Apple has been fined

Italy fines Apple and Google for ‘aggressive’ data practices

Apple and Google have been fined €10 million apiece by Italy’s competition and market authority (AGCM) which has found they did not provide their users with clear enough information on commercial uses of their data — in violation of the country’s consumer code.

The regulator also accuses the pair of deploying “aggressive” practices to push users to accept the commercial processing.

Apple and Google were both contacted for a response to the ACGM’s sanction. Both said they will appeal.

Google is accused of omitting relevant information at the account creation phase and as consumers are using its services — information the regulator says should be providing in order for people to decide whether or not to consent to its use of their data for commercial ends.

The AGCM has also accused Apple of failing to immediately provide users with clear information on how it uses their information commercially when they create an Apple ID or access its digital stores, such as the App Store.

It’s the rather more surprising sanction — given Apple’s carefully cultivated image as a champion of consumer privacy (not to mention the premium its devices and services tend to command vs cheaper, ad-supported alternatives, such as stuff made by Google).

The Italian regulator lumps both companies’ practices together in a press release announcing the sanctions — accusing each one of being especially aggressive in pushing self-serving commercial terms on their respective users, especially at the account creation phase.

For Google, the ACGM notes that it pre-sets user acceptance of commercial processing — and also notes that the adtech giant fails to provide a clear way for users to revoke consent for these data transfers later or otherwise change their choice after the account step has been completed.

It also takes the view that Apple’s approach denies users the ability to properly exercise choice over its commercial use of their data, with the regulator arguing the iPhone maker’s data acquisition practices and architecture essentially “condition” the consumer to accept its commercial terms.

It’s an awkward accusation for a company that splashes major marketing cash on suggesting its devices and software are superior to alternatives (such as tech made by Google) exactly because it claims to put user privacy at the core of what it does.

In a statement, Apple rejected the ACGM’s finding — writing:

“We believe the Authority’s view is wrong and will be appealing the decision. Apple has a long-standing commitment to the privacy of our users and we work incredibly hard to design products and features that protect customer data. We provide industry-leading transparency and control to all users so they can choose what information to share or not, and how it is used.”

A Google spokeswoman also disagreed with the findings, sending this statement:

“We have transparent and fair practices in order to provide our users with helpful tools and clear information about their usage. We give people simple controls to manage their information and limit the use of personal data, and we work hard to be fully compliant with the consumer protection rules. We disagree with the Authority’s decision and we will appeal.”

The full text of the ACGM’s decisions can be found here: For Apple and Google.

The Italian regulator has had a busy few days slapping big tech: Earlier this week it issued a $230M fine (total) for Apple and Amazon over alleged collusion around the sale of Apple kit on Amazon’s Italian marketplace.

It has also been stepping up investigations of tech giants over a period of years — earlier this year it fined Facebook over similar issues with its commercial use of people’s data, while this summer it hit Google with a $123M fine related to Android Auto. It also has an open probe into Google’s displaying advertising business.

Other fines from the ACGM in recent years include one for Apple related to misleading iPhone users about the device’s water resistance and another for Apple and Samsung for slowing devices.

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Apple fined for slowing down old iPhones

7 February 2020

Apple has been fined 25 million euros (ВЈ21m, $27m) for deliberately slowing down older iPhone models without making it clear to consumers.

The fine was imposed by France’s competition and fraud watchdog DGCCRF, which said consumers were not warned.

In 2017, Apple confirmed that it did slow down some iPhones, but said it only did so to «prolong the life» of the devices.

Apple said in a statement that it had resolved the issue with the watchdog.

Why does Apple slow down old iPhones?

Many customers had long suspected that Apple slowed down older iPhones to encourage people to upgrade when a new one was released.

In 2017, the company confirmed it did slow down some models as they aged, but not to encourage people to upgrade.

It said the lithium-ion batteries in the devices became less capable of supplying peak current demands, as they aged over time.

That could result in an iPhone unexpectedly shutting down to protect its electronic components.

So, it released a software update for the iPhone 6, iPhone 6s and iPhone SE which «smoothed out» battery performance.

