Class Action Against Apple and AT&T is a BIG DEAL

A federal class-action lawsuit will move forward against Apple (Nasdaq: AAPL) and AT&T (NYSE: T) for “locking” iPhones to AT&T’s network, and Apple’s control over which apps can be installed on the owner’s phone.

This is an issue of whether a purchaser of iPhones has purchased all the ownership rights to the device or whether Apple somehow has reserved a parcel of ownership. If the courts rule Apple and AT&T may exert special control over iPhones after a customer has purchased the device, it sets the tone for hardware manufacturers to limit and manipulate the use of mobile communications.

Personally, I tend to favor freedom and innovation. Why should Steve Jobs decide whether Adobe’s (Nasdaq: ADBE) Flash should become extinct? Isn’t this the same thing as allowing only Microsoft (Nasdaq: MSFT) Explorer to work as a browser on Windows?

More importantly, the single biggest complaint about iPhone has been AT&T’s horrendous cell phone coverage. It is one thing to force consumers into a short-term exclusive agreement. It is another to force them to use a service provider which is not providing reasonable service.

We are still in only the very early childhood of the Internet. In order to encourage innovation and the birth of industries not yet imagined, we should hold off on giving a very small handful of early pioneers the power to kill off too many potential paths to our economic future.

A reasonable compromise is one which Toyota (NYSE: TM) has with its Prius customers. A Prius owner is free to modify their vehicle for their personal benefit. However, modification immediately terminates Toyota’s vehicle warranty. So, if we want to pimp our ride or install a 100 mpg battery, Toyota doesn’t have to deal with helping us anymore. Why not the same for the iPhone or any hardware for that matter?

Despite the depressing recession, desperation appears to be mothering ingenuity in many different industries. If the world does not come to an end, the next generation of Internet-based technology will absolutely be one of the most exciting developments the world has ever seen. Let’s hope at least our judicial branch can protect us from those who envision a much more monopolized future.

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