New Apple Products, Consumer Suspicion, and Transparency in the Tech Industry

Fall has come again, and in what feels like a cyclical tech tradition, many older iPhone models have undergone a ‘slow-down’ as new iPhone models are released.

 

Many in the U.S. and globally feel that Apple secretly releases software to phase older iPhone models into obsolescence when new ones are released to drive profits and create additional reliance on Apple’s product line and repair options. In 2017, Apple even admitted that a new software release weakened the performance of older iPhone models – lending some credence to the masses’ belief of nefarious corporate behavior from Apple. In 2020, Apple folded in a class action lawsuit and agreed to pay a settlement fee for not informing Apple product users of the potential for new software to slow older devices. Individuals owed money under that settlement agreement received money this Fall, 2023.

 

Despite the understanding that new software sometimes slows old devices and confirms such from Apple, people have remained suspicious of Apple whenever new products are released. For example, there is an active investigation into Apple’s purportedly nefarious “planned obsolescence” in France. Additionally, a case against Apple for over a billion dollars was recently approved to move forward in the UK for the same underlying reason.

The older and more recent cases illustrate a tendency for individuals worldwide to distrust big tech. It may be because tech is an industry where laypeople lack deep knowledge of products and how software may affect hardware. The ongoing suspicion manifests the expectation for tech products to be efficient and remain efficient over time. Or, of course, the distrust may be well founded – at least in these cases against Apple.

 

In the face of consumer protection regulations and in the eyes of its consumers, the tech industry would do well to be as transparent as possible when releasing new technologies that may impact the performance of old devices. Consumer welfare, in part, hinges on ensuring an informed consumer population. Apple likely faces an uphill battle to rebuild trust with its consumers, and it can certainly expect to continue trudging through legal adversity in the face of these new lawsuits and investigations.

Cole Haaf, BridgehouseLaw Charlotte

Sources

 

https://www.france24.com/en/europe/20230515-france-investigating-apple-over-alleged-planned-obsolescence-for-smartphones

https://www.nytimes.com/2017/11/15/technology/personaltech/new-iphones-slow-tech-myth.html

https://www.cnet.com/tech/mobile/apple-to-start-paying-out-500m-in-iphone-slowdown-lawsuit/

https://www.theregister.com/2023/11/02/apple_batterygate_uk/

Corporate Transparency Act

The Corporate Transparency Act (CTA) is a law that requires certain businesses to disclose ownership and other information to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The purpose of the CTA is to combat financial crime and assist law enforcement in detecting criminal activity by creating a centralized database of information about who owns and operates US businesses. Enacted in 2021, the law is set to go into effect starting January 1, 2024. The CTA has broad reporting implications for current businesses and businesses formed after January 1, 2024.

The CTA requires information about the “reporting company,” each “beneficial owner” of the company, and any “company applicants”. After the initial report, there is no annual or quarterly filing requirement, only that the company must update its documents if its information has changed.

Reporting companies operate in the US and were either formed with US law (domestic reporting company) or with foreign law (foreign reporting company). A reporting company must disclose its full legal name, trade name, current US address, state or foreign jurisdiction of formation, IRS ID and EINs, and state jurisdiction of first registration for foreign reporting companies. Beneficial Owners are individuals who either substantially control the reporting company (examples include senior officers like presidents, CEOs, etc.) or own at least twenty-five percent of the company’s ownership interest. Company Applicants are individuals who either directly filed the documents that created the reporting company or were primarily responsible for directing the filing. Companies must report the beneficial owner and company applicant’s full legal name, date of birth, current address, and a unique identifying number like a US state driver’s license or foreign passport.

If the reporting company exists before January 1, 2024, it must file its initial report by January 1, 2025. If the company is created after January 1, 2024, it only has thirty days after its creation to make its filing. Failure to make these required filings can lead to civil and criminal penalties as severe as two years imprisonment and/or $10,000 in fines. 

Save for a few exceptions, the CTA will affect most companies operating in the US. Therefore, companies must know the information they are required to report and the timeline to file these required reports.

Luca Tappa, Law Clerk, BridgehouseLaw LLP, Charlotte