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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud,

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Speaker 1: and on Bloomberg dot com slash podcasts. President Donald Trump

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Speaker 1: issued an executive order to keep the prisoner Guantanamo Bay

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Speaker 1: in Cuba open. He made the announcement during his State

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Speaker 1: of the Union address, asking Congress to ensure that in

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Speaker 1: the fight against ISIS and al Qaeda, we continue to

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Speaker 1: have all necessary power to detain terrorists wherever we chase

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Speaker 1: them down, wherever we find them, and in many cases

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Speaker 1: for them, it will now be Guantanamo Bay. It's a

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Speaker 1: major reversal of the policy of former President Barack Obama,

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Speaker 1: who would order the detention facility be put on a

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Speaker 1: path off to closing and the terrorists suspects held there

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Speaker 1: tried or transferred to facilities elsewhere. European allies and Muslim leaders,

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Speaker 1: among others, have expressed strong opposition to how detainees have

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Speaker 1: been held at Guantanamo without charges and in grim condition.

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Speaker 1: Joining me is J. Wells Dixon, a senior staff attorney

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Speaker 1: at the Center for Constitutional Rights. Well, the facility holes

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Speaker 1: only forty one prisoners now and no new prisoners have

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Speaker 1: been sent there since Trump was elected. Is there a

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Speaker 1: reason to keep it open. There's no good reason to

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Speaker 1: keep it open. I think, unfortunately, the president's decision to

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Speaker 1: keep it open surprising. As unsurprising as it is, you know,

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Speaker 1: it is really confirmation of his willingness to pander to

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Speaker 1: his shrinking political base at the expense of national security

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Speaker 1: and human rights, because there is no, um, there is

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Speaker 1: no reason, actual foreign policy reason or national security reason

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Speaker 1: to keep it open. Quite quite the contrary, President Obama

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Speaker 1: tried to have Guantanamo closed and failed after some seven years.

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Speaker 1: Are their practical problems with closing it? Well, there's a

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Speaker 1: lot of blame to go around when it comes to

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Speaker 1: the fact that Guantanamo is still open. But I think

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Speaker 1: it's important to recognize that it was the policy consensus

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Speaker 1: of both President Obama and President Bush that the prisoner

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Speaker 1: Guantanamo needs to be closed, right and and Donald Trump's

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Speaker 1: uh decision to to make it the formal policy of

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Speaker 1: the United States to continue to detain Muslims there forever

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Speaker 1: is really very significant. Um, because you know, even if

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Speaker 1: even if you don't prioritize human rights, Uh, they're keeping

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Speaker 1: Guantanamo open undermines our national security. Right, Consider the President

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Speaker 1: talked about ISIS. Consider the fact that ISIS invokes the

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Speaker 1: very existence of Guantanamo as a recruiting tool. Right. ISIS

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Speaker 1: and other terrorist groups use the propaganda value of Guantanamo

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Speaker 1: to recruit new members to attack US. So keeping the

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Speaker 1: prison open is really counterproductive. Now, the detainees that are there,

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Speaker 1: have they been tried. Almost no one at Guantanamo has

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Speaker 1: been tried, you know, there are there have been a

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Speaker 1: total of seven hundred and eighty Muslim men and boys

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Speaker 1: held at Guantanamo since it opened sixteen years ago. And

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Speaker 1: you know, more people have died at Guantanamo than have

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Speaker 1: been convicted there. I mean, Guantanamo is really a complete

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Speaker 1: failure when it comes to prosecuting alleged terrorists. And UM,

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Speaker 1: you know, the that's not going to change, right because

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Speaker 1: it is endemic to UM to a prison that was

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Speaker 1: designed to be entirely outside the law. I mean, you know,

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Speaker 1: the for example, the nine eleven case has been going

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Speaker 1: on for years and years at Guantanamo and we are

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Speaker 1: nowhere near the actual start of that trial. I mean,

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Speaker 1: it's been a complete failure. And if you know, if

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Speaker 1: if I were um uh nine eleven victim or a

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Speaker 1: family member of a victim, I would be outraged that

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Speaker 1: the alleged perpetrators of of that terrorist attack continued to

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Speaker 1: be held in Guantanamo rather than be tried in federal court. Um.

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Speaker 1: President Trump, during his speech, and I take it he

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Speaker 1: was referring to the prisoners who have been released from Guantanamo,

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Speaker 1: said we foolishly released hundreds and hundreds of dangerous terrorists,

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Speaker 1: only to meet them again on the battlefield, including the

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Speaker 1: ISIS leader Al Baghdatti, who we captured, who we had

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Speaker 1: who we released? What about that? Have some of the

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Speaker 1: people released come back to fight against the US? Well?

