Apple’s infamous Battery Gate scandal

Background

Apple, a technology company based in Cupertino, California, is one of the largest companies in the world. When it comes to tech innovation, the company has a prominent presence. The company has always enjoyed the top spot in the premium consumer market segment. Business decisions, however, do not always turn out to be the best. The same happened to the company in 2017 when a controversial business decision was taken that later transformed into an infamous battery gate scam. And when a company of this stature plays dirty, it is impossible that its actions go unnoticed. It can never evade the scrutinous eye or contemptuous stare of the public. The battery gate scandal, which we shall delve into detail about below, has cost Apple millions of dollars.

Analysis of the issue

Since the start of 2016, the old iPhones have been facing reliability issues. They were reported to face sudden shutdowns. Most of the complaints revealed that iPhone models experienced sudden shutdowns when their battery capacity reached a threshold of 30%. When Apple was approached regarding such an issue, it issued a statement saying that the issue only affected a small number of phone devices. But in reality, a lot of iPhones were facing this issue.

On 23rd January 2017, the company released the iOS 10.2.1 update to the existing operating system for iPhones. This update enabled users with a feature to limit the iPhone’s processing speed in order to prevent sudden spikes in power demands that were causing many iPhones to shut down unexpectedly. It made changes to power delivery on all devices above the iPhone 6 model. The problem here is that Apple did not communicate this feature to the public. The public was left on their own to figure out this feature. A Reddit post by user Tyler Barney first shed light on this issue. He claimed that when he replaced his iPhone’s battery, the phone’s processing speed doubled. Barney used the Geekbench app, which is a popular app to benchmark processor speeds, in order to find out about this.

Geekbench then came forward and published benchmark data publicly to show how the performances of iPhone 6 and iPhone 7 models were affected by the updates of 10.2.1 and 11.2.0. By the end of 2017, Apple issued a public statement alleging that it had throttled the CPU due to ageing batteries. It also posted an apology on its website, explaining the functionality of the update. This led to a public outcry and various lawsuits.

When the feature was examined from a technical standpoint, it unfolded other severe issues.

Lack of transparency

Whenever a company launches an update, it is the legal and ethical duty of the company to explain to its users what the update does. When Apple came up with the iOS 10.2.1 update, it contained a generic message which stated "iOS 10.2.1 includes bug fixes and improves the security of your iPhone or iPad". This message in no way conveys to the users that the new update is a major performance management feature. On the contrary, the users thought it to be a regular minor update and they had no clue that the update related to the battery.

Apple’s software update changed the then-existing functionalities of iPhone devices without the users’ knowledge. The failure of Apple to notify users of a major software functionality alteration is reflective of a serious lack of transparency. This is one of the reasons why the public showed anger towards the company.

During investigations about the battery gate scam, it was found out that Apple in February 2017 had made a statement to TechCrunch.com wherein it revealed that the update was intended to fix the unexpected shutdown issue. However, the information was very partial and did not mention anything about how the update would accomplish it. The statement was thus thought to be very vague as no one possibly understood how the update affected the performance of the iPhone’s CPU and GPU.

Such actions by the company created trust issues for its users, who heavily rely on the existing functionality of technologies. It is unreasonable to do so as it misguides an individual who is kept in the dark on whether the software update is in his best interests or not.

Another aspect here is the omission of material information. Not only did the company fail to communicate what the software update would do but it also deliberately omitted to communicate a relevant piece of information that iOS 10.2.1 could reduce the performance of their iPhones. Here, the users and experts were not expecting every little detail of the change in OS to be revealed but an acceptable level of disclosure. As rightly stated by TechCrunch, "There is a balance to be struck between giving people too much information and not enough information". It was undoubtedly unethical conduct on the part of Apple in this case.

The intention of planned obsolescence

All these scenarios are interconnected. Experts believe that behind the failure to communicate the necessary software update lies a mala fide intention. Apple allegedly used its consumers as a means to accomplish its own goals. If a phone stops functioning normally, slows down and/or starts giving major power issues, the user would naturally think of buying a new device and abandoning the old one. This is where the company is alleged to have played its dirty game. It knew consumer behaviour very well. Between the release of iOS 10.2.1 and the company revealing its true functionality, Apple sold a number of iPhones to customers. The company created a situation to its own advantage. The numbers too speak for themselves. According to Apple’s annual report in 2018, it sold a whopping 216.756 million iPhones in 2017. The extraordinary sales of iPhones in that one-year period can easily be attributed to the public’s unawareness of the performance management feature associated with the update.

