Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud,
Speaker 1: and on Bloomberg dot com slash podcasts. President Donald Trump
Speaker 1: issued an executive order to keep the prisoner Guantanamo Bay
Speaker 1: in Cuba open. He made the announcement during his State
Speaker 1: of the Union address, asking Congress to ensure that in
Speaker 1: the fight against ISIS and al Qaeda, we continue to
Speaker 1: have all necessary power to detain terrorists wherever we chase
Speaker 1: them down, wherever we find them, and in many cases
Speaker 1: for them, it will now be Guantanamo Bay. It's a
Speaker 1: major reversal of the policy of former President Barack Obama,
Speaker 1: who would order the detention facility be put on a
Speaker 1: path off to closing and the terrorists suspects held there
Speaker 1: tried or transferred to facilities elsewhere. European allies and Muslim leaders,
Speaker 1: among others, have expressed strong opposition to how detainees have
Speaker 1: been held at Guantanamo without charges and in grim condition.
Speaker 1: Joining me is J. Wells Dixon, a senior staff attorney
Speaker 1: at the Center for Constitutional Rights. Well, the facility holes
Speaker 1: only forty one prisoners now and no new prisoners have
Speaker 1: been sent there since Trump was elected. Is there a
Speaker 1: reason to keep it open. There's no good reason to
Speaker 1: keep it open. I think, unfortunately, the president's decision to
Speaker 1: keep it open surprising. As unsurprising as it is, you know,
Speaker 1: it is really confirmation of his willingness to pander to
Speaker 1: his shrinking political base at the expense of national security
Speaker 1: and human rights, because there is no, um, there is
Speaker 1: no reason, actual foreign policy reason or national security reason
Speaker 1: to keep it open. Quite quite the contrary, President Obama
Speaker 1: tried to have Guantanamo closed and failed after some seven years.
Speaker 1: Are their practical problems with closing it? Well, there's a
Speaker 1: lot of blame to go around when it comes to
Speaker 1: the fact that Guantanamo is still open. But I think
Speaker 1: it's important to recognize that it was the policy consensus
Speaker 1: of both President Obama and President Bush that the prisoner
Speaker 1: Guantanamo needs to be closed, right and and Donald Trump's
Speaker 1: uh decision to to make it the formal policy of
Speaker 1: the United States to continue to detain Muslims there forever
Speaker 1: is really very significant. Um, because you know, even if
Speaker 1: even if you don't prioritize human rights, Uh, they're keeping
Speaker 1: Guantanamo open undermines our national security. Right, Consider the President
Speaker 1: talked about ISIS. Consider the fact that ISIS invokes the
Speaker 1: very existence of Guantanamo as a recruiting tool. Right. ISIS
Speaker 1: and other terrorist groups use the propaganda value of Guantanamo
Speaker 1: to recruit new members to attack US. So keeping the
Speaker 1: prison open is really counterproductive. Now, the detainees that are there,
Speaker 1: have they been tried. Almost no one at Guantanamo has
Speaker 1: been tried, you know, there are there have been a
Speaker 1: total of seven hundred and eighty Muslim men and boys
Speaker 1: held at Guantanamo since it opened sixteen years ago. And
Speaker 1: you know, more people have died at Guantanamo than have
Speaker 1: been convicted there. I mean, Guantanamo is really a complete
Speaker 1: failure when it comes to prosecuting alleged terrorists. And UM,
Speaker 1: you know, the that's not going to change, right because
Speaker 1: it is endemic to UM to a prison that was
Speaker 1: designed to be entirely outside the law. I mean, you know,
Speaker 1: the for example, the nine eleven case has been going
Speaker 1: on for years and years at Guantanamo and we are
Speaker 1: nowhere near the actual start of that trial. I mean,
Speaker 1: it's been a complete failure. And if you know, if
Speaker 1: if I were um uh nine eleven victim or a
Speaker 1: family member of a victim, I would be outraged that
Speaker 1: the alleged perpetrators of of that terrorist attack continued to
Speaker 1: be held in Guantanamo rather than be tried in federal court. Um.
Speaker 1: President Trump, during his speech, and I take it he
Speaker 1: was referring to the prisoners who have been released from Guantanamo,
Speaker 1: said we foolishly released hundreds and hundreds of dangerous terrorists,
Speaker 1: only to meet them again on the battlefield, including the
Speaker 1: ISIS leader Al Baghdatti, who we captured, who we had
Speaker 1: who we released? What about that? Have some of the
Speaker 1: people released come back to fight against the US? Well?
Speaker 1: President Trump's statements in that regard are absurd. For one thing,
Speaker 1: All Beg Dotty was never held at Guantanamo. All Beg
Speaker 1: Dotty was held into rock and he became radicalized because
Speaker 1: of what the United States did to him in detention,
Speaker 1: first of all. Second of all, the the the claim
Speaker 1: that detainees who have been held at Guantanamo have gone
Speaker 1: on to do bad things after their their release is
Speaker 1: wildly overstated. Right, the Director of National Intelligence publishes figures
Speaker 1: um statistics on this issue and has said that, you know,
Speaker 1: less than five percent of the individuals held at Guantanamo
Speaker 1: who were released by President Obama have gone on to
Speaker 1: do anything contrary to the interest of the United States.
Speaker 1: The other thing I'll say about it is, you know,
Speaker 1: if a former detainee writes an editorial, for example, in
Speaker 1: the New York Times criticizing American foreign policy, that gets
Speaker 1: held against them. I mean, they get put on that
Speaker 1: list as a consequence of that. UM. So you have
Speaker 1: to be very skeptical. But you know, even if you're
Speaker 1: not a skeptic and you're you're inclined to believe the
Speaker 1: government take them at their word. When the Director of
Speaker 1: National Intelligence says the figure is less than five percent,
Speaker 1: statistically insignificant. There's been a lot of discussion about an
Speaker 1: Apple software update released in early seen that slowed older
Speaker 1: model iPhone models, but apparently there wasn't enough discussion by
Speaker 1: Apple before the software update. The Department of Justice and
Speaker 1: the Securities and Exchange Commission are investigating whether Apple violated
Speaker 1: securities laws by not making proper disclosures about the software update.
Speaker 1: According to people familiar with the matter, and Apple spokeswoman
Speaker 1: told Bloomberg News that it has received questions from some
Speaker 1: government agencies and is responding to them. My guest is
Speaker 1: Armor ben Shahar, professor at the University of Chicago School
Speaker 1: of Law. Armory, will you first described the slowdown and
Speaker 1: Apple's response. Yes, a. Apple admitted that the software updates
Speaker 1: deliberately slowed down the performance of old iPhones. They explained,
Speaker 1: according to the apology that they posted online, that these
Speaker 1: slowdowns were meant as an upgrade, not as a derogation
Speaker 1: of the service, and they were intended to stop the
Speaker 1: unintended shutdowns of phones with old batteries. So rather than
Speaker 1: force people to replace batteries, they said, we would slow
Speaker 1: down the phone and avoid that. Of course, the result
Speaker 1: was the people head to replace not the batteries, but
Speaker 1: the phones, not knowing that the problem is all stems
Speaker 1: from the software updates. Now, our justice and the sec
Speaker 1: looking at the same or different possible violations of the law.
Speaker 1: So you know, securities fraud here is kind of a
Speaker 1: byproduct or an echo of the fraud that is alleged
Speaker 1: to have occurred in the product market. There are, by
Speaker 1: the way, now many class action lawsuits and investigations by
Speaker 1: state Attorney general for the possibility of fraud committed by
Speaker 1: Apple in the product market against consumers. At the same time,
Speaker 1: whenever there is duch fraud in the product market, it
Speaker 1: affects the stock price. And Apple was bleeding, so it
Speaker 1: made statements to the public and to their investors about
Speaker 1: what they did and why. If these statements were in
Speaker 1: some sense incomplete fraudulent misleading, that could lead to also
Speaker 1: this echo of securities liability. Here's Apple CEO Tim Cook's explanation.
Speaker 1: He told ABC News earlier this month that when the
Speaker 1: company put out the sow Square update, we did say
Speaker 1: what it was, but I don't think a lot of
Speaker 1: people were paying attention, and maybe we could have been clearer.
Speaker 1: Is that a good enough excuse to avoid legal action.
Speaker 1: I don't think so. I mean, if you look clearly, yes,
Speaker 1: Apple said things, and in their contract with consumers, in
Speaker 1: the seventeen page of tiny fined print ten thousand words,
Speaker 1: there is a statement and that says something like we
Speaker 1: don't warrant YadA, YadA, YadA. You know how these things go.
Speaker 1: So they said it in the contract, but they also
Speaker 1: created a completely opposite impression for people when they recommended upgrade.
Speaker 1: Those little flashes that you get on your phone or
Speaker 1: a MacBook that constantly ask you to upgrade and suggest
Speaker 1: upgrade full of all sorts of junk notices that prompt
Speaker 1: people to do things. But the one thing that is
Speaker 1: not was not said to people in these occasions is hey,
Speaker 1: if you do that, by the way, your device will
Speaker 1: no longer be as functional as it used to be. So,
Speaker 1: you know, to let be, we have the real choice
Speaker 1: that failure is more than an oversight. This isn't the
Speaker 1: first time that Apple has been accused of deliberately throttling
Speaker 1: the performance of its older phones. One accusation has been
Speaker 1: that Apple deliberately slows down the old phones to make
Speaker 1: people buy the new phones. Apple denies that has there
Speaker 1: ever been any proof of this planned obsolescence. Well, you know,
Speaker 1: the tech blogs are full of discussion about sorry about
Speaker 1: the planned obsolescence of phones. It just seems a little
Speaker 1: too much of a coincidence that as soon as devices
Speaker 1: new devices and new generation of devices is rolled out,
Speaker 1: the software of the old devices is slowed down in
Speaker 1: a way that would obviously increase the demand and bring
Speaker 1: Apples cash register for new phones. So This is kind
Speaker 1: of circumstantial. I don't know that there is any stronger
Speaker 1: evidence than that, but security class actions, pay litigation as
Speaker 1: well as consumer litigation could try to smoke these things out.
Speaker 1: As you mentioned. So, Apple is facing at least eight
Speaker 1: class action lawsuits in federal courts in New York, California,
Speaker 1: and Illinois, and one in Israel. So what are the
Speaker 1: allegations there? The allegations there would be primarily deception, that
Speaker 1: Apple violated consumer protection laws that require them to give
Speaker 1: people the food truth, not just part of the truth.
Speaker 1: There is you know, their precedent for these for businesses
