US authorities launch an investigation

Authorities in the US are investigating whether Apple misled investors by failing to tell them about a software update that slowed down older iPhones.

The most valuable company in the world is facing a wave of class action lawsuits alleging it deceived customers by reducing processor speeds in outdated handsets – a move Apple claims was designed to stop devices abruptly shutting down.

If the investigation by the Justice Department and the Securities and Exchange Commission finds Apple acted inappropriately, the lawsuits could see the company pay out millions of dollars in compensation.

In December, Apple admitted slowing down older iPhone devices with low-capacity batteries, saying it was a way of protecting the components of the iPhone 6, 6S, 7 and SE.

Customers queue outside Apple Regent Street ahead of the launch of the iPhone 8
Customers queuing outside Apple Regent Street ahead of the launch of the iPhone 8

US politicians have also written to Apple to demand an explanation – with the head of the Senate commerce committee asking why the technology giant would not provide free batteries if older ones were causing so many problems.

That letter came after French prosecutors launched an investigation into Apple’s conduct. In France, it is illegal to shorten the lifetime of products to encourage consumers to replace them.

In a post on its website, Apple apologised for the scandal, saying: “We know that some of you feel Apple has let you down. We apologise.

“There’s been a lot of misunderstanding about this issue, so we would like to clarify and let you know about some changes we’re making.

“First and foremost, we have never – and would never – do anything to intentionally shorten the life of any Apple product, or degrade the user experience to drive customer upgrades.

“Our goal has always been to create products that our customers love, and making iPhones last as long as possible is an important part of that.”

iPhone 7
The company apologised for slowing iPhone 6, 6S, 7 (pictured) and SE

In part, the fascination with whether Apple acted inappropriately is due to the company’s size, with its market capitalisation currently established at $851bn (£596bn).

Also in question is whether Apple can maintain the extraordinary growth it has enjoyed since the turn of the millennium, when its shares fell to $12.88 (£9) during the tech bubble crash.

Apple shares were trading at $167 (£117) on Thursday – recovering slightly from a 5% drop prompted by rumours that the company is planning to reduce production of the iPhone X amid slow sales.

The company is due to make an earnings announcement for the first quarter of 2018 later on Thursday.

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