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Apple Class Action Filed Over Locking iPhone to ATT Network

By Andrew Lu on October 24, 2012 6:52 AM

Two iPhone owners have filed a putative class action lawsuit against Apple to have their phones unlocked.

The lawsuit was filed in Northern California and the plaintiffs charge the iPhone maker with violating antitrust laws by locking the iPhones to voice and data contracts with AT&T Mobility only, reports CNET.

When the iPhone first came out, Apple had signed a five-year exclusivity agreement with AT&T. So iPhone owners could only use the phones on AT&T networks and could not move to a different carrier. The plaintiffs say that this exclusivity agreement was essentially monopolistic as it forced them to stick with AT&T even if there were better or cheaper alternatives available.

To ensure exclusivity with AT&T, Apple allegedly installed software locks on the iPhone that prevented the iPhones from working with other wireless carriers, reports CNET. Plaintiffs claim that this lock "unlawfully stifled competition, reduced output and consumer choice, and artificially increased prices in the aftermarkets for iPhone voice and data services."

This is not the first time that smartphone owners have sued to have their phones unlocked. And since smartphones still typically come locked, plaintiffs have generally lost these lawsuits. So what makes this most recent lawsuit different?

Previously, plaintiffs had sued the wireless carriers like AT&T. However, a U.S. Supreme Court ruling in 2011 found that these class action lawsuits could not be brought. That's because the wireless carriers had a standard arbitration clause in customer contracts that required the customers to address their grievances through arbitration as opposed to class action lawsuits.

Without the ability to bring a class action lawsuit against AT&T, the plaintiffs in this case decided to sue Apple directly.

Apple is not a wireless carrier and the plaintiffs hope that the consumer technology company could be held liable for the allegedly anti-competitive practices even though AT&T could not. A judge will have to decide whether the consumer contracts that protected the wireless carrier companies similarly protect the phone manufacturers.

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