An amended complaint filed in June 2008 takes issue with Apple’s practice of “locking” iPhones so they can only be used on AT&T’s network…
The majority of cellular phones sold in the U.S. are carrier-locked. Furthermore, since the two biggest networks in the U.S. operate with different radio standards and cannot share devices, there’s almost zero demand for unlocked phones here.
…and its absolute control over what applications iPhone owners can and cannot install on the gadgets.
Nearly every phone has imposed carrier- or vendor-specific restrictions on which applications can be run (including Google’s).
The lawsuit also says Apple secretly made AT&T its exclusive iPhone partner in the U.S. for five years.
Phones get exclusive deals with carriers all the time. The first U.S. Android phone, the G1, was a T-Mobile exclusive, as was Google’s Nexus One. The Palm Pre was a Sprint exclusive. The Droid was a Verizon exclusive. If anyone cared about the Motorola ROKR, they could only get it for AT&T (then Cingular). And Verizon owners had to wait years after everyone else before getting compatible versions of such popular phones as the BlackBerry or the Motorola RAZR.
As for “secretly”, the duration of the iPhone-AT&T exclusivity has been kept secret, but the exclusivity itself was clearly stated during the MacWorld 2007 keynote address in which the iPhone was announced. Apple has never made any effort to prevent anyone from learning that the iPhone is only available on AT&T in the U.S.
Consumers agreed to two-year contracts with the Dallas-based wireless carrier when they purchased their phones, but were in effect locked into a five-year relationship with AT&T, the lawsuit argued.
“In effect”? If you refuse to use any smartphone platforms except the iPhone, you indeed only have one U.S. carrier choice. But nobody’s forcing customers to renew their contracts. In fact, since the iPhone syncs all of its data and media to its owners’ computers as frequently as it can, it’s one of the easiest platforms to migrate away from, should customers choose to do so.
The actions hurt competition and drove up prices for consumers, the lawsuit claims.
Major advanced smartphone platforms in the U.S. today, in approximately descending order of popularity (depending on whose numbers you believe):
- Windows Mobile
RIM is still number one by a fat margin on nearly every metric, and Android is approaching or exceeding the iPhone in quarterly sales. Apple’s marketshare is usually estimated at around 25% of U.S. smartphones. Competition seems healthy and vigorous, and the market is performing its role exactly as it should.
I also don’t see where prices have been driven up. Since the iPhone’s release in June 2007, the purchase price of a high-end smartphone with a 2-year contract has fallen from $400-500 to $100-200.
The monthly service fees, which represent the bulk of the cost of owning a smartphone, have decreased since 2007. Verizon charges the same rates as AT&T for nearly every comparable service, and often more. If anyone is responsible for keeping prices high, it’s the carriers, but it’s certainly not just AT&T.
How did this suit get past a judge?
Update: Oh, it doesn’t, yet. This is class certification, not a summary judgment. (Thanks.)