Italian consumer watchdog hands down €15M in fines to Apple and Samsung for slowing devices

Italy’s Autorità garante della concorrenza e del mercato, roughly equivalent to this America’s FTC, has fined Apple and Samsung a total of $ 15 million for the companies’ practice of forcing updates on consumers that may slow or break their devices. The amount may be a drop in the bucket, but it’s a signal that governments won’t always let this type of behavior fly.

The “unfair commercial practices” are described by the AGCM as follows:

The two companies have induced consumers – by insistently proposing to proceed with the download and also because of the significant information asymmetry of consumers vis-a-vis the producers – to install software updates that are not adequately supported by their devices, without adequately informing them, nor providing them an effective way to recover the full functionality of their devices.

Sounds about right!

In case you don’t remember, essentially Apple was pushing updates to iPhones last year that caused performance issues with older phones. Everyone took this as part of the usual conspiracy theory that Apple slows phones to get you to upgrade, but it turns out to have been more like a lack of testing before they shipped.

Samsung, for its part, was pushing Android Mashmallow updates to a number of its devices, but failed to consider that it would cause serious issues in Galaxy Note 4s — issues it then would charge to repair.

The issue here wasn’t the bad updates exactly, but the fact that consumers were pressured into accepting them, at cost to themselves. It would be one thing if the updates were simply made available and these issues addressed as they came up, but both companies “insistently suggested” that the updates be installed despite the problems.

In addition to this, Apple was found to have “not adequately informed consumers about some essential characteristics of lithium batteries, such as their average duration and deterioration factors, nor about the correct procedures to maintain, verify and replace batteries in order to preserve full functionality of devices.” That would be when Apple revealed to iPhone 6 owners that their batteries were not functioning correctly and that they’d have to pay for a replacement if they wanted full functionality. This information, the AGCM, suggests, ought to have been made plain from the beginning.

Samsung gets €5 million in fines and Apple gets €10 million. Those may not affect either company’s bottom line, but they are the maximum possible fines, so it’s symbolic as well. If a dozen other countries were to come to the same conclusion, the fines would really start to add up. Apple has already made some amends, but if it fell afoul of the law it still has to pay the price.

Gadgets – TechCrunch

Apple’s Warranty Practices Under Fire In Europe Again As Belgian Watchdog Agency Files Complaint

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Apple’s warranty plans have drawn the ire of a Belgian consumer watchdog agency, Test-Aankoop/Test-Achats. The group has filed a complaint against the company over how AppleCare is sold and marketed to customers, who in the EU by default are entitled to a free two-year warranty with any consumer electronics purchase. The complaint says Apple markets its warranties in a manner which doesn’t properly explain consumer rights to Belgian gadget shoppers.

The decision to pursue legal action comes only after Test-Aankoop/Test-Achats decided to join up with 10 other Europe-based entities to make complaints about how Apple operates its warranties, but now the group feels it is time to escalate to a court case after efforts to petition the Mac maker have gone unheard. The move also follows successful action in Italy regarding the same exact issue, a case which the Belgian watchdog cites as a precedent, noting that Apple not only had to pay a €900,000 penalty in that case, but also modified its practices for the Italian market.

Why all the fuss? There is lots of money to be made in value-added warranties, that’s why. It’s not clear exactly how much Apple makes via AppleCare, which offers consumers extended protection on their devices above Apple’s basic one-year warranty, for an additional fee. But it is likely a lot; added warranties are much higher profit than gadgets themselves, since many consumers never take advantage of their services at all, more than compensating for the few who do redeem them for expensive repairs or replacements. That’s why Apple isn’t moving to change its practices in the EU for anything short of a court order to do so, and why we may see others beyond the Belgian group pursue the same kind of action.

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