Samsung, Apple fined over treatment of older-generation smartphone customers

Apple and Samsung have been hit by hefty fines from the Autorità Garante della Concorrenza e del Mercato (AGCM), Italy's Competition Authority, over what it claims were unfair commercial practices designed to force users to upgrade from perfectly functional previous-generation smartphones to shiny new devices unnecessarily.

The mobile industry works on a rapid cadence: New flagship handsets are, typically, released on an annual schedule which once tied nicely into the mobile networks' 12-month contract period until rising handset prices saw most contracts pushed to an 18- or even 24-month period. Buyers are encouraged to acquire the handsets under contract with a mobile network, paying a higher monthly fee to avoid having to find hundreds of pounds up-front to buy the devices SIM-free, and then further encouraged to get rid of the handsets and upgrade to a shiny new device at the end of the contract period.

For the frugal, though, there's less of a need to constantly upgrade. Aside from the issue of manufacturers failing to support older devices with security updates, a problem far more prevalent in the world of Android handsets than Apple's iOS equivalents, there's little wrong with a two-year-old device - unless, that is, the manufacturer cheekily inserts a few problems via an over-the-air firmware update.

That's the reason behind a pair of fines levied by the Italian Competition Authority against Samsung and Apple, after an investigation found the company had been forcing software updates on their users which slowed down or otherwise harmed the functionality of older devices - specifically, it claims, to encourage them to upgrade to newer hardware.

'Samsung, since May 2016, has insistently suggested to consumers that had purchased [the] Note 4 (marketed from September 2014), to install the new firmware based on the new Marshmallow version of Android, conceived for the new device Note 7, without informing them of the serious malfunctions that the new firmware could cause due to greater stress of device's hardware and asking a high repair cost for out-of-warranty repairs connected to such malfunctions,' the Authority's investigation finds. 'With respect to Apple, since September 2016, it has insistently suggested to consumers that had purchased an iPhone 6 (6/6Plus and 6s/6sPlus, marketed respectively from Autumn 2014 and 2015) to install the new operating system iOS 10, optimised for the next model iPhone7, without informing consumers of the greater energy demand of the new operating system and of possible inconveniences – in particular, sudden shutdowns - that such software update could cause.

'To limit the occurrence of such inconveniences, Apple released, in February 2017, a new update (iOS 10.2.1), without warning consumers that its installation could reduce the speed of execution and functionality of devices. In addition, Apple did not offer any specific support measures for iPhones that had experienced such operating problems and were no longer covered by the legal warranty; only in December 2017 Apple provided for the possibility to replace batteries at a discounted price. The AGCM has also ascertained that Apple has carried out another conduct in violation of Article 22 of the Consumer Code as, until December 2017, it has not adequately informed consumers about some essential characteristics of lithium batteries, such as their average duration and deterioration factors, nor about the correct procedures to maintain, verify and replace batteries in order to preserve full functionality of devices.'

The result of the investigation: €5 million fines against both companies with regard to the performance-sapping software updates, with an additional €5 million for Apple for its failure to inform consumers about how to maintain the non-user-replaceable batteries in their smartphones. Both companies are also requested to publish a declaration on their Italian websites containing a link to the Authority's decision.