Why Did Consumers Lose the Class Action Lawsuit Over Alleged Intentional iPhone Performance Throttling?

[Asia Economy Reporter Kim Daehyun] Consumers filed a lawsuit seeking damages, claiming that Apple deliberately degraded the performance of older iPhone models through software updates, but the court did not accept the claim.

In a ruling issued 4 years and 10 months after the first lawsuit was filed, almost all of the consumers' claims were rejected.

On October 7 last year, when Apple's new iPhone 14 series was officially released in Korea, citizens were lining up to purchase the product at the Apple Store in Myeongdong, Jung-gu, Seoul.

On the morning of the 2nd, the Civil Division 31 of the Seoul Central District Court (Presiding Judge Kim Jisuk) ruled in the first trial of a 12.7 billion KRW damages claim lawsuit filed by about 9,800 iPhone users including Mr. Kim against Apple headquarters and Apple Korea, stating, "It is difficult to see that the performance throttling function necessarily has a negative impact or causes inconvenience to users," and ruled against the plaintiffs.

The court said, "All claims by the plaintiffs are dismissed. The plaintiffs shall bear the litigation costs."

First, the court stated, "From a user's perspective, it may be more useful to prevent the device from unexpectedly shutting down even if the maximum performance is somewhat limited," and "It appears that the defendant judged that the positive effects gained outweigh the drawbacks of the function."

Furthermore, the court judged, "Without the performance throttling function, the iPhone could face situations where it might shut down, making it impossible to run high-performance applications as well."

Regarding suspicions of 'inducing new product purchases,' the court sided with Apple, citing that subsequent products also included the performance throttling function and that the problematic operating system update included other improvements to compensate for the inconveniences of lithium-ion batteries.

The court also considered that some plaintiffs failed to prove that they installed the update itself and that it is difficult to objectively prove performance degradation caused by the update.

Immediately after the ruling, Hannuri Law Firm, representing the consumers, stated, "We will review the judgment as soon as we obtain the text and decide on follow-up measures such as whether to appeal," adding, "Regardless of the outcome, this lawsuit process revealed significant limitations in remedying collective consumer damages due to the absence of a consumer class action system and discovery procedures."

Previously, in December 2017, Apple applied software updates to iPhone 6 and 7 models, adding a 'performance throttling' function that could degrade performance in certain cases.

Consumers protested, saying, "Isn't this update intentionally degrading performance to sell more new iPhones?" but Apple explained, "It is to prevent the device from shutting down when the battery ages." Related consumer class action lawsuits were filed consecutively in 2018 and 2019, and the court consolidated and reviewed them.

During the trial, consumers argued, "We were not informed at all about the side effects of the update, nor were we given a choice. This constitutes an illegal act or breach of contract." They claimed that Apple planned and produced the software update to conceal battery defects, prevent customer loss, and promote sales of subsequent models, distributing it while hiding this from users. They demanded payment of 200,000 KRW per person, totaling 12.7534 billion KRW. Including consolidated cases, the total number of plaintiffs exceeds 62,000.

Apple CEO Tim Cook and Apple Korea CEO Daniel D'Souza were also criminally reported for violating the Information and Communications Network Act, but investigative agencies judged, "It is difficult to see that Apple distributed programs that could interfere with the operation of information and communication systems without justifiable reasons."

Meanwhile, similar class action lawsuits have been filed in various countries including the United States, Israel, France, and Canada. Last year in the UK, consumer rights activists filed a lawsuit against Apple demanding compensation of up to 768 million pounds (approximately 1.2156 trillion KRW) for about 25 million consumers in the UK.

There are countries where liability for damages has been recognized. Apple, which faced a class action lawsuit in the US, agreed in March 2020 to pay 25 dollars (about 29,800 KRW) per user of older iPhones, totaling 500 million dollars (650 billion KRW). In Chile, each user participating in the lawsuit was compensated 50 dollars (about 56,000 KRW).