Industry Committee on March 1st, 2018

[Maxime Bernier, Conservative, Beauce, QC]

Okay, but you know what Apple said after that happened. Do you think they were doing that unintentionally or was it intentional to try to sell new phones?

[John Poole]

I'm not sure whether they were doing this intentionally to sell new phones.

I believe they should have been very transparent with this at the beginning when they reduced the performance of the phone. The fact that this was a mystery to basically all consumers, including me.... I think I'm fairly well positioned to comment on performance of phones, but this result caught me completely by surprise when I discovered it in December. I wish Apple had been very transparent from the beginning.

What their motives were, whether this was to sell more phones, to avoid a recall of existing phones, I unfortunately can't comment to that.

[Maxime Bernier, Conservative, Beauce, QC]

All right, thank you.

I enjoyed your presentation on the Competition Bureau. You said that we cannot become involved in the bureau's internal affairs, and that is quite understandable.

Having said that, I imagine that consumers are quite concerned about what happened. Has the bureau received complaints about this specific file?

[Alexa Gendron-O'Donnell]

Unfortunately, whether or not we have received complaints and the number of complaints is also confidential information.

However, as you mentioned, our bureau accepts complaints and anyone can call us and report their concerns.

[Maxime Bernier, Conservative, Beauce, QC]

I tried.

Thank you.

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Poole, in your opinion, did Apple misrepresent its product to the public in any way?

[John Poole]

It's hard to say. The claims that Apple makes about performance tend to coincide with device launches. That's when they really do talk the most like, “This phone is faster than the old phone; this is roughly by how much.”

Most people in the industry look at the figures that manufacturers present as an optimistic best-case scenario. A device manufacturer will find the one benchmark that shows a 2X performance and will say, “up to two times the performance”.

There are also, of course, factors that are outside a device manufacturer's control that might affect the performance of its phones. A great example of this would be thermals, where if your phone is in a hot environment, it will more likely run slower than the phone in the cold environment, simply due to the mechanics of how modern integrated circuits work.

In this particular case of having the battery start to slow down, I think Apple wasn't as forthcoming as it could have been about the condition of the battery. We've heard reports of users with a slow phone, and this was ahead of Apple's battery upgrade program that it announced in late December. They would know their phone was slow. They would be able to verify this with Geekbench or with other tools, and they would take their phone into an Apple store and say, “My battery is slow; I would like to upgrade this”, and Apple would say say, “No, no, your battery is fine.” Clearly, Apple wasn't being as forthcoming as it could be.

To speak particularly to deceptive claims, I'm not sure how much Apple claims of its iPhones 6s two years after they've been released. The question is, of course, do consumers expect performance to degrade over time? I would expect the average consumer would not. Consumers are used to the idea of battery charge decreasing over time. As I mentioned before, lithium ion is a fairly established technology and everybody understands the batteries will reduce capacity over time. I don't think anybody expects their phone to suddenly get slower because of the quality or the age of their battery.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We're going to move on to Mr. Masse. You have five minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

One of the reasons I proposed the study was to ensure that Canadian consumers are going to receive fair and equitable treatment. It's just my opinion, but I believe that the Competition Bureau does an excellent job with the resources it has and the legislation that's in place. However, it fails and pales in comparison to what other countries have in order to deal with consumer-related issues, not only in terms of competition but also privacy, and also the protection of public safety.

My first question to Mr. Poole is this. In your analysis of this, have you done this type of analysis for any other phones or operating systems, and if you have, what were the results of those? Your analysis that you did here with the graph is a good one for people to grasp and whatever. Is this a normal practice that you would do, or is this something that was developed because of the complaints coming in on the particular phones that you did them on?

[John Poole]

We developed these graphs in response to the public interest in the iPhone battery issue. We have run these charts for other phones. We've done a selective sampling of popular android handsets, as well as laptop computers, anything that basically runs off a battery. These problems currently are unique to iPhones.

