On December 2nd, 2020 it had been reported that Apple is now facing lawsuits all over Europe for their practices of slowing down older iPhone models with software updates to increase sales in newer models. The company has cases filed in Belgium, Spain, and expect to see more cases filed in Portugal and Italy in the coming weeks, furthermore they have just recently settled multiple lawsuits in the United States for engaging in the same practice.
This case will examine a variety of ethical theories including Individualism, Utilitarianism, Kantianism and even Virtue Theory, as well as evaluate each case to see if the company was actinging ethically or not. Starting with Individualism, Apple was in fact acting ethically in this case as their primary goal was to maximize profit. Meanwhile, according to Utilitarianism, Apple’s actions are highly unethical as they are not spreading happiness but creating harm on their customers and those who sell Apple products. In accordance with Utilitarianism, Kantism also views Apples’ actions unethical as they are not motivated by good will. Finally Virtue Theory also sees Apples actions as unethical because they fail one the four categories of business virtues being that they did not exercise fair practices.
Ethics Case Controversy:
Apple is a leading developer and manufacturer in the technology industry and is most famous for their vast selection of Iphones. But what many customers are slowly realizing is the inconsistency in their products over the years specifically their performance. Within the past week many reports have surfaced indicating that Apple is now facing serious lawsuits and allegations all over Europe and the number of claims filed are estimated to continue to increase. The legal action they are facing is over there highly “controversoal practice of slowing down older iPhones”(CNNLondon). The advocacy group who is behind the lawsuits against Apple is known as the “Euroconsumers”. The Euroconsumers are an organization that works to protect consumer rights and ensure fair markets all over Europe. In a statement from the Euroconsumers the “class action lawsuits cover up to 2 million iPhone 6, 6 Plus, 6S, and 6S Plus devices”(CNNLondon). These devices are consumers residing in Portugal, Spain, Belgium, and Italy. Previously the two parties attempted to resolve the issue but ultimately never came to an agreement which is what led to the lawsuits being filed. The purpose of the lawsuits is that the Euroconsumers are seeking compensation for each consumer of an average of $72.30 per device.
This is not the first time Apple has faced legal action in regard to similar actions as just back in March they settled a lawsuit accusing them of “slowing down older iPhone models to compel users to buy new ones”(CNN March). The settlement could cost Apple up to $500 million, where each affected consumer is available for compensation of $25 per device. You must file a claim in order to receive compensation but another major part of the settlement is that Apple will pay a minimum of $310 million regardless of the amount of claims. Back in December of 2017 Apple admitted that they used software updates to slow down older iPhones in response to consumer backlash and tech analysts who stated the updates were affecting the performance of the iPhones in a negative way. During this time was also when many consumers started to believe Apple was doing this in attempts to force users to upgrade to the latest models constantly. But Apple responded and apologized with a statement saying the practice was “aimed at addressing issues with older lithium-ion batteries that would make the phones suddenly shut down to protect their components”(CNN March). In addition they also later released an apology statement where they announced the price reduction in battery replacement from $79 to $29.
Below are images of all the possible affected devices included in both U.S. and European lawsuits against Apple. Meanwhile back on November 19 2020 it had been reported Apple will pay “$113 million to settle an investigation over how Apple was not transparent about its iPhone battery problems”(CNN Business 113). These battery problems led to devices unexpectedly shutting down, and in response to the issue Apple pushed a software update in December of 2016 which negatively impacted the overall performance of older models. As each year has passed Apple continues to rack up new lawsuits every year and all of them have one thing in common and it is that their software updates are designed to slow down older versions to increase customer upgrades.
The stakeholders in the Apple lawsuits include all the employees, employees families, customers, sellers, and even competitors. The customers are the stakeholders who are most affected as they are the ones using Apples devices. The consumers are the ones who are being treated unethically as they are being pressured into spending more money on defective products. Furthermore, it is very common for families to all have the same line of cellular devices and in many cases the exact same model. Therefore many families were all affected and possibly at the same time making it an even more of an inconvenience. Meanwhile while this scandal was becoming public knowledge Apple faced heavy backlash and many of their employees were the ones who had to deal with it, especially those who worked in customer service at any of their vast locations throughout the world. In addition those who sell Apple products are also being treated unethically because they were most likely unaware of the situation and defects of certain models. As a result of this they were not only selling but because they promoted the products and this can come back to harm the seller regardless of if they are actually part of Apple or not. As a culture we need our cellular devices for everyday life. They have become an essential part of it and because of the situation, Apple as well as their other sellers will most likely lose more customers over the scandal which is rightfully deserved for Apple not so much the sellers.
