Apple lands itself in $55 million worth of hot water over carrier contracts

“Apple may be celebrating the release of the iPhone SE and the 9.7-inch iPad Pro, but the company likely isn’t nearly as thrilled with recent allegations made by France’s competition, consumer, and fraud agency, la Direction Générale de la Concurrence, de la Consommation, et de la Répression des Fraudes (DGCCRF), reports BFM TV,” Williams Pelegrin reports for Digital Trends. “”

“The DGCCRF filed a lawsuit against Apple through the Commercial Court of Paris,” Pelegrin reports. “According to the suit, Apple’s contracts with carriers were set up to benefit the Cupertino-based company in ways that violated France’s competition laws.”

“If Apple is found guilty of abusing its market position with these contractual provisions, the company could be forced to pay 48.5 million Euros, or roughly $55.2 million,” Pelegrin reports. “Out of that total, 40.5 million Euros, or roughly $46.1 million, would go to the four carriers listed in the lawsuit — SFR, Orange, Free Mobile, and Bouygues Telecom — with the remaining eight million Euros paid as fines.”

Read more in the full article here.

MacDailyNews Take: Cost of doing business.


  1. How come the french government can site ‘market power’ to pull this off, while every other story we hear about Apple and ‘the market’ is how Apple’s market share is irrelevantly small and will soon dwindle to nothing in the onslaught of superior Android devices?

      1. Market share does not equal market power. You may be selling KIA cars, but you’re competing against Hyundai, Chevrolet, Toyota, and you have no leverage. If you are BMW, your market share is perhaps no more than 5%, but you can set terms and conditions.

        Carriers are more than happy to sell Androids to anyone who wants them, but are aggressively seeking out and advertising to affluent customers, and the only way to reach those is to offer the iPhone. Apple clearly has massive leverage there, and some of that legal language (quoted by Derec Currie below) sounds quite a bit predatory.

    1. Perhaps France is one of a handful of countries where iPhone sales are significantly higher than all Android combined.. Would make sense with the stereotype there of leading fashion.

  2. From the source article:

    More specifically, there were 10 clauses in the contracts that the agency objected to:

    1. Carriers need to purchase a minimum number of iPhones over three years.
    2. If customers brought in iPhones for repair, carriers must pay at least part of the repair cost.
    3. Apple could use any patents held by the carriers.
    4. Carriers must finance any in-store iPhone displays.
    5. Carriers are forbidden from making any iPhone contract or payment plans.
    6. Apple holds the right to void any contracts with carriers.
    7. Apple is free to use the carriers’ brands, but not vice-versa.
    8. Apple has a fund set up for advertising, to which carriers must contribute.
    9. Carriers must abide by stricter rules regarding orders than does Apple.
    10. Apple receives more beneficial conditions than competitors, including the price of the iPhone without a contract, quality of service, and more.

    I can’t adequately evaluate this. But my impression is that some of this makes perfect sense, and some of it does not. This one particularly disturbs me:

    3. Apple could use any patents held by the carriers.

    But perhaps, in context, it makes sense. If the carrier has proprietary tech that must be used in the Apple gear, then of course Apple has to use the carrier’s patents.

    1. 4 seems ok as long as Apple isn’t ordering carriers to create in-store iPhone displays if they don’t want to. And 8 is reasonable as long as the carriers that contribute get mentioned in the advertising paid for via the fund they are contributing to. I agree that 3 may be necessary however it should be worded to limit use to only that they need in the Apple devices currently being sold. (e.g if a patent is needed for the iPad but not the iPhone and only the iPhone is sold by the carrier, Apple has no use right to the patent needed for the iPad held by the carrier without agreed compensation.)

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