I wonder if there’s been any product that’s been the focus of so many frivolous lawsuits as the iPhone has. In the latest example reflecting the overwhelmingly litigious nature of our society, Judge James Ware of the U.S District court for the Northern District of California recently granted class-action status to plaintiffs who accuse Apple and AT&T of operating an iPhone monopoly.
Despite the fact that consumers can terminate their iPhone/AT&T contract at anytime, the plaintiffs assert that because the iPhone doesn’t run on other carriers, that they are effectively locked-in to AT&T even if they pay a early termination fee. In other words, they’re locked in because they’re unwilling to give up their iPhone.
The suit was originally filed in 2007 and notes that Apple and AT&T were in cahoots to the extent that they told customers of the initial 2-year contract without telling them AT&T’s exclusive right to carry the iPhone would extend indefinitely.
Apple’s 2008 response to the lawsuit revealed that Apple and AT&T’s initial contract was for a 5 year term, though it remains unclear if the length of that agreement has subsequently been modified.
So is there any legal merit to this case? Do Apple and AT&T truly run an iPhone monopoly? In a word, no. If the Apple/Psystar litigation taught us anything, it’s that a company cannot have a monopoly over a single product. Companies exert monopoly power over markets, not over individual products. Just as the court in Psystar rejected the claim that Apple operated a monopoly over OS X, there’s no legal basis to argue that Apple and AT&T operate a monopoly over the iPhone. Customers know full well that the iPhone is an AT&T exclusive, and if you’re not on board with that restriction, then guess what – you don’t have to buy an iPhone.
To be clear, the fact that this case was granted class-action status indicates suggests nothing about the actual legal merits of the suit.