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. @ Macintosh

    I’m not sure.
    But, even if he had said that AT&T;and Apple had signed a 5 year exclusive deal. The devil is in the details as to what exactly that means. As far as I know no one has seen the contract outside of Apple and AT&T;executives and attorneys. The iPhone hasn’t been out long enough for anyone’s contract with AT&T;to end. So, at the end of your contract is your iPhone still going to be locked to AT&T;? No one can say. But, the my guess is your iPhone would be unlocked from AT&T;if you requested it.
    My guess in the contract is much less binding and restrictive then everyone makes out like it is. More of a handshake deal then a long negotiated contract.
    The Facts are Apple when to all the carries to get them to agree to sell and support the iPhone. Only AT&T;agreed that’s why I think it’s more of a handshake deal then a long negotiated contract.

  2. The court didn’t rule anything about AT&T;and Apple’s agreement or business practices. What the court “ruled” was that Apple and AT&T;’s motion to dismiss the charges did not meet the standards; in other words, there may be some issue of law or fact that supports the plaintiff’s claims and that needs to be litigated.

    A motion to dismiss is basically Apple and AT&T;telling the court that the plaintiff’s claims have no merit or legal claims whatsoever, and that therefore there is nothing to litigate, so the claims should be dismissed.

    In this case, the judge decided that there is at least enough of a question that the claims should be litigated, which permits both sides to fully present their cases. At this point, no evidence has even been presented.

    Nothing to see here, people. Move along.

  3. “The Facts are Apple when to all the carries to get them to agree to sell and support the iPhone. Only AT&T;agreed that’s why I think it’s more of a handshake deal then a long negotiated contract.”

    What?

  4. “greed that’s why I think it’s more of a handshake deal then a long negotiated contract.”

    greed that’s why I think it’s more of a handshake deal, then a long negotiated contract.”

    greed that’s why I think it’s more of a handshake deal than a long negotiated contract.”

    English? Words mean things.

  5. Apple purportedly has 5-year agreement with AT&T for exclusive sale of the iPhone (which nobody has seen, but people somehow feel free to quote in their law suits!!!). The only thing this purported contract means is that T-Mobile can’t sell iPhone (Verizon and Sprint are out of the game, they aren’t GSM).

    Nobody knows what happens to your iPhone when your 2 years expire. If you buy any phone from AT&T or T-Mobile, they will let you unlock it if you ask (and if you’re eligible). There is nothing that indicates AT&T wouldn’t do the same for iPhone when the two years are up.

    As for the US law, some two years ago, an exemption to the DMCA was adopted that allows people to unlock their phones. Under original DMCA, unlocking was unlawful, since it was circumventing software locks. This law does NOT require carriers to tell you how to unlock your phones. Nor does it require them to support that phone once you unlock it, if they explicitly stated in your contract that they won’t support phones that you unlocked without their approval.

    It seems that nobody here understood what happened. This wasn’t a trial. Apple asked the judge to throw out this case, because it’s ridiculous. Judge refused and now, they are going to trial, which Apple will undoubtedly win easily.

  6. Again, the details of the Apple-AT&T;agreement have NEVER been made public. It is only wild speculation that the two companies have a five-year, exclusive deal. This summer (in July), a news report did indicate that Apple and AT&T;signed a contract extension for one additional year, but again, no details were made public.

    I believe the original deal likely was for two years (through July 2009), as that is the standard that AT&T;has used in the past when locking up exclusive phones (like the Motorola Razr). This matches customer contract terms. This summer’s one-year contract extension (through July 2010) also suggests that an initial two-year agreement probably is accurate. With the release of the iPhone 3G, it seems logical that AT&T;needed an additional year of exclusivity to be able to sell new two-year, 3G contracts.

    Mystery solved!

  7. The whole 5 year thing is still unconfirmed, and that reporter that first announced it, stated the Apple-ATT agreement had been extended a 3rd year to 2010, when the iPhone 3G launched. So, the reporter who originally stated that the deal was for 5 years, is the same reporter who this summer said the deal was extended a year, to 3 years. Strange.

  8. In other words, Apple has every legal right to exclusively sell iPhone through AT&T. Just like Verizon is selling some Samsung knock-off, and Sprint is selling its own LG version of an iPhone knock-off. They are all just as exclusive as the iPhone on AT&T.

    They also have every legal right to control the way users will get applications for their phone. They also have every legal right to control system software updates and prevent user modification.

  9. i am happy if this exclusive deal with AT&T;ends… Apple wins out anyway, if they include T-Mobile. They have better service where i live and in many metropolitans. So, in that case the only loser would be AT&T;.

  10. There is a difference between your phone being “locked” to ATT, and YOU being under contract WITH ATT for cell phone service.

    Your contract means you will pay a monthly charge for access to their network. That is a legal, contractual thing that is time limited.

    Your phone being “locked” means that it will only work with that network. That is a physical, technical thing that can be undone by ATT.

    I bought my 3G on the first day it was available. At the end of July, beginning of August, we went to Germany. As part of buying the necessary data and phone packages so my phone would work there without astronomical roaming charges, I asked the ATT rep I spoke to if it could be unlocked.

    He replied that after 3 months, for a small fee, about $30, it could be unlocked so I could insert a prepaid SIM card from a German carrier whenever I went overseas.

    Of course, my ATT contract would still be in force when I got back and I could reinsert m ATT SIM and continue until the end of the contract.

    Gee, folks, this isn’t rocket science.

    Sure, Apple has a contract to <u>produce iPhones that only work with ATT right out of the box</u>, for some period we haven’t nailed down yet.

    But the Apple/ATT contract does not limit YOU once your contract with ATT ends.

    You are then free to go and contract with T Mobile, the only other carrier that it will work with in the US.

    Just don’t expect visual voicemail to work at T Mobile.

  11. Awwww, skip the jPhone stuff – rest of you go nutz

    But intonation and inflection, cut me off a piece of that

    I THOUGHT you were going to Chicago

    I thought YOU were going to Chicago

    I thought you were going to CHICAGO

    Just be damn careful how you do stuff like that in Japan or China

    ” width=”19″ height=”19″ alt=”smile” style=”border:0;” />

    BC

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