The practice was confirmed after a customer shared performance tests on Reddit, suggesting their iPhone 6S had slowed down considerably as it had aged, but had suddenly speeded up again after the battery had been replaced.

What did the regulator say?

The French watchdog said iPhone owners «were not informed that installing iOS updates (10.2.1 and 11.2) could slow down their devices».

As part of the agreement, Apple must display a notice on its French-language website for a month.

It says Apple «committed the crime of deceptive commercial practice by omission» and had agreed to pay the fine.

Does Apple still slow down older iPhones?

Yes. Since Apple confirmed the practice in 2017, it has implemented it on several more iPhones including:

• iPhone 6, 6 Plus, 6S, 6S Plus
• iPhone SE
• iPhone 7 and 7 Plus
• iPhone 8 and 8 Plus running iOS 12.1 or higher
• iPhone X running iOS 12.1 or higher
• iPhone XS, XS Max and XR running iOS 13.1 or higher

The setting is only enabled when the battery begins to degrade, and iOS now offers clearer information to consumers about when performance management has been switched on.

«The effects of performance management on these newer models may be less noticeable due to their more advanced hardware and software design,» Apple said.

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Apple and Samsung fined by Italian authorities over slow phones

24 October 2018

Apple and Samsung have been fined millions of euros each by Italian authorities over «planned obsolescence» in smartphones.

Apple was hit with a 10 million euro (ВЈ8.8m) fine while Samsung received a smaller bill of five million euros.

«Apple and Samsung implemented unfair commercial practices», the Italian competition authority said in a statement.

Software updates were said to have slowed the performance of older phones.

This «caused serious malfunctions and significantly reduced performance», which provoked users into upgrading their devices, the authority said.

The companies encouraged users to upgrade operating system software but did not make clear the increased demands that new software would make on smartphones, according to the authority.

Plan to appeal

Samsung said it was «disappointed» with the decision and said it would appeal.

«Samsung did not issue any software update that reduced the Galaxy Note 4’s performance,» a spokesman said.

«In contrast, Samsung has always released software updates enabling our customers to have the best experience possible.»

The BBC has contacted Apple for comment.

Apple was fined more than Samsung because the tech giant also failed to tell customers important details about iPhone batteries — including how to prolong their lifespan.

Both firms must publish a declaration on their Italian websites telling consumers of the authority’s decision.

Last year, Apple confirmed that it deliberately slowed down some older iPhone models because their battery performance diminished over time.

It argued the move would «prolong the life» of devices.

The following month, French prosecutors launched a probe over accusations of «planned obsolescence» in iPhones.

A judgement in that case is yet to be delivered.

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Apple has been fined $1.2 billion for anti-competitive behavior by French regulators

Apple is no stranger to appealing legal proceedings it’s not particularly fond of, so it should come as no surprise that the company is going to appeal a $1.2 billion fine brought against it by French regulators.

According to a report on Monday from Reuters, France’s watchdog meant to oversee competition is fining Apple a whopping 1.1 billion euros (about $1.23 billion) for anti-competitive behavior. The decision is tied to what the regulators believe is anti-competitive behavior in its distribution network, and related to abuse of its economic dependence on its resellers.

Related, a pair of Apple wholesalers have also been fined quite a bit of money for “unlawfully agreeing on prices”. Tech Data was fined 63 million euros and Ingram Micro was fined 76 million euros. The regulators have said that the deal between Apple and the wholesalers essentially sterilized the wholesale market.

Apple and its two wholesalers have agreed not to compete with each other and to prevent distributors from competing with each other, thereby sterilising the wholesale market for Apple products,” it said.

There is additional information about the whole proceeding from France’s Competition Authority, which states that the whole anti-competitive scope was brought down on Apple when another one of the company’s wholesalers, eBizcuss, brought allegations of anti-competitive behavior against Apple. eBizcuss shut down in 2012 over what it deemed unfair competition.

