Israel’s consumer protection bureau said Tuesday it was investigating Apple over a failure to disclose to users that its software could slow performance in some iPhones. The Consumer Protection and Fair Trade Authority said it had questioned the head of Apple in Israel, Rony Friedman.
An agency spokesman said it had the power to levy significant fines in civil proceedings, but it was too early to discuss such a possibility. Apple acknowledged in December that its software sometimes deliberately slows phones with weak batteries. It apologized and cut the price of replacement batteries for affected phones.
Critics say Apple obfuscated the fact that a worn-out battery not only fails to hold a charge but also degrades the phone’s performance, and that this lack of transparency has pushed people to buy a new phone rather than a new battery. Government agencies in countries ranging from Brazil to France and Italy to South Korea are also investigating Apple following complaints.
If the Israeli agency finds that Apple violated Israeli law, the U.S.-based firm could face fines of millions of dollars. The probe followed complaints from iPhone users on social media. Apple acknowledged the problem in December but said there was no deliberate effort to shorten the life of the phones.
Consumer protection bureau employees said Apple’s response suggests that a component in the older phones slowed them down and that the company’s explanation to customers was incomplete. The authority is investigating Apple on suspicions of consumer deception. In addition to imposing fines, the agency can pursue criminal charges against violators of the consumer law. At this stage, it should be noted, the investigation against Apple is administrative in nature and not criminal.
The market research firm GFK has estimated that Apple’s iPhones have a 16.2% market share of the smartphone market in Israel. Based on such numbers, if Apple is found to have violated the law, it could be facing tens of millions of shekels in fines or even more.
Friedman has been at the helm of Apple Israel for about a year after coming to the company following a stint as vice president of Intel Israel. Apple has a research and development center in Israel with a staff of about 1,000. According to reports, Apple’s primary focus in Israel is the development of augmented reality technology, involving overlays of additional information. AR technology, as it is known, is expected to be the next breakthrough product for Apple.
The Fair Trade Authority’s investigation is part of a larger enforcement effort against suspected violators in the communications industry, including mobile service providers and the suppliers of mobile devices.
In January, for example, the authority announced that it was fining Israeli mobile carriers Pelephone and Partner 2.85 million shekels ($812,000) and 1.7 million shekels, respectively, for charging customers for products and benefits that customers believed to be free.
“It appears that recently the authority has taken a more active stance, initiating investigations and sanctions,” said Anat Even-Chen, a lawyer who specializes in consumer regulation. “International firms operating in Israel, such as Apple and Facebook, can’t ignore Israeli regulation and have to examine their activity and see it that are complying with the law,” she said. “This investigation is a sign to international corporations that think that they are above the countries’ laws that we too have enforcement powers and insist on [enforcing] them.”
Apple in Israel declined to comment to TheMarker or to Reuters.
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