news A Federal Court judge has found that iconic technology giant Apple’s US headquarters deliberately chose to ignore the fact that its new iPad was not capable of 4G mobile broadband speeds in Australia, during a marketing campaign for the device.
In late March this year, the Australian Competition and Consumer Commission took Apple to court for advertising its new iPad tablet as featuring “4G” speeds — despite the fact that the tablet’s specifications did not allow it to take advantage of the only 4G network in Australia at the time, operated by Telstra.
Subsequently, several weeks ago, Apple and the regulator agreed that Apple would pay $2.25 million in fines regarding the issue, which the ACCC had alleged represented a breach of consumer law. Today in the Federal Court, Justice Bromberg agreed that the amount was appropriate. However, the judge also made a number of other comments regarding Apple’s behaviour in the judgement (which is available in full online).
“The most concerning aspect of Apple’s contravention of [section 33 of Australian Consumer Law], is the deliberate nature of its conduct,” said Bromberg. “Apple does not seek to deny the deliberateness of its conduct and there are no facts before me which seek to excuse or explain the conduct, other than that the conduct occurred at the behest of Apple’s parent company, the second respondent (“Apple Inc”).”
“Apple was aware that the “iPad with WiFi + 4G” was not compatible with the Telstra LTE network. That matter was raised with Apple as early as 8 March 2012.”
“In my view, the risk of a contravention of s 33 of the ACL was reasonably obvious, and must have been recognised as substantial by those within Apple familiar with the Australian market’s understanding of the term “4G”. In that context, and in the absence of any other explanation, the facts to which I have just referred, suggest that Apple’s desire for global uniformity was given a greater priority than the need to ensure compliance with the ACL.”
“Conduct of that kind is serious and unacceptable.”
Apple’s 4G marketing campaign, Bromberg said, was settled and deployed by Apple’s head office for worldwide use, with materials supplied by Apple to various resellers in Australia. This “controlling hand” of the Cupertino head office could be seen in the fact that Apple Australia ignored complaints by the ACCC and others regarding the Australian 4G advertising, until 12 May, when the 4G label was changed globally.
This, Bromberg intimated, was unacceptable.
“Multi-national corporations who (through their subsidiaries or otherwise) operate in and profit from the Australian market, must respect that market and the laws which serve to regulate it and protect its participants,” he told the litigants. “Those who design global campaigns, and those in Australia who adopt them, need to be attuned to the understandings and perceptions of Australian consumers and ensure that representations made by such campaigns will not serve to mislead. The penalty imposed in this case, needs to make that message clear.”
Some commentators, including Delimiter, have raised the fact that the $2.25 million fine is small in the context of Apple Australia’s revenues, which were $4.48 billion in the past financial year. Bromberg appeared to agree. “I harbour a concern that the size and financial strength of Apple diminishes the meaningfulness of the penalty proposed,” he stated.
However, factors such as Apple’s willingness to cooperate with the ACCC, and the fact that the company has not transgressed in this area previously, weighed for Apple in the judge’s determination.
“I do not perceive any further transgressions by Apple to be likely,” said Bromberg. “The fact of the litigation and the media attention which it has drawn, will no doubt be a sober reminder to Apple, and others who rely on their brand image that, as well as a penalty, there will likely be an intangible cost involved in a contravention of the ACL.”
opinion/analysis
I have previously written that I thought the ACCC’s approach to this matter was overblown, given that Apple had agreed to give anyone who complained about its 4G support a refund, and modified its marketing materials relatively quickly, given the need to coordinate everything with the nerve control centre in Cupertino. I can’t see Apple Australia making many decisions in this kind of matter on its own.
However, reading Blomberg’s judgement this afternoon, I couldn’t help but feel that the many Delimiter readers who urged me to take a tougher approach with Apple on this one were in fact, right. The judge paints a picture of a technology vendor which knowingly flouted Australian law and only modified its approach when the nation’s competition regulator took it to court and after Apple decided globally to make broad changes to its marketing materials.
If Blomberg is to be believed, and Federal Court judges usually are, Apple knew the new iPad couldn’t support 4G speeds in Australia, but actively decided to promote the 4G term with its marketing materials anyway, knowing that it was breaking the law in doing so.
The company’s contriteness with respect to the matter is probably a matter for debate, but one doesn’t have to be a lawyer or an accountant to suggest that a $2.25 million fine is little more than a flea bite for Apple. It will be interesting to see how the company handles similar issues the next time around (for example, will its next iPhone support 4G in Australia, and on which telcos’ networks?); and to what extent it is prepared to try to push Australia’s legal boundaries in future.
Image credit: Apple
Ladies and Gentlemen, the arrogance of Post-Jobs Apple.
In general I have found post-Jobs Apple to be less arrogant and more transparent. This looks like an outlier.
I wonder how many people felt ripped off and took their misleadingly-labelled iPads back. More than ten?
I personally doubt anybody did.
Bit harsh! FFS it’s an international product and hardly apples fault the carriers here don’t use the same frequencies as the USA.
I was a little surprised apple didn’t use the dc-hspda defense as that is called 4g by AT&T and some other OS carriers and the iPad 3 supports this standard.
I think they did try to use that defence.
Still a bad decision, the tpg one was fair but this is just stupid, the product works as advertised, only local carries don’t use the same frequencies as us based carriers!
A bit of overlay text on the ads would have fixed this for Apple. They were misleading about the capabilities of the product in the Australian marketplace; it doesn’t actually matter in this case whether the device technically can connect to a 4G network somewhere, but not necessarily all of them, because thats not what they lead the consumer to believe.
Guys, none of what you are saying meets the applicable Australian Consumer protection laws. You’re just restating the case, that Apple lost comprehensively under laws designed to protect from willful misinformation, as if that makes things better for Apple.
They mislead the public.
They (Apple Australia) knew they were misleading the public and that it was against the law.
Apple (US) told them to do it anyway.
They were found guilty and fined under said laws.
Why defend them?
when will the ACCC take action against the ACMA for not ensuring a world-class 4G network on international standardised spectrum? Discuss.
Irrelevant.
I would like to also point out that what is market in the US as 4g by some providers doesn’t meet the standard either.
Read the gibberish in there 4g is less and standard and more a marketing term. It is about as standard as what is classed as a “road”.
Telstra FakeG is implemented as LTE-Basic (not LTE-Advanced) because that is all the Ericsson retards who supply Telstra’s equipment had on offer (Telstra are locked in). Telstra FakeG operates on a non standard frequency because that was the spectrum Telstra already owned. The end result is a network that is not 4G, does not operate on a standard frequency, and requires custom handsets to be manufactured for it to work. Telstra’s network is wrong on so many levels which is hardly Apple’s fault.
Your statement that it is not 4G is factually inaccurate. Regular speeds of 35Mbps down and 25Mbps up are 4G in my book. I have done quite a lot of testing of it recently.
Hi renai, he’s not far from the truth tho, dc-hspda can do the same speeds as lte-basic but the network is too congested to manage it.
AFAIK there is no frequency / spectrum defined as part of the standard. As a specification it tells you what the waveforms look like (OFDM etc), how to separate multiple signals and handle the packet data. You can put an LTE standard on any frequency you like (multiply the waveform with the quadrature signal of your baseband frequency basically) and have it work (well sort of, it is of course a bit more complicated than that).
We have pentaband mobile phones to cover the fact that 3g is used across different chunks of spectrum in different countries. I think LTE is no different to this.
“a $2.25 million fine is little more than a flea bite for Apple”
Does anyone else think that Apple knew that this was the likely outcome, and simply considered it part of the cost of doing business in Australia?
Would the time and effort required by Apple to ‘Do The Right Thing’ have cost them more than the $2.25 million fine?
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