It is also argued in various lawsuits pertaining to this scam that enormous sales took place in 2017 because Apple’s customers, when making purchasing decisions, lacked important information on why they were facing such issues, due to which they unnecessarily had to purchase newer iPhones. Users innocently believed that the reduced performance was because of their phones ageing.

In a French lawsuit against Battery Gate, Apple was fined $27 million. In the lawsuit, the DGCCRF (Directorate General for Competition, Consumption and Fraud Prevention) of France observed that Apple’s conduct "constituted a misleading commercial practice by omission". He opined that if consumers knew that the update had the ability to lower their iPhones’ performance levels, many would not have opted for the update and a situation to replace the device with a new iPhone would not have arisen. Even if they had opted for the update, they would have known exactly the cause of the phone’s reduced performance and would have had to only then replace their batteries. This could have saved them a lot of money. Thus, Apple created a misleading market situation. The company misled the rationality of others for its own personal goals; this is very unethical.

Investigations

Investigations also revealed that the power management issue impacts the iPhone 6, iPhone 6 Plus, iPhone 6s, iPhone 6s Plus, iPhone SE, iPhone 7, and iPhone 7 Plus, but only in situations where battery health has declined. Affected iPhones saw throttling during times of peak power usage, such as when running a benchmark. It was a clear case of a deliberate slowdown of the processor to prevent Apple’s handsets with degraded batteries from shutting down when they were under high load.

Since Apple and its products have a global reach, cases were filed against the company in multiple countries. The company has been paying fines since early 2019, such as a $27 million fine imposed by French regulators and a $5 million fine imposed by Italian regulators.

Apple realised that its reputation was largely at stake due to the whole battery gate thing. People started losing trust in the company’s ethics. Apple was thus prompted to find ways to come out of this situation.

The company issued a public apology towards the end of 2017 for not being transparent about the update. It then offered its users battery replacements at discounted prices for their iPhone 6 and new models in 2018. In addition, customers who paid for out-of-warranty battery replacements for their iPhone 6 or older models in 2017 were provided a reimbursement of $50 by Apple.

iPhone users had filed a class-action lawsuit against the company. Because the company was making such offerings by paying customers for the damage, it pleaded with federal judges to dismiss lawsuits against them. It finally reached a $500 million settlement in the US in March 2020. The terms of the settlement stated that any current or former owner of an iPhone 6 or 7 can receive a payment of about $25 from Apple and a few specific class member names that were expressly mentioned would receive $1500 or $3500.

Apple never admitted to deliberate wrongdoing in the battery gate case. All it said was that it would be more transparent in future. It also said that their intentions were never bad. It deliberately limited the amount of power the phone’s processor could draw in certain circumstances, like cold weather, to avoid the phone randomly shutting down.

Similar news repeats in 2022–23

Apple’s battery gate fiasco again started doing the rounds in the UK in 2022. A consumer rights campaigner, Justin Gutmann, filed a legal claim against the company at the Competition Appeals Tribunal. Gutmann argued that Apple didn't disclose that it was going to deliberately throttle users' phones before it did so and that the company didn't give them the option to disable the setting. The complaint covers the iPhone 6, 6 Plus, 6S, 6S Plus, SE, 7, 7 Plus, 8, 8 Plus and iPhone X models. He argued that Apple on purpose misled users and instead of rolling out a battery recall or replacement programme, the company pushed out this feature to cover up the fact that older iPhone batteries were not able to cope with the new power demands put on them. He claimed that Apple concealed a tool in software updates that slowed their devices by up to 58%. He stated, "I am launching this case so that millions of iPhone users across the UK will receive redress for the harm suffered by Apple's actions."

If Apple loses this legal battle, it will have to pay damages of more than $950 million to 25 million people who purchased affected iPhones.

Conclusion

Transparency is a prominent pillar of corporate governance and anything that is not transparent is bound to be suspicious. Software maintenance and software engineering, just like other domains, have their own set of ethical considerations. A tech company is expected to respect these ethical considerations. Ethics lie at the crux of corporate governance. Firstly, the foundation of a company’s values should be made up of strong ethics and secondly, the members of the board are expected to be ingrained in the company’s ethical values. The corrupt ideas of a few members at the top can damage the company as a whole. As can be seen from this case, the reputation is loosened, a heavy monetary penalty is imposed on the company, gaining back the trust of people becomes difficult and the company starts losing goodwill. The goal of money-making per se is not wrong but validating such goals over consumers’ interests in an unethical manner is unacceptable.