Will Apple Be Penalized for AT&T Love Lock?
Two iPhone users have filed a putative class-action lawsuit against Apple (NASDAQ:AAPL) for locking their handsets to AT&T’s (NYSE:T) network, alleging the move violates the Sherman Act and the Digital Millennium Copyright Act.
The lawsuit, filed with the U.S. District Court for the Northern District of California by Zack Ward of Los Angeles and Thomas Buchar of Chicago, asks Apple for monetary damages and demands that the company provide SIM unlock codes to iPhone owners on request while being barred from selling locked devices in the future. The suit refers to a five-year exclusive iPhone partnership that Apple entered with AT&T in 2007 and covers devices purchased between October 19, 2008, and February 3, 2011.
Apple has been a huge winning stock pick for Wall St. Cheat Sheet Newsletter subscribers. Don’t waste another minute — click here and get more of our CHEAT SHEET stock picks now.
While the exclusive relationship is now over, Apple’s first three iPhone models — iPhone 2G, iPhone 3G and iPhone 4 — could only operate on AT&T’s network and needed a special code to work on a SIM card from a different operator. The lawsuit says consumers were not made party to this contractual arrangement that prevented them from choosing their own provider. “Through these actions, Apple has unlawfully stifled competition, reduced output and consumer choice, and artificially increased prices in the aftermarkets for iPhone voice and data services,” the filing said.
When Apple made Verizon (NYSE:VZ) an iPhone partner last year, it released a version of the iPhone 4 that worked on the new network. Eventually, in June 2011, the company also began selling officially unlocked iPhones that could operate on GSM networks. However, until April this year, AT&T refused to unlock iPhones even after a user’s contract had expired. The iPhone 5 and the iPhone 4S are available through AT&T, Verizon, and Sprint (NYSE:S).
While previous such cases by consumers have failed because of a clause in the carriers’ customer contract that prevents class-action lawsuits, this particular filing takes the route of suing Apple instead.
Don’t Miss: Analyst: Stop Worrying About iPhone Numbers.