There are three main ways in which the idea Individualism is based upon, the first is in accordance to Miltion Friedman, who believed “the only goal of business is to maximize profit for the owner or stockholders within the law”(Salazar 2). The next main idea was founded by Tibor Machan, where his definition of Individualism is “The only direct goal of a business is to profit, and the primary obligation of the business person is to maximize profit within the law(Salazar 3). Machans ideas are most commonly known as Classical Individualism. Finally it is important to keep in mind while profit is the only goal under these ideas, but regardless they still believe that business needs to be socially responsible while doing so.
This now ponders the question of how Individualists view Apples practices? In summary Apple is actually following the theory as their primary goal was profit and that is the only goal under Individualism. In January of 2018 Apple reduced the price of a battery replacement in response to the issue at hand, Tim Cook later noted the revenue for 2018 was partly hit as a result of the price change. But Apple's practices of slowing down older iPhones is not socially responsible, it is extremely harmful and something to keep in mind when purchasing Apple products in the future. The negative connotation that could be attached to Apple products could seriously deter many customers which will also lead to loss in profit, thus failing the primary goal of Individualism. According to Individualism, consumers are being treated ethically, as Apple's primary goal to maximize profit did work at the time. But they were able to do so through the use of slowing down older iPhone models with software updates to push customers to buy upgrades earlier than they needed too. Technically speaking Apple did not break any direct laws that state they are not allowed to engage in this type of practice, therefore under Individualism ideas Apple was not in the wrong.
Utilitarianism beliefs are founded upon the idea of happiness. Their ideas believe that “Happiness or pleasure are the only things of intrinsic value” and that we are to “maximize happiness in yourself and others and do so impartially”(Salazer 2). While trying to attain the goal of happiness, Utilitarianism also considers all affected parties and how each will be affected without increasing harm or pain on another party. The affected parties of this scandal are known as the Stakeholders. The stakeholders who were most affected were the customers of Apple. Back in 2015 was when the iPhone 6 models were introduced to the iPhone family at a starting retail prince of $649. In addition it is very common for people to purchase these phones with financing and understandably so. But Apple does allow consumers to purchase new iPhones regardless if the consumer's current phone is fully paid off or not. As a result of this some consumers ended up with two Iphones not paid off and the newest model they purchased a year ago randomly shuts off and the only option is a new one. Although the effects are not seen or felt right away, in the long run they are especially fiscally speaking. Meanwhile the second group of stakeholders, the employees, benefited from the company doing so well which increased some benefits as an employee. But they also were the ones who had to deal with angry consumers, and give consumers answers to problems they do not have. Lastly, we have the sellers of Apple products, and at the time they did benefit as overall profit was increasing in the sale of Apple products. But again when it became public knowledge of Apples despicable actions resulted in severe backlash in those who sold Apple products because they are associated with the company but it was unfortunately something the sellers could not control. The effects of Apple's practice of slowing down older iPhone models has a trickle down effect on the stakeholders as over time it did not spread happiness in fact they did the complete opposite.
Kantism business ethics has four main principles: act rationally, allow and help people make rational decisions, respect people and their individual needs and differences and finally to be motivated by good will. Actions that come from good will are ones where you are acting rationally and are rightly motivated to do so. These ideas were first developed and adopted by Immanuel Kant who lived from 1724 to 1804. In addition the ideas of Kantism explicitly state it is wrong to manipulate and or exploit people for a personal advantage. Immanuel Kant was a very smart man as he created a test that decides if an action is to be permissible or not under Kantism, this test is known as the Categorical Imperative or Law of Rationality. The most important part of the Categorical Imperative is The formula of Humanity in which you are never to use someone as just a means both parties must benefit from the action.
