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Apple, AT&T Hit With Lawsuit In iPhone Monopoly Flap
11:04 AM EDT Thu. Oct. 11, 2007
Two separate lawsuits were filed in San Jose, Calif., on Friday, both seeking class-action status. One was filed in federal court and the other in state court.
Both cases raise similar allegations, namely that the two companies violated antitrust, telecommunications and warranty laws while engaging in unfair business practices. AT&T is the exclusive wireless carrier for Apple's iPhone in the United States.
Spokespersons for Apple and AT&T declined to comment on the lawsuits on Wednesday, according to the Associated Press.
The federal lawsuit alleges that the companies colluded to create a monopoly by forbidding iPhone owners to "unlock" their phones to use on other carriers' networks.
Apple and AT&T are also accused of limiting consumer choice. Apple disabled third-party, unauthorized software programs on iPhones in its most recent software update turning some iPhones into useless bricks.
The update was issued on Sept. 27, after Apple had warned iPhone owners that damaged iPhones with unauthorized modifications or software were not covered under the product warranty.
However, for Rory Sanchez, CEO and president of Miami-based solution provider SL Powers, Apple and AT&T are just being smart.
"I don't see it as a monopoly at all. It sounds to me like business is business and Apple has a product and they've chosen a channel to sell it through. You could either use that channel or not. If I want to buy a Mercedes you have to buy it from a Mercedes dealer," said Powers.
"I could see some of the antitrust stuff that was once being looked at against Microsoft because every PC in America needed it in order to run every piece of software that was out there. They really were able to control a lot of things and squeeze people out, but there's nothing stopping any other company from coming out with an iPhone-like product and being competitive to Apple," he said.
"Of course I'm a business guy and if I could do that to control the market I would," he said. "It's kind of common practice with the cell phone providers to strike an exclusive deal with a particular phone. I'm sure that AT&T probably paid apple big bucks to get an exclusive."
The federal case was filed on behalf of iPhone owners Paul Holman and Lucy Rivello by the law firms Hoffman & Lazear in Oakland and Folkenflik & McGerity in New York. Saratoga attorney Damian Fernandez filed the state case on behalf of California resident Timothy Smith.
More than 1 million iPhones have been purchased since the device went on the market on June 29.
