France says Apple owes 48.5 million euros for unfair iPhone contracts with carriers
France's competition, consumer, and fraud agency -- the DGCCRF -- has reportedly launched a court case against Apple seeking 48.5 million euros ($55.3 million), saying the company is maintaining unfair carrier contracts that grant it too much control.
The DGCCRF has specifically asked Apple to remove 10 contract clauses, according to France's BFM. These for instance force carriers to buy a minimum number of iPhones over three years, pay into an Apple-run advertising fund, and allow Apple to use their patents. The company can also void a contract without warning, and prevent carriers from setting their own plans and payments for iPhones.
Another stipulation gives Apple "most favored nation" status on factors like phone price, quality of service, and commissions paid to salespeople.
Most of the 48.5 million euros would be split in several directions amongst carriers, with 14 million going to SFR, 11.6 million to Orange, 8.2 million to Free Mobile, and 6.7 million to Bouygues Telecom.
Apple has long set strict contract terms for carriers, dating back to the first-generation iPhone in 2007, which helped establish the more generous data plans modern smartphones are dependent on. France was in fact one of the first countries with multiple iPhone carriers.
Since then, a number of carriers have complained about Apple's terms, including not just things like minimum buys but also high subsidies where the iPhone is available on contract -- requiring carriers to turn a profit through fees instead. The U.S. wireless industry has largely shifted away from contracts toward monthly payment schemes that include annual or biennial upgrades.
The DGCCRF has specifically asked Apple to remove 10 contract clauses, according to France's BFM. These for instance force carriers to buy a minimum number of iPhones over three years, pay into an Apple-run advertising fund, and allow Apple to use their patents. The company can also void a contract without warning, and prevent carriers from setting their own plans and payments for iPhones.
Another stipulation gives Apple "most favored nation" status on factors like phone price, quality of service, and commissions paid to salespeople.
Most of the 48.5 million euros would be split in several directions amongst carriers, with 14 million going to SFR, 11.6 million to Orange, 8.2 million to Free Mobile, and 6.7 million to Bouygues Telecom.
Apple has long set strict contract terms for carriers, dating back to the first-generation iPhone in 2007, which helped establish the more generous data plans modern smartphones are dependent on. France was in fact one of the first countries with multiple iPhone carriers.
Since then, a number of carriers have complained about Apple's terms, including not just things like minimum buys but also high subsidies where the iPhone is available on contract -- requiring carriers to turn a profit through fees instead. The U.S. wireless industry has largely shifted away from contracts toward monthly payment schemes that include annual or biennial upgrades.
Comments
Also so known as negotiations. Or simply doing business.
This is exactly what makes Apple and iPhones so much better than anything else out there!
Is there any carrier bloatware on Apple phones?
Apparently, the French are not fond of fair deals negotiated between two parties. Did Apple force any carrier to sign any deals?
Apple shouldn't pay a dime to these French extortionists.
The carriers did not have to sign, or even renew these contracts. Hell wireless service providers in the US and Canada tended to hide the iPhone in the back, and show you nothing but the highly-profitable Android phones, you know the ones with all the security problems and are obsolete in 8 months so the customer will be back for another.
If anything Apple saved these very jackass wireless carriers from being overtaken by a competing WiFi technology, and that may still yet happen in major cities.
cry me a river.
It's ridiculous that most cell plans in the US cost as much as they do.
And we have people in our government who want the US to be more like EU. Yeah that is working well for them over there. Even companies are now having the government fight their battles. Really, a company can not stand up for themselves. I wonder if they realize they had the right to walk away from the table, they did not have to drink the apple juice.
Now you get even worse contracts which are essentially leases with buyout clauses. Even better for the carrier than the subsidy contracts. With sub, you pay off $450 over the course of 24 months at 0%. With these leases/buyout contract, if you want to leave you have to wait until you pay $850 for a $650 phone. If you think things are getting better for consumers by removal of subsidies, then you are mistaken. All the changes are for the benefit of the carrier.
Some of the other clauses probably shouldn't be illegal, just hard ball business on the part of Apple.
Below is a machine translated version of the ten complaints:
The 10 clauses deemed illegal by the DGCCRF
1-operator must order a minimum volume of 3 years
2-operator can not establish its own pricing policy
3-operator pays money to an advertising fund used to Apple's discretion
4-finance the operator highlighting the iPhone in stores by the operator, who is committed to a minimum expenditure
5-Apple can freely use trademarks owned by operators, while Apple strictly controls the ability for the operator to communicate the Apple brand
6, the operator is imposing strict controls conditions, while Apple makes no commitment on compliance orders and deliveries
7-operator participates in the terminal repair costs
8-Apple has the unilateral right to terminate the contract without adherence to a notice in accordance with law
9-Apple can freely use the operator's patents
10-Apple gets conditions at least as favorable as those -or more favorables- competing manufacturers on rates outside the bundle;quality of service; the commissions to sellers; loan fees of a replacement device; limitation of services offered to customers.
They do their own thing, often breaking EU law and they don't give a toss about it.
Just part of life.