AAPL Apple Inc

By Kimberly Chin 

Apple Inc. has agreed to pay as much as $500 million to settle a class-action lawsuit that claims the company slowed down the performance of older iPhones to spur customers to buy new ones.

The potential settlement would put a cap on one of the biggest legal challenges involving the Cupertino, Calif., company's smartphone since its 2007 debut.

Apple has agreed to pay owners $25 in cash per iPhone, with the company's payout totaling a minimum of $310 million but not exceeding $500 million. The per-iPhone payout could change, depending on the number of eligible devices. Apple said in 2017 that a software update introduced at the start of that year reduced the performance of older models.

The settlement covers U.S. owners of the iPhone 6, 6 Plus, 6s, 6s Plus and SE devices that ran the iOS 10.2.1 updates or later, as well as iPhone 7, 7 Plus and SE models that ran iOS 11.2 updates or later.

The settlement is awaiting preliminary approval in court.

Apple denied any wrongdoing and agreed to a settlement to avoid burdensome and costly litigation, according to court records. The company declined to comment.

"The settlement provides substantial relief to Apple consumers and, going forward, will help ensure that customers are fully informed when asked to update their products," said Joseph W. Cotchett, co-lead class counsel at Cotchett, Pitre & McCarthy LLP.

Dozens of iPhone customers have filed separate lawsuits since the end of 2017 accusing the company of curbing the performance of older iPhone models to get customers to buy new iPhones or replace their batteries.

Some of the lawsuits allege that Apple misrepresented the true nature and scope of the battery problems to customers, and failed to inform users last year that upgrading to new operating systems would force them to add a feature that slowed down the phone, according to court records.

After criticism from iPhone users and tech analysts, Apple issued an apology in 2017 acknowledging that its software had curtailed the computing power of some of its older models to prevent unexpected shutdowns. As a result, the company slashed the price for iPhone battery replacements in the coming year.

The company said previously that it would never intentionally shorten the life of its products or degrade performance to drive customers to upgrade.

The Justice Department and the Securities and Exchange Commission also are investigating Apple over potential securities violations related to the company's disclosure of a software update that slowed older iPhones. It has also faced questions from consumer and watchdog groups in Europe and China.

The company settled a class-action lawsuit in 2012 over the iPhone 4's tendency to drop calls. The company in a settlement agreed to pay iPhone 4 owners $15 each or give them a free smartphone bumper case.

Write to Kimberly Chin at kimberly.chin@wsj.com

(END) Dow Jones Newswires

March 02, 2020 17:06 ET (22:06 GMT)

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