Apple rebuts complaints of bending iPhones.
Shortly it was launched, the iPhone 6 has received complaints that the product bends when sat on in the pants pocket. Apple has to address the issue to avoid any drop in sales.
Apple has been enjoying brisk sales of iPhone 6 since after its launching. However, a problem arose with regard to iPhone 6’s quality: It bends when people sat on them when it is left inside the pants pockets. Videos of bent phones and demonstrations of people bending phones have circulated and have gone viral. The problem is one in a series of problems confronting the company. Earlier, it had a problem with an app or software on the iPhone. The company had to apologize and recall the software. With regard to the bending phones issue, the company did not apologize nor admit any defect in the product as the have been only a few complaints.
The issue could affect Apple in two ways. First, it could result in lower sales of the iPhone 6. Second and in turn, it could affect the prices of Apple’s stock especially if sales do not hit forecasts.
In the US, complaints regarding issues of this kind could be coursed through the American Arbitration Association. Should the product be found to pose some kind of threat to consumers or people’s society, the complaint may be filed at the Consumer Product Safety Commission. The issue of bending phones does not seem to have any safety concerns as yet. So, the case might not prosper in that government agency unless the matter could be shown to pose some kind of hazard to people. More likely, the case could be filed at the Federal Trade Commission. People could have been misled to buy the product because of claims that led to certain expectations. The raised expectations should be shown to have been brought about by certain claims made in the promotions of the product, specifically claims made in advertising.
The real problem lies in consumer perceptions. Apple is challenged to prove that criticisms and issues about the product are incorrect or statistically insignificant. The complaint about the product does not seem to be a matter that requires legal resolution. Bending phones does not seem to pose any danger to anyone. People’s expectations do not seem to have been the result of false or misleading claims. These are issues that have not yet arisen as the product has just been launched. Rather, the problems surrounding the iPhone 6 seem to stem mainly from the perceptions and expectations that consumers have of Apple’s image of high standards and quality. It is an image that Apple has carefully cultivated. The problem of bending phones may have met legal standards of quality. Unfortunately, it does not meet people’s perceptions of Apple’s own standards. Bending phones could be a normal occurrence in very thin phones with other brands. It is considered a defect with regard to Apple products. Apple will have to respond to the issue so that consumers will view the company in a more favorable light.
The arbitration game
The “investor-state dispute settlement” (ISDS) is a process that have been agreed on by several countries but unfortunately had been abused by some multinationals. Some multinationals sue and demand compensation for closure of operations to the detriment of the long-term interests of another country’s population.
The ISDS was first implemented in bilateral agreements between Germany and Pakistan. It seeks to protect the interests of multinationals operating in foreign countries from adversities. For justifiable reason, a multinational can demand compensation from the host country should its operations be terminated. It is clause that seems to have been abused by multinationals. For instance, the 2011 Fukushima nuclear disaster after the earthquake and tsunami in Japan led Germany to decide to stop all nuclear energy operations. Some Swedish companies were forced to close in Germany. In response, these Swedish companies demanded compensation from Germany.
The ISDS mechanism is provided in bilateral agreements between two countries. Any case arising as a result of the ISDS would involve several agencies in the two countries including the State Department or Department of Foreign Affairs, the Supreme Court, and the agencies regulating the affected industry. There is no single international body arbitrating ISDS cases. Instead, the cases are settled in the different government units of the countries involved.
The issue has conflicting and contrasting views. On one hand, there are the interests of investors of multinationals operating in other countries. On the other, there are the interests of the sovereign country where the multinationals have set up operations. Under normal circumstances, the relationship is a win-win proposition. The multinationals and correspondingly their investors earn profits. The host countries also earn through various means like employment for its people. Things go awry when disaster strikes like what happened in Fukushima and its impact on Germany and on Swedish companies in Germany. As result, some countries—except, most prominently among others, the US—have wanted to get out of the ISDS
The US understandably does not want to debunk the ISDS. It has many investors in many countries. Perhaps, it has more multinationals operating in other countries than anyone else. It will have to protect the interests of these investors in these multinationals. It would seem that the US also has enough laws and lobby groups to protect itself against any entity that would assert its rights under the ISDS. Should a problem like that in Germany occur, it would seem to have enough means to protect itself. While the case does not directly relate to the ISDS, the 1984 Bhopal tragedy demonstrates how US laws could protect the interests of its corporate citizens to the detriment of the populations of another country .
