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Angry iPhone users bring antitrust class action against Apple

New suit argues AT&T tie-in and App Store are anticompetitive

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Four American iPhone users have launched a class action suit against Apple over its exclusive deals with carriers in the country and the way it runs the App Store.

Apple partnered with US carrier AT&T when it first brought the Jesus-mobe to stores in 2007, in a five-year exclusivity agreement that tied users to an AT&T SIM card with no option to use another network.

The four plaintiffs* in the case are arguing that the restrictive partnership violates the US Digital Millennium Copyright Act, because it didn't give customers the "absolute legal right to modify their phones to use the network of their carrier of choice".

The complaint (23-page PDF/1.2MB) states:

Prior to launch, Apple entered into a secret five-year contract with AT&T that established AT&T as the exclusive provider of cell phone voice and data services for iPhone customers through some time in 2012. As part of the contract, Apple shared in AT&T's revenues and profits with respect to the first generation of iPhones launched, known as the iPhone 2G, which was a unique arrangement in the industry. The Plaintiffs and other class members who purchased iPhones did not agree to use AT&T for five years. Apple's undisclosed five-year Exclusivity Agreement with AT&T, however, effectively locked iPhone users into using AT&T for five years, contrary to those users' knowledge, wishes and expectations.

While the iPhone fanbois knew that their shiny new toy was coming from Apple in partnership with AT&T, they claim that they didn't know that the length of that partnership was five years and they didn't know they wouldn't get the unlock code if they asked for it, something AT&T does give out for other phones bought under contract.

As well as taking issue with being stuck with one carrier, the complainants are also suing over the fruity firm's handling of its App Store.

They want the court to decide that Apple's refusal to approve third-party apps that don't pay the annual fee for the software development kit, or don't hand over 30 per cent of their sales to Apple, is unlawful. If Cupertino doesn't approve an app and iPhone users download it anyway, it voids their phone's warranty – a pretty risky move on such an expensive piece of kit.

The complaint alleges:

Through these actions, Apple has unlawfully stifled competition, reduced output and consumer choice, and artificially increased prices in the aftermarkets for iPhone voice and data services and for iPhone software applications.

The four people bringing the case against Apple say they're not sure how many people could be counted in the suit, but estimate that it is somewhere in the tens of millions.

The lawsuit is seeking a court order that stops Apple from selling locked iPhones unless it makes the terms clear and forces it to hand over the unlock code to everyone who already has a locked Jesus-mobe. The suit also wants the court to end the firm's monopoly in the App Store.

Naturally, the complaint is also looking for attorney's fees and costs, as well as "treble damages for injuries caused by Apple's violations of the federal antitrust laws". (Multiplying the award for damages by three is something the court ordinarily does in the US for wilful violation of antitrust laws.)

Class actions over Apple and AT&T has been knocking around in one form or another since 2007, but this version of the complaint was officially filed in California at the end of December last year and is only being brought against Apple.

Another case (PDF) against both Apple and AT&T for the same antitrust violations, but brought by different plaintiffs, was already filed in 2008 and is currently moving through the courts.

Apple had not replied to a request for comment at the time of publication. ®

* including the intriguingly named Mr "Hayter".

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