apple faces lawsuits
11 October 2007

California - Complaints over Apple's (AAPL) use restrictions and recent software update for the iPhone have erupted in two lawsuits alleging Apple and its carrier partner, AT&T (T), engaged in illegal monopolistic behaviour. Two separate lawsuits were filed in San Jose on October 5 - one in federal court and the other in state court and both seeking class-action status. Both cases accuse the companies of unfair business practices and violations of antitrust, telecommunications and warranty laws.

The state case was filed by Saratoga attorney Damian Fernandez on behalf of California resident Timothy Smith. AT&T is the exclusive carrier in the US for Apple's iPhone. The companies are unlawfully restricting consumer choice by preventing users from "unlocking" their iPhones, and Apple intentionally disabled unofficial third-party programs or rendered unlocked phones useless with its software update, the lawsuit alleges. Apple issued the update on September 27 after warning users that any ensuing damage to iPhones with unauthorised modifications was not covered by the product's warranty.

It is unclear how many iPhones were disabled or how many iPhone owners have modified their handsets. The federal lawsuit stated it didn't know how large the affected class could be but pegged the number at 100 or more and anticipates "there will be millions."

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Dow Jones, www.fin24.co.za