Antitrust rules go against Apple and AT&T; Will Apple be forced to make even more money?

The United States District Court for The Northern District of California “has ruled that Apple and AT&T may have violated the Sherman Antitrust Act when they had a secret agreement that locked customers in for five years, three years past the two-year agreements that customers thought they were signing. The court ruled as well that Apple may have violated the same law by limiting the market for iPhone applications to those available through the App Store. In addition, the court ruled that Apple’s decision to permanently disable unlocked iPhones with its Version 1.1.1 update may have also violated the law,” Scott Bradner writes for Network World.

“I say ‘may have’ because what the court did was refuse to rule that the charges made by the people suing Apple and AT&T should be dismissed. The next step will be discovery, where Apple and AT&T will have to produce mountains of documents detailing just what they have been doing,” Bradner writes.

“This case has hardly started, but one possible outcome could be that Apple is told that it cannot have the kind of restrictive agreement it now has with AT&T and has to open up the iPhone for more third-party applications. I expect that Apple, but not AT&T, will benefit considerably if this happens — as will consumers (and, of course, the lawyers),” Bradner writes.

Full article here.

[Thanks to MacDailyNews Reader “Fred Mertz” and “Judge Bork” for the heads up.]

38 Comments

  1. 5 years? what is that all about, my AT&T;contract expressly states 2 years, not 5. The 5 year exclusivity arrangement was between Apple and AT&T;. I mean, I guess one could offer that people who want an iPhone would then be forced to stay with AT&T;for as long as the exclusivity remains, but no one HAS to have an iPhone.

  2. You have just gotta be kidding me – just when I had kidded myself that Apple were perfect.

    Yes naughty Apple for 5 year tie-ins, but the other two come on. All mobile phones have a software administration program on the PC and Apple provides iTunes on OS X and XP / Vista to provide the same level of administration – against the law – I don’t think so! Disabling locked phones, well that was a risk that most people unconsciously knew about – just didn’t want to admit it out loud.

  3. I believe there is a law in the U.S. that requires carriers to unlock cell phones after contractual obligations have been met, meaning that you could take your iPhone to any GSM carrier after 2 years. Can anyone confirm this is the case?

  4. @Willie G

    Your contract is for 2 years. That is correct. But The Apple/ATT iPhone deal is for 5 years. SO, after your two years are up you are free to buy another phone and leave ATT, but you are not free to take your iPhone with you. That Voids the warranty and breaks the user license. Your iPhone is stuck with ATT for at least 5 years.

  5. No one really knows what the contract between Apple and AT&T;is or even how long the contract is. The Judge didn’t say anything. The Judge just ruled on the motion to dismiss. Which allows the discovery phase to start.

  6. So where is it illegal to have an exclusive agreement to sell somthing? Its NOT.

    not only that, but you cant force APPLE to support anything unless THEY SET the terms. You cant take the iphone jailbrake it then have it overheat and melt and expect them to fix it. and you cant expect them to support software updates on a network THEY DONT WANT TO.

    you cant force a product maker to do what YOU WANT. They set the terms, if you dont like them DONT BUY IT.

    END OF STORY. STOP WHINING!

  7. So Apple may be “forced” to back out of its exclusivity arrangement with AT&T;, for which AT&T;is probably paying a very high cost. And Apple will have a Verizon version of the iPhone, waiting the in wings. I’m sure Apple has enough clout this time around to motivate Verizon to make whatever concessions are needed. This is no-lose for Apple…

  8. Most likely, this is some kooky, 9th Circuit left-wing judge refusing to apply the law or previous court precedent. Apple should appeal this. BTW, the Supreme Court spends (wastes) much of its time overruling the 9th circuit for its crazy rulings.
    With respect to policy, this ruling is deeply misguided. Apple and ATT think their current deal is in their joint interest and they relied on its terms to bring a great product to consumers. Obviously, consumers AGREE because they’re buying iPhones by the bucket. If the current arrangement gets disallowed, Apple or ATT will pass any additional costs on to the consumer. Thanks a lot, judge!!!

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