The Bhopal tragedy shows how the application of laws in one country can be one-sided. It was one case when US investor interests prevailed over the interests of large population in a village in India. As what happened between Germany and Sweden, the host country should always protect the interests of its people and the investing countries would seek to protect its investor interests. A balance between the conflicting and competing interests is still being sought.
Amazon and Hachette resolve dispute
Amazon arbitrarily sets prices for Kindle books in the interest of its customers, and when Hachette, a publisher, refused to agree to protect the interests of its authors and other stakeholders, Amazon banned Hachette books from its online stores. Hachette, with the support of authors, threatened lawsuits against Amazon, but the two companies settled out of court with Hachette getting much of its way.
Hachette is the fourth largest publishing company in the US. It refused to allow Amazon to set prices for its books. In response, Amazon stopped selling Hachette books on its sties. It also issued statements to customers blaming Hachette for the unavailability of its publications. The dispute resulted in a dip in the sales of Hachette’s books. This in turn adversely affected Hachette’s authors. It also affected US customers who want or need Hachette books as Amazon accounts for about 50% of book sales in the US.
The Hachette authors formed an association with about 1,500 members—Authors United—and started moves against Amazon. They also allied themselves with the US biggest association of authors, the 9,000-strong Authors Guild. Amazon settled with Hachette as the authors were preparing charges of antitrust violations against Amazon.
Amazon also suffered from the publicity generated by the dispute. It had been portrayed as a bully and a menace in the industry. This dent in its reputation could have serious repercussions on Amazon should the dispute escalate into a full-scale court battle.
Issues of this sort are usually arbitrated at the US Justice Department. The two companies, Amazon in particular, did not wait for the courts to settle the issue.
Very low pricing is the main issue in the dispute. Amazon claims that it is arbitrarily setting low prices to benefit its consumers. At the same time, it is obviously trying to gain advantage over its competitors. It goes against traditional practice of publishers setting prices for their books. Amazon’s pricing scheme reduces the publishers’ profits and correspondingly those of their stakeholders including authors. It is a long-standing issue between Amazon and publishers. Amazon loosened its control a bit when competitors like Apple came in.
The agreement between the two companies seems to go against Amazon’s strict position in the past and also against the US Justice Department decision against Apple and the major publishers. That decision pertains more to the collusion of publishers as they may be forming a cartel or monopoly. However, it is still about setting prices.
In the end, it is a question of which interests should be more important: those of the publishers or those of the customers.
Appendix: Screen Shots of Articles
Works Cited
Broughton, Edward. "The Bhopal Disaster and Its Aftermath: a Review." Environ Health 4.6 (2005). Web. 24 Nov 2014. <10.1186/1476-069X-4-6>.
Streitfeld, David. "Amazon and Hachette Resolve Dispute." The New York Times 13 Nov 2014. Web. 21 Nov 2014. <http://www.nytimes.com/2014/11/14/technology/amazon-hachette-ebook-dispute.html?_r=0>.
The Economist. "The Arbitration Game." The Economist 11 Oct 2014. Web. 23 Nov 2014. <http://www.economist.com/news/finance-and-economics/21623756-governments-are-souring-treaties-protect-foreign-investors-arbitration>.
Wakabayashi, Daisuke. "Apple Rebuts Complaints of Bending iPhones." The Wall Street Journal 25 Sep 2014. Web. 23 Nov 2014. <http://online.wsj.com/articles/apple-defends-against-complaints-of-bending-iphones-1411668618>.
