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Apple Forced AT&T on iPhone Users, Class Says

SAN FRANCISCO (CN) - Apple violated antitrust law by forcing customers to use AT&T Mobility for five years and barring them from switching to another carrier, a class claims in Federal Court.

Lead plaintiffs Zack Ward and Thomas Buchar say Apple entered into a secret five-year contract with (nonparty) AT&T Mobility before it launched the original iPhone in June 2007. The contract established AT&T as the exclusive provider of cell phone and data services for iPhone customers through part of 2012.

Ward and Buchar say iPhone buyers did not agree to use AT&T Mobility for five years.

"Apple's undisclosed five-year exclusivity agreement with [AT&T Mobility], however, effectively locked iPhone users into using [AT&T Mobility] for five years, contrary to those users' knowledge, wishes and expectations," the lawsuit states.

The complaint mirrors another federal antitrust lawsuit filed against Apple in early January.

Apple allegedly enforced the exclusive contract by programming and installing locks on each iPhone that prevented customers from switching to a competing carrier.

Under the Digital Millennium Copyright Act of 1998, cell phone consumers "have an absolute legal right to modify their phones to use the network of their carrier of choice," according to the lawsuit.

But the plaintiffs say Apple blocked iPhone customers from exercising that right "by locking the iPhones and refusing to give customers the software codes needed to unlock them."

This barred international travelers from using their iPhones abroad, as they would first need to swap out their SIM cards and replace them with the SIM card of a local carrier such as Vodaphone or Orange.

Global carriers AT&T Mobility and T-Mobile "typically unlocked SIM cards on request for international travel, or even if customers wanted to cancel their accounts and switch to another carrier," the plaintiffs say.

"Accordingly, [AT&T Mobility] unlocked SIM cards on telephones sold exclusively through them, such as the Blackberry Torch and the Samsung Blackjack," the complaint states. "There is but one exception: the iPhone."

The plaintiffs say Apple never told customers that their phones would only work with AT&T Mobility cards or that the unlock codes would not be provided to them, even on request.

They also accuse Apple of failing to tell even its sales or customer service representatives about the length of the exclusivity agreement.

"Apple retained exclusive control over the design, features and operating software for the iPhone, including the code that 'locks' iPhones to the [AT&T Mobility] network," the complaint states.

"Through these actions, Apple has unlawfully stifled competition, reduced output and customer choice, and artificially increased prices in the aftermarkets for iPhone voice and data services."

Ward and Buchar sued on behalf of people who purchased an iPhone from Apple or AT&T Mobility and then bought wireless voice and data services for the phone between Oct. 19, 2008 and Feb. 3, 2011.

The class is represented by Francis Gregorek of Wolf, Haldenstein, Adler, Freeman & Herz in San Diego.

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