 5 years ago | (#25252237)

There's only one single company - ATT - through which Apple's iPhone is available, due to an exclusive contract signed between the maker and the service provider.
What does best qualify as a monopoly ?

I'm not even addressing the question of whether there is a monopoly or not.

I am addressing the question of whether there was a subsidy or not.

These are different words. Look them up. I'll wait. "Monopoly". "Subsidy".

Re:Point five is false. (0)

Anonymous Coward | more than 5 years ago | (#25252313)

There iPhone was not subsidized by AT&T. The exclusivity contract was actually all about Apple wanting to get a share of every account that has an iPhone on it. Unlike just about every other phone out there, the manufacturer gets money for as long as you use it, not just when it gets bought.

My take (1, Interesting)

Thail (1124331) | more than 5 years ago | (#25251851)

My take on why apple should be punished isn't the exclusivity deal with AT&T being the only seller of the product, but with them disabling the product on other carriers, such that you can't use the itunes service if you did unlock the phone. Phones have been carrier locked for years, but most carriers can provide unlock codes for these phones once the contractual obligation is met, freeing the phone to be used with the other services. The iPhone however looses full functionality due to software restrictions installed by the manufacturer.

Although I'm a fan of competition... (2, Insightful)

SpcCowboy (1303133) | more than 5 years ago | (#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.

I love how... (1)

jflo (1151079) | more than 5 years ago | (#25252227)

I love how Apple has become the new evil empire of corporations.... Microsoft used to be number one.... however, when a product becomes so popular and let just face it, everyone wants one, the greedy people behind the product will try to squeeze every penny they can out of it. At the same time, its the greedy people like the ones at Apple who have really added to economy problems. Whats the worth of a dollar if only a small handful of people are collecting the larger chunks of it?

Convicted monopolist some day? (1)

ClosedSource (238333) | more than 5 years ago | (#25252249)

Some on Slashdot are fond of describing MS as a "convicted monopolist" which is incorrect since the action taken against them was strictly civil. Wouldn't it be mind-bending if they could accurately describe Apple that way some day?

Interesting how this plays with the Psystar case.. (0)

Anonymous Coward | more than 5 years ago | (#25252339)

Apple recently submitted a motion in Psystar v Apple on a very similar point--whether a monopoly can exist on a single product [groklaw.net] where there are competing similar products.

I have to say, reading the groklaw article, I find Apple's argument reasonably persuasive on whether anti-trust law applies when a manufacturer restricts access to one of their products (summary: it doesn't).

At least Apple is toeing a consistent line, but I'm guessing they'll win here, probably on summary judgement.

Bad summary (3, Insightful)

torstenvl (769732) | more than 5 years ago | (#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.

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