According to the theory of Kantism, Apple’s practice of slowing down older model iPhones fails the categorical imperative because they are using their own customers as a mere means for only the companies benefit. The results of the practice really increased Apple's profit over time as the software updates purposely slowed down but also the batteries in the devices could not withstand the newer models software. Instead of Apple making this public knowledge and offering an alternative solution to consumers to keep them happy they tried to cover up the issue and used it as a chance to increase overall profit of the business. Another example is when Apple offered a price reduction for the cost in battery replacements. But the only reason the iPhones needed a battery replacement was because they could not support the new software that Apple promoted and offered for all iPhones. Apple’s actions go completely against the theory of Kantism, and the company must find a different, ethical way to increase their profits.
Virtue Theory is a set of business ethics ideas which are based upon Aristotle Ethics. There are four cardinal virtues of character in business and they are as follows; courage, honesty, temperance, and justice. In addition, Virtue Theory also is based upon something known as the Doctrine of the Mean, where it is believed to find the mean between extremes. This translates as finding the perfect feeling point, but not living in moderation(Salazer 2).
After examining Apple's case it is clear through Virtue Theory, it is clear Apple was not acting ethically. First, they were not acting courageous because they took advantage of their customers. In addition they were given multiple chances to do what was right and come forward but they choose not too. The second virtue, Honesty was not adopted and applied to their practice because they did not make their customers aware of possible battery issues or that the new software updates will slow down certain models. Furthermore when Apple did choose to come forward it was too late for the knowledge to have a positive effect on the situation for consumers. The third virtue, temperance measures if Apple had reasonable expectations and desires and in their case they did not. Unfortunately Apple’s desire in this case was to increase profit which is understandable, but their expectations that using this technique was fair to consumers is not reasonable expectations for a business to have. The last cardinal virtue, justice measures for “fair practices, good ideas, hard work, and quality products”(Salazer 6). Apple was not just to their consumers, and sellers. Their practice was unethical and not hard work, it was a manipulative act to drive up profit. Apple’s ideas and business practices are highly frowned upon in accordance to the Virtue Theory.
Justified Ethics Evaluation:
In my opinion, Apple’s actions were highly unethical and unprofessional. Apple could have avoided their battery issue completely if they came forward in the first place and planned a proper solution to the problem. Instead Apple chose to use this opportunity to take advantage of their customers, hoping no one would question or notice that it was the software updates that were causing the cell phones to slow down. Apple has been one of the leading companies in the electronic industry and have the necessary skills, experience, and leadership to be able to produce a fair solution for both Apple and their consumers. Apple neglected their customers and ignored any risk, putting their customers at harm for profit.
Company Action Plan:
Apple is up against major allegations and so far they continue to lose every court case they have been involved in regarding this issue. They have two lawsuits in the U.S. one was investigated by 34 states. In addition they will have to pay a minimum of $310 million because of that investigation. In November 2020 they settled another lawsuit where they will have to pay $113 million for purposely slowing down older iPhone models. These lawsuits are well deserved compensation for the stakeholders affected by their actions. The company was aware of the battery problem and attempted to solve it through software updates and those did not work but they used their mistake to take advantage of their customers as they purposely slowed down older iPhone models. Furthermore, when the customers began to realize what was happening Apple denied the allegations of purposely slowing down iPhones, but did admit to not disclosing the battery issue to the public. They later offered a price reduction in battery replacement which was one positive, but that did not help those who were affected before they implemented that practice. A large majority of consumers paid full price for a battery replacement or worse had to purchase a new model and did not receive any form of compensation for those actions. Apple did not hold themselves accountable for their actions, they ignored the needs of their customers and violated their rights, all to increase profit. The end result of their actions is costing Apple a fortune, and as more cases are filed it is increasingly more likely that their consequences have just started coming.
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Kelly, S. (2020, November 19). Apple to pay $113 million over deliberately slowing down iPhones. Retrieved December 15, 2020, from https://edition.cnn.com/2020/11/19/tech/apple-battery-settlement/index.html
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