[Brian Masse, NDP, Windsor West, ON]

Have you subsequently done analyses on any other newer models of iPhones or previous phones, or has it just been this particular model?

[John Poole]

We've looked at the iPhone 6s, and we've also looked at the iPhone 7. The iPhone 7 has a similar issue. The performance issue started appearing in iOS 11.2. We believe it's too early for this defect to show up in the iPhone 8 or the iPhone 10.

[Brian Masse, NDP, Windsor West, ON]

One of my concerns is whether this is a one-off or a pattern of behaviour. We've seen cases similar to Volkswagen and others, and I was involved previously with the Toyota file, where there were several statements by the company that turned out to be erroneous in terms of consumer protection and the problems related to their products.

Ms. Gendron-O'Donnell, I know you can't comment on specific cases, but will you be examining market share? Is that part of the process? In terms of a company releasing a product or influencing a product that's different from what they marketed and they gain market share based upon that, is that part of an overall analysis in terms of an investigation to see if it has advanced the company's percentage of market share and changed that for consumers and also other competitors?

[Alexa Gendron-O'Donnell]

Again, without being able to speak to the specifics of this case, in a general sense, the analysis that we undertake really depends on the part of the act that we are looking at. For example, in an abuse of dominance matter we are certainly looking to see whether the company is dominant. In a deceptive practices matter, I believe what you're referring to would come into play if we determined that penalties were required. We have a list of factors that can come into play when we're determining, for example, how large an administrative monetary penalty should be. One of them could in effect be how long the conduct took place, what was the breadth of the conduct, and the extent to which there were other factors such as profit made from this conduct. In certain ways, those kinds of analyses would fit with our investigations.

[Brian Masse, NDP, Windsor West, ON]

With that, not to this specific case, but I am of the opinion that the $35 compensation for the batteries is tenuous at best, especially with shipping costs. That's my personal opinion. I don't believe it's sufficient for consumers. However, for compensation on any product or service are you able to levy any type of correction, and can it be different from what's proposed in other countries?

France, Israel, South Korea, and the United States are having different investigations. Are you able, under the legislation, to communicate with their different agencies and organizations, governmental and justice, to participate in any type of information sharing?

[Alexa Gendron-O'Donnell]

I will say from a general perspective that we have a lot of co-operation with our counterpart agencies, as I mentioned in my opening remarks. Again, I can't speak to this case but we have various MOUs with all of these different agencies that allow us to speak with them, if it's appropriate, if we are enforcing the act.

With respect to how, I think what you're referring to is we're going back to this idea of what a remedy could look like.

[Brian Masse, NDP, Windsor West, ON]

Yes.

[Alexa Gendron-O'Donnell]

When we, for example, negotiate consent agreements, that can take a large variety of forms. I'll point to a previous case we had with Telus where they committed to restitute up to $7.34 million to affected consumers. The form that penalty takes is very case-specific, depending on the facts of our investigation.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Thank you, Mr. Chair.

[The Chair, Liberal, Dan Ruimy]

We're going to move to Mr. Baylis.

You have five minutes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Thank you, Chair.

Mr. Poole, I'd like to understand a bit more of the technicalities. If I understood you correctly, barring this update, once my phone hits about 30% left on the battery, what will happen if I don't do this update?

[John Poole]

If you were not to apply this update to your phone, when your phone hits approximately 30% charge, if your battery had degraded past a certain point, then your phone would be susceptible to shutting down unexpectedly. Should, let's say, you launch an application or something, it would just shut off immediately.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Did that problem exist on previous phones? It started with the iPhone 6. Is that correct?

[John Poole]

I believe it did start with the iPhone 6. It was a large issue with the iPhone's success that attracted some media attention in approximately December 2016. That was the first phone where I'd heard of this in a widespread manner.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

When that happens, I'd have a choice normally if I saw that happening. What would I normally have done if I didn't do the software update?