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Speaker 1: President Trump's statements in that regard are absurd. For one thing,

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Speaker 1: All Beg Dotty was never held at Guantanamo. All Beg

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Speaker 1: Dotty was held into rock and he became radicalized because

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Speaker 1: of what the United States did to him in detention,

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Speaker 1: first of all. Second of all, the the the claim

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Speaker 1: that detainees who have been held at Guantanamo have gone

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Speaker 1: on to do bad things after their their release is

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Speaker 1: wildly overstated. Right, the Director of National Intelligence publishes figures

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Speaker 1: um statistics on this issue and has said that, you know,

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Speaker 1: less than five percent of the individuals held at Guantanamo

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Speaker 1: who were released by President Obama have gone on to

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Speaker 1: do anything contrary to the interest of the United States.

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Speaker 1: The other thing I'll say about it is, you know,

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Speaker 1: if a former detainee writes an editorial, for example, in

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Speaker 1: the New York Times criticizing American foreign policy, that gets

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Speaker 1: held against them. I mean, they get put on that

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Speaker 1: list as a consequence of that. UM. So you have

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Speaker 1: to be very skeptical. But you know, even if you're

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Speaker 1: not a skeptic and you're you're inclined to believe the

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Speaker 1: government take them at their word. When the Director of

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Speaker 1: National Intelligence says the figure is less than five percent,

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Speaker 1: statistically insignificant. There's been a lot of discussion about an

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Speaker 1: Apple software update released in early seen that slowed older

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Speaker 1: model iPhone models, but apparently there wasn't enough discussion by

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Speaker 1: Apple before the software update. The Department of Justice and

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Speaker 1: the Securities and Exchange Commission are investigating whether Apple violated

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Speaker 1: securities laws by not making proper disclosures about the software update.

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Speaker 1: According to people familiar with the matter, and Apple spokeswoman

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Speaker 1: told Bloomberg News that it has received questions from some

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Speaker 1: government agencies and is responding to them. My guest is

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Speaker 1: Armor ben Shahar, professor at the University of Chicago School

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Speaker 1: of Law. Armory, will you first described the slowdown and

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Speaker 1: Apple's response. Yes, a. Apple admitted that the software updates

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Speaker 1: deliberately slowed down the performance of old iPhones. They explained,

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Speaker 1: according to the apology that they posted online, that these

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Speaker 1: slowdowns were meant as an upgrade, not as a derogation

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Speaker 1: of the service, and they were intended to stop the

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Speaker 1: unintended shutdowns of phones with old batteries. So rather than

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Speaker 1: force people to replace batteries, they said, we would slow

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Speaker 1: down the phone and avoid that. Of course, the result

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Speaker 1: was the people head to replace not the batteries, but

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Speaker 1: the phones, not knowing that the problem is all stems

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Speaker 1: from the software updates. Now, our justice and the sec

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Speaker 1: looking at the same or different possible violations of the law.

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Speaker 1: So you know, securities fraud here is kind of a

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Speaker 1: byproduct or an echo of the fraud that is alleged

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Speaker 1: to have occurred in the product market. There are, by

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Speaker 1: the way, now many class action lawsuits and investigations by

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Speaker 1: state Attorney general for the possibility of fraud committed by

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Speaker 1: Apple in the product market against consumers. At the same time,

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Speaker 1: whenever there is duch fraud in the product market, it

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Speaker 1: affects the stock price. And Apple was bleeding, so it

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Speaker 1: made statements to the public and to their investors about

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Speaker 1: what they did and why. If these statements were in

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Speaker 1: some sense incomplete fraudulent misleading, that could lead to also

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Speaker 1: this echo of securities liability. Here's Apple CEO Tim Cook's explanation.

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Speaker 1: He told ABC News earlier this month that when the

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Speaker 1: company put out the sow Square update, we did say

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Speaker 1: what it was, but I don't think a lot of

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Speaker 1: people were paying attention, and maybe we could have been clearer.

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Speaker 1: Is that a good enough excuse to avoid legal action.

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Speaker 1: I don't think so. I mean, if you look clearly, yes,

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Speaker 1: Apple said things, and in their contract with consumers, in

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Speaker 1: the seventeen page of tiny fined print ten thousand words,

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Speaker 1: there is a statement and that says something like we

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Speaker 1: don't warrant YadA, YadA, YadA. You know how these things go.

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Speaker 1: So they said it in the contract, but they also

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Speaker 1: created a completely opposite impression for people when they recommended upgrade.

