Apple hit by class action lawsuit for weak iPhone sales in China

A new lawsuit emerges after Apple’s settlement with Qualcomm.

credit: DFIC

Sluggish iPhone sales in China, the world’s largest smartphone market, has been a headache for Apple since last year, but a recent class action lawsuit brings the US tech giant’s woes to a whole new level.

Apple, along with its CEO Tim Cook and CFO Luca Maestri, have been named as defendants in a securities fraud lawsuit. The class action suit, represented by Robbins Geller Rudman & Dowd LLP, was filed in the Northern District of California by the City of Roseville Employees’ Retirement System, a pension plan in Michigan.

The class action complaint, which was filed on the same day when Apple announced a surprise legal settlement with Qualcomm, said the Cupertino-based company had “failed to disclose adverse information regarding Apple’s business and prospects” in the midst of the ongoing Sino-US trade war.

The complaint said Apple’s business in China is “more susceptible to geopolitical trade manoeuvres by the United States and China,” and that “tariffs imposed by the United States have also threatened sales.”

Apple’s iPhone pricing strategy has also been called into question in the complaint, because the strength of the US dollar and the high price of iPhones “placed the iPhone out of reach of many Chinese consumers who might otherwise have upgraded.”

While the sales of its local competitor Huawei grew 23% in the fourth quarter of 2018, iPhones recorded a 20% year-on-year drop in sales in China, according to market intelligence firm IDC.