Department Of Justice, SEC Investigating Possible Apple Securities Violations
Apple confirmed late Tuesday that it is responding to questions from U.S. government agencies concerning its handling of iPhone battery issues through a software update that throttled the performance of some handsets, Apple Insider reported.
U.S. regulatory agencies want answers about how Apple implemented firmware designed to temporarily slow down iPhone units with depleted battery cells, Apple said in a statement to Axios.
The U.S. Department of Justice and the Securities and Exchange Commission are investigating whether Apple violated securities laws, Bloomberg reported on Tuesday.
The main type of securities violation is known as securities fraud. Securities fraud happens when a party uses fraud, misrepresentation, or untrue statements in connection with the sale of a security.
Some types of securities violations and securities litigation claims involve market manipulation, according to LegalMatch:
This may occur when a securities company, broker, or investor engages in any activity creating a false impression regarding the price, availability, or distribution of a security. Even minor violations can lead to criminal misdemeanor charges, which are punishable by a fine and/or jail time.”
Apple admitted in December to throttling iPhone processor performance, saying that it was needed because aging lithium batteries deliver power unevenly, which can cause iPhones to shut down unexpectedly to protect the delicate circuits inside, according to Reuters.
In a December statement, Apple explained the iOS 10.2.1 update of 2016 was designed to manage unexpected shutdowns afflicting iPhone 6, iPhone 6s and iPhone SE models, particularly those with chemically depleted batteries. iPhone 7 handsets had similar features that would be addressed with iOS 11.2, as would future devices, Apple said.
At the time, a Reddit user claimed to have evidence that iOS intentionally slows down iPhones with degraded batteries. Apple Insider reported. Testing by Geekbench’s John Poole seemed to corroborate those claims — the benchmark developer found a correlation between hardware slowdows, battery wear and iOS version.
Consumers have filed 50 class action lawsuits over Apple’s latest iPhone software update, which they allege caused unexpected shutdowns and hampered the performance of iPhone models of the SE, 6 and 7 lines.
They claim the company tricked consumers into believing their phones were close to the end of their life cycle, forcing them to buy new phones or pay up to $80 for a replacement battery.
Most of the lawsuits have been filed compensation and damages in federal court in San Jose, California, and in other federal courts across the country.
Government agencies are investigating Apple in Brazil, France, Italy and South Korea following complaints.
Apple informed customers about the battery issue when it released iOS 10.2.1, Apple CEO Tim Cook said in an interview this month, according to Apple Insider:
“When we put it out, we did say what it was, but I don’t think a lot of people were paying attention. And maybe we should have been clearer, as well,” Cook said.
Demand for Apple’s flagship handset, the iPhone X, hasn’t met the most optimistic expectations, according to investment research firm Sanford C. Bernstein, the Star reported. Apple is expected to report fiscal first-quarter results Feb. 1 with forecasts for the current quarter:
Consumers may be buying fewer iPhones than predicted, but they’re paying more, on average, for the devices they do purchase, according to the report. The iPhone X, which went on sale in November, comes in $999 and $1,149 configurations, at least $150 more than any iPhone starting price that came before it.”
Lawsuits against Apple claim the company tried to trick consumers into thinking their phones were close to the end of their life cycle so they’d be forced to buy new ones or pay up to $80 for a replacement battery.
Apple apologized for the way it handled the problem and lowered the price of iPhone battery replacements from $79 to $29.