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Speaker 1: Those little flashes that you get on your phone or

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Speaker 1: a MacBook that constantly ask you to upgrade and suggest

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Speaker 1: upgrade full of all sorts of junk notices that prompt

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Speaker 1: people to do things. But the one thing that is

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Speaker 1: not was not said to people in these occasions is hey,

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Speaker 1: if you do that, by the way, your device will

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Speaker 1: no longer be as functional as it used to be. So,

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Speaker 1: you know, to let be, we have the real choice

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Speaker 1: that failure is more than an oversight. This isn't the

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Speaker 1: first time that Apple has been accused of deliberately throttling

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Speaker 1: the performance of its older phones. One accusation has been

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Speaker 1: that Apple deliberately slows down the old phones to make

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Speaker 1: people buy the new phones. Apple denies that has there

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Speaker 1: ever been any proof of this planned obsolescence. Well, you know,

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Speaker 1: the tech blogs are full of discussion about sorry about

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Speaker 1: the planned obsolescence of phones. It just seems a little

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Speaker 1: too much of a coincidence that as soon as devices

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Speaker 1: new devices and new generation of devices is rolled out,

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Speaker 1: the software of the old devices is slowed down in

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Speaker 1: a way that would obviously increase the demand and bring

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Speaker 1: Apples cash register for new phones. So This is kind

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Speaker 1: of circumstantial. I don't know that there is any stronger

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Speaker 1: evidence than that, but security class actions, pay litigation as

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Speaker 1: well as consumer litigation could try to smoke these things out.

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Speaker 1: As you mentioned. So, Apple is facing at least eight

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Speaker 1: class action lawsuits in federal courts in New York, California,

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Speaker 1: and Illinois, and one in Israel. So what are the

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Speaker 1: allegations there? The allegations there would be primarily deception, that

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Speaker 1: Apple violated consumer protection laws that require them to give

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Speaker 1: people the food truth, not just part of the truth.

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Speaker 1: There is you know, their precedent for these for businesses

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Speaker 1: trying to prompt people to do to buy, to purchase

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Speaker 1: more products that are not needed, and the courts have

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Speaker 1: found often in the past in such situations there is deception,

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Speaker 1: there is fraud, and if there is fraud then there

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Speaker 1: is there will be damages under state consumer protection laws

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Speaker 1: that could be very high. And I have to say, well,

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Speaker 1: I think that many class actions regularly filed against tech

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Speaker 1: companies are frivolous. This one since quite meritorious. Well now

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Speaker 1: throwing at that point. As part of its public apology,

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Speaker 1: Apple cut the prices of battery replacements in its stores

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Speaker 1: from fifty doll from which was a fifty dollar discount.

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Speaker 1: Would consumers get more than that realistically in a class action?

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Speaker 1: I mean often you get coupons or reimbursements or some

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Speaker 1: coupon for something in the future, and here there's already

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Speaker 1: a fifty dollar discount that Apple is given. Yeah, that's

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Speaker 1: a very good question. I think our class action apparatus

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Speaker 1: does not do well in terms of getting money into

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Speaker 1: the pockets of consumers. It does do well in terms

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Speaker 1: of getting money out of the pockets of businesses. If

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Speaker 1: Apple gets to pay into whatever fund to the lawyers

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Speaker 1: and somewhat to the consumers, it could be expensive, especially

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Speaker 1: its statutory images are triggered, it's gonna be hard to

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Speaker 1: identify the exact loser users who were deceived, and therefore

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Speaker 1: these class actions are not going to be easy to

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Speaker 1: to succeed in overall. But the possibility is there for

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Speaker 1: significant bill for Apple legal bill. So I'm read about

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Speaker 1: a minute here, the government has requested information from Apple,

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Speaker 1: According to people who asked not to be named, What

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Speaker 1: kind of information would these agencies be looking for? Is

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Speaker 1: it a smoking gun memo or something less the That's

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Speaker 1: a good question. It's you know that Apple keeps insisting

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Speaker 1: that what it did was in good faith, that it

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Speaker 1: was not their intent to increase the demand for new

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Speaker 1: devices to just to help consumers avoid unplanned shutdowns of

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Speaker 1: their phones. That is the question, because under many of

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Speaker 1: these statutes that create liability, the question is why towards

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Speaker 1: Apple's intent and the I think that the information that

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Speaker 1: the government and UH plaint exployers are trying to get

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Speaker 1: out is information about what was going on lots for

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Speaker 1: the Apple thinking about all right, about thirty seconds yes

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Speaker 1: or no answer here? How likely is there to be

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Speaker 1: an enforcement action here? Actually not yes or no? One

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Speaker 1: to ten yes not probably not enforcement action, but yes,

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Speaker 1: long dragging class actions and eventually probably a very large settlement.

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Speaker 1: All right, Thanks so much. That's um re Ben Shahar,

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Speaker 1: a professor at the University of Chicago School of Law.

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Speaker 1: and on Bloomberg dot com slash podcast. I'm June Brosso.

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