Meanwhile, Apple provided a statement to CNBC over the matter, confirming the company plans an appeal of the fine:

The French Competition Authority’s decision is disheartening. It relates to practices from over a decade ago and discards 30 years of legal precedent that all companies in France rely on with an order that will cause chaos for companies across all industries. We strongly disagree with them and plan to appeal.

We’ll have additional updates on the matter as they unfold. It will be interesting to see how long this one pans out.

Meanwhile, this is the second major fine France has leveled against Apple in recent months. Earlier this year the company was handed a $27 million fine for the battery management features the company baked into its software not too long ago. The same features that would throttle older iPhones in favor of better battery life. You remember, it was a whole thing — and cost $500 million in the United States.

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Apple (AAPL) Fined Over iPhone Water Resistance Claims

Italian regulators issue $12 million fine for deceptive sales practices

Apple Inc. (AAPL) has been fined 10 million euros, the equivalent of roughly $12 million, by regulators in Italy who ruled that the company has engaged in «aggressive and misleading» sales practices regarding the water-resistant properties of its iPhones. The Italian Competition Authority, officially the Autorità Garante della Concorrenza e del Mercato (AGCM), levied the fine.       

The AGCM found that Apple’s claims about the water-resistant properties of various iPhone models, from the iPhone 8 through the iPhone 11, only held true in certain controlled lab conditions. Moreover, the AGCM criticized Apple for making bold claims about water resistance in its marketing pitch for these iPhone models while disclaiming coverage for damage caused by water or other liquids in the fine print of its warranty and refusing to repair iPhones that had suffered water damage.       

• Regulators in Italy have fined Apple over deceptive sales practices.
• The case involves the water resistance of recent iPhone models.
• Regulators found that Apple’s claims only held in controlled conditions.
• Meanwhile, the iPhone warranty excludes water damage.
• Other fines and suits regarding water resistance may follow.

Significance for Investors

Given that Apple has total annual net sales of $274.5 billion,   the fine assessed by Italy’s AGCM is easily absorbable by the company. However, there is a strong possibility that this will prove to be just the opening salvo in a series of regulatory and legal actions to be taken against the company in this matter by governments and consumers around the world. In that case, the potential cost to Apple could escalate rapidly.

For example, the AGCM also slapped Apple with a 10 million euro fine in 2018 over what has come to be known as «batterygate,» in which Apple failed to inform consumers that its software updates were deliberately downgrading the performance of older iPhones with aging batteries.   After a pair of large settlements in the United States in 2020, the total worldwide cost to Apple from «batterygate» currently is trending to be upwards of $600 million. 

Moreover, the water-resistance matter represents yet another hit to the reputation of Apple, which is bound to have some, as yet indeterminate, negative impact on future sales. Apple already has become a prime target of politicians, regulators, and consumer advocates in the wake of «batterygate.»   The water-resistance matter is likely to provide yet more fodder for the company’s critics.

Other Large European Fines for Apple

So far in 2020, French authorities have hit Apple with fines of 25 million euros (about $29.9 million) over «batterygate» and 1.1 billion euros (about $1.3 billion) over anti-competitive practices. «Apple and its two wholesalers agreed not to compete and prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products,» the president of the French Competition Authority stated in March 2020, regarding the latter case. 

Those two Apple wholesalers were fined a combined 139 million euros (about $166.5 million) for price fixing. The collective fines assessed in this case, over 1.2 billion euros (more than $1.4 billion), were the largest ever levied in a single case, the French Competition Authority noted. 

Looking Ahead

In the promotional materials for its recently introduced iPhone 12 models, Apple included improved water resistance among the key features.   In the wake of the AGCM’s findings, it is possible that yet other claims made by Apple about this product’s features may be met with skepticism as well, at least until they can be confirmed by rigorous independent testing. That, in turn, may put a brake on sales. Indeed, it is possible that consumers’ confidence in Apple’s assertions about any of its products may be damaged as well.

Additionally, the tests conducted by the AGCM stopped with the iPhone 11.   It remains to be seen whether the iPhone 12 measures up to Apple’s claims about water resistance and, if not, whether additional fines may be forthcoming.

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