Australia court fines Apple
US electronics giant Apple (AAPL) was recently slapped with a fine of 9 million Australian dollars, or ~$6.7 million, by an Australian court after “Error 53” problems disabled iPhones whose screens had been repaired by a third party.
Error 53 problem
According to regulators, Apple violated customers’ rights under Australian Consumer Law to repair devices. The issue first surfaced in 2016, when iPhone users that went to a third party to fix their devices for a cracked screen or a failing Touch ID-enabled home button complained that their phones became disabled and showed only an “Error 53” message.
In June 2017, the Australian Competition and Consumer Commission (or ACCC) held an undercover operation. It was disclosed that Apple staff in the Australian stores stated that they didn’t have a responsibility to service iPhones that had been repaired by a third party. Apple representatives allegedly refused to correct the disabled iPhones of nearly 275 Australian customers affected by Error 53 between February 2015 and February 2016.
Will Apple compensate customers?
According to the ACCC investigation, Apple is likely to pay 5,000 affected customers. According to the court, instead of a refurbished one, Apple could offer new devices to users if asked for a replacement. Apple has also committed to improving staff training and systems and procedures to ensure future compliance with Australian Consumer Law.
Apple relies on the iPhone
The iPhone contributes the most to Apple’s revenues. In the first quarter of 2018, iPhone shipments were at 52.2 million and contributed to revenue of $61.6 billion, up from the 50.8 million iPhone units shipped last year, generating revenue of $54.4 billion.
In fact, Apple stands second in the worldwide smartphone market at the end of the first quarter of 2018 with a 15.6% market share, according to IDC. Samsung (SSNLF) still has a dominant position with a 23.4% share of the market. China’s (FXI) Huawei, Xiaomi, and Oppo have the third, fourth, and fifth position in the global smartphone market.