Apples Marketing iPhones as “waterproof” without clarifying the boundaries of function, and a guarantee that excludes coverage for damage caused by liquids has brought the company to hot water in Italy.
The Italian competition authority (AGCM) has informed the tech giant of its intention to impose a € 10 million fine for commercial practices related to the marketing and warranty of a range of iPhone models since October 2017, from the iPhone 8 to the iPhone 11 following an investigation into consumer complaints related to the promotion of water resistance and subsequent refusal to cover the cost of repairs due to water damage.
In a document setting out the AGCM's late October decision, released today (via Reuters), the regulator concludes that Apple has twice violated the country's consumer code for being "misleading" and "Aggressive" is called.
The investigation found that iPhone marketing was being tricked by Apple Consumers believe that the devices are not only waterproof, but also impermeable to water – with insufficient emphasis on the limitations of functionality in ads. A disclaimer stating Apple's warranty does not include liquid damage was seen as an aggressive attempt to circumvent consumer legal obligations – given the heavy advertising of the devices as waterproof.
Apple places a liquid contact indicator in iPhones that changes from white or silver to red upon contact with liquid. Checking the display is a standard step that repair personnel take.
The AGCM report gives examples of consumers whose iPhone has taken a “brief dive” in the ocean and has been denied cover. Another complainant had washed his device under the tap – which Apple considered to be improper use.
A third reported that his one-month-old iPhone XR stopped working after coming into contact with water. Apple told them they had to buy a new device – albeit at a subsidized price.
While an iPhone XS user was denied coverage by Apple Support with a year old cell phone that claimed never came in contact with water, he complained to regulators that a consumer could not prove their device was this is no more than the time and depth that Apple's fine print states it is waterproof.
We asked Apple to comment on the AGCM's results.
The tech giant has 60 days from the date it was notified of the regulator's intention to fined the decision.
The size of the fine is well below half of the operating profit that the regulator made in Italy from September 2018 to September 2019, according to the regulator, when it found that its sales and services had a turnover of € 58,652,628 has been. and an operating profit of € 26,918,658.
Two years ago, Italy's competition watchdog fined Apple and Samsung around $ 15 million for imposing updates on consumers that could slow down or damage their devices. In February of this year, France fined Apple $ 27 million for limiting the operating system performance of iPhones with older batteries.
Apple has also received far higher penalties from other competition authorities across Europe – including notifying the French competition authority of a $ 1.2 billion fine in March this year accusing the tech giant along with two wholesale partners, Ingram Micro to operate a reseller cartel and technical data.
Apple had to raise up to 500 million euros in back taxes last year, which were demanded by the French authorities.
About $ 15 billion of Apple's European headquarters is in escrow to cover the 2016 European Commission state aid fee that illegally benefited from corporate tax regimes in Ireland between 2003 and 2014.
In July, Apple and Ireland won the first round of an appeal against the prosecution. However, the commission appealed in September – meaning the case will be referred to the ECJ, which is likely to lead to more years of litigation.
EU lawmakers continue to push for global digital tax reform, while some member states are pushing their own digital taxes.