The release of Apple’s iPhone locked exclusively to one carrier could be illegal under Australia’s competition laws, claim researchers. The issue could delay the product’s release in Australia or force Apple to sell an unlocked version.
The finding comes from analysis of implications of the technological locking of the Apple iPhone under Australia’s competition laws by QUT law researchers Dale Clapperton and Professor Stephen Corones, published in the QUT Law and Justice Journal.
In the US Apple released the iPhone with an exclusive agreement with AT&T to sell the product. Users must sign a two-year contract with AT&T to be able to “unlock” the iPhone. A SIM card from another carrier will leave the iPhone unusable with an error message on screen.
QUT law researcher Dale Clapperton says despite there being at least two class actions in the US against Apple alleging violations of antitrust and consumer protection laws, with its exclusive iPhone deal with AT&T, Apple went on to make similar deals to sell the iPhone in France and Germany.
However, Clapperton says that if Apple used this same strategy in Australia it could come up against our unique third-line forcing laws which would make forcing consumers to do business with another organisation illegal.
While Apple has not revealed its plans for releasing the iPhone in Australia, if the US marketing strategy were adopted here, it would likely be prohibited by the Trade Practices Act 1974 (TPA) provision dealing with third-line forcing, Clapperton argues.
“Australia’s competition laws may be uniquely suited to preventing this type of anti-competitive technological tying because they prohibit third-line forcing per se,” he said. “This law will greatly simplify the task of seeking redress for such behaviour through the courts and could prove a deterrent for exclusive release of the iPhone with one carrier.”
“US financial analysts have calculated that AT&T is paying Apple a US$18-a-month ‘commission’ per iPhone customer which, of course, is ultimately paid by the customer.
“The digital locking of the iPhone forces consumers to use the mobile carrier nominated by Apple so that over the two-year contract term, the consumer would probably pay more in secret commissions to Apple than they paid for the iPhone in the first place,” he said.
Many iPhone users have already worked out illegitimate ways of unlocking the iPhone from the exclusive carrier, however Apple says unauthorised unlocking will nullify the warranty on the product. Installing the company’s iPhone software update on an unlocked iPhone will also render the product unusable.
Apple did not respond to an enquiry on the issue.