Cupertino based company, Apple Inc. (NASDAQ: AAPL) has been slammed with a law-suit alleging ‘false advertisement’ and ‘wrongful representation’ of its 16GB iPhones. The law-suit which has been filed by two Florida based plaintiffs, namely Paul Orshan and Christopher Endara, have been filed as a class action complaint on behalf of all of Apple’s consumers. The plaintiffs have also demanded a jury trial.
The lawsuit was filed because of the disappointment caused to Apple’s users who were promised full 8GB and 16GB capacities on their phones. As claimed in the lawsuit, the iOS 8, which is the operating system currently being used in Apple’s devices, utilizes as much as 23.1% of the advertised storage capacity. Because, it was claimed that the iOS 8 comes prepackaged with the devices, the advertised storage capacity is never available to them and instead only four-fifths of what is advertised is really accessible and available for use.
The lawsuit declared that this ‘marked discrepancy’ between what is advertised and what is available will not be accepted by reasonable users such as the plaintiffs and others. The suit accuses Apple of 1) Failing to provide storage capacity as advertised, thus wrongfully representing features of the Apple’s devices, 2) Falsely advertising Apple’s devices and selling them as not advertised, 3) Failing to disclose full information regarding its devices.
Interestingly, the lawsuit added another angle to the legal action against Apple by claiming that a reason for Apple reducing the storage space available to Apple’s users is that Apple wants to promote its iCloud services. This can be a serious allegation under the Competition Law as Apple can be proved as exploiting its dominant position in one market, i.e., the ‘devices’ market to enter and push through another market, viz., ‘storage space’ market.
This type of bundling may be termed as anti-competitive and may fall foul of the anti-trust principles of US courts. However, Apple may yet escape the attack on this front because the users are not locked into availing the iCloud’s services and are free to opt for other online cloud based storage services, such as Drop Box or Google Drive for example.
The plaintiffs have requested the Courts to order Apple to immediately cease all wrongful representation of its device’s features and false advertisement. Additionally the plaintiffs want Apple to distribute all the profits that it has earned so far from the sales of such falsely advertised devices.
The lawsuit has been filed under the provisions of California’s Unfair Competition Law, False Advertising Law & Consumer Legal Remedies Act.