iLounge

By Charles Starrett

Senior Editor, iLounge
Published: Monday, July 12, 2010
News Category: Apple, iPhone

A long-standing lawsuit against Apple and AT&T over the two companies’ iPhone exclusivity agreement has been granted expanded class action status. According to the court document posted online by Wired, the suit now covers “[a]ll persons who purchased or acquired an iPhone in the United States and entered into a two-year agreement with Defendant AT&T Mobility, LLC for iPhone voice and data service any time from June 29, 2007, to the present.” In an interview with Wired, Mark Rifkin, lead counsel representing the plaintiffs of the suit, explained that AT&T’s two-year contract provides an option for customers to terminate the agreement—for a fee—and switch to another carrier. Due to the nature of the U.S. cellular industry, and because the iPhone is only offered by AT&T, customers are essentially locked into using AT&T despite having the termination option.

Apple has argued that its original five-year iPhone exclusivity agreement with AT&T was widely reported, and that even if it wasn’t disclosed, it fails to produce the kind of monopoly power claimed by the plaintiffs. Notably, the exclusivity situation described above is the same for many current smartphones from other cellular providers, such as the Evo 4G from Sprint, the Droid from Verizon, and the original model of the Nexus One from T-Mobile. In addition, it remains to be seen whether the five-year exclusivity deal between Apple and AT&T is still in place, as it has been speculated that the terms of the two companies’ iPhone deal may have been part of the negotiations over iPad with Wi-Fi + 3G data plans.