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Will Apple finally pay a price for keeping secrets?
At first I thought Apple would get away with deliberately slowing down its older iPhones when their batteries aged. I mean, when it comes to techno fandom loyalty, you can’t beat hardcore Apple fans. They love their iGadgets. But maybe I was wrong.
As Hyoun Park, CEO of Amalgam Insights, pointed out, “Apple’s sin in this case was in not providing any explanation on the performance slowdownfix until it was basically caught.” Instead, users were forced to find out about the problem themselves and either to “voluntarily void their warranties to replace their batteries on the cheap or to pay Apple’s $79 battery replacement fee to keep the performance that they were used to having.”
Thus, Apple started out on the wrong foot. It then sweetened its offer, saying it would replace an iPhone’s battery for $29 rather than the usual $79, even when the phone was no longer under warranty. And that would go for any iPhone battery, not just those that no longer retained “up to 80 percent of its original capacity at 500 complete charge cycles.”
It sounds to me as if Apple finally realized that some of its customers weren’t going to so easily forgive the company for slowing down their precious phones.
I don’t know if Sen. John Thune is among Apple’s customers. But in a Jan. 9 letter to Apple CEO Tim Cook, Thune (R-S.D.), chairman of the Commerce, Science, and Transportation Committee, asked if Apple had tried to notify customers that their phones were being slowed down and if customers had been given the chance to decline this upgrade.
Spoiler alert: Apple did not make any effort to tell customers that their phones would be slowed down, nor were customers given the chance to decline this update.
Thune wrote, “Even if Apple’s actions were indeed only to avoid unexpected shutdowns in older phones, the large volume of consumer criticism leveled against the company in light of its admission suggests that there should have been better transparency with respect [to] these practices.” You think?
The senator continued, “Apple’s proposed solutions have prompted additional criticism from some customers, particularly its decision not to provide free replacement batteries.”
That would have been Apple’s smarter move. Free replacement batteries would have instantly gotten all its customers back on its side. Apple’s lame apology, combined with its $29 replacement offer, has left a bad taste in many former Apple fans’ mouths.
How many? Good question. We don’t know for certain, but we do know that there are more than 30 — count ’em 30-plus — lawsuits coming Apple’s way.
One of those lawsuits is from the law firm Hagens Berman. Does that name ring any faint bells? It should if you follow Apple as closely as a peel covers an apple. Hagens Berman is the law firm that forced Apple to cough up a $450 million settlement for its role in an e-books price-fixing conspiracy.
Then there are several lawsuits, such as one from Gibbs Law Group, that argue that Apple is guilty of trespass to chattels in slowing down its batteries. That legal concept is a new one on me, but the argument boils down to this: Apple has no right to degrade your iPhone performance and usefulness. Therefore, iPhone users “suffered a permanent and long-term degradation in performance, utility, condition, quality, and value. As a result, plaintiffs and/or class members were required and induced to purchase new iPhones and/or new batteries to their detriment and Apple’s benefit.”
That accusation that Apple was doing this deliberately to encourage customers to buy new iPhones has been gaining a lot of support. In France, the national consumer fraud watchdog, DGCCRF, is investigating Apple for deceptive sales practices and planned obsolescence of its products. That last is a big deal. Under French law, companies can be fined of up to 5% of their annual sales for deliberately shortening the life of products to spur demand to replace them.
What this means is that, win, lose or draw in the lawsuits, Park expects Apple to lose up to $10 billion of revenue over the next year. That’s real money, even by Apple standards. If the lawsuits win out and disgusted customers start moving to Android phones, there’s no telling how much damage Apple will incur.
The thing about reality distortion fields is that when they collapse, they can destroy everything. I doubt that will happen to Apple, but this is proving to be the biggest challenge the post-Jobs Apple has faced. Apple is about to find out why “May you do business in interesting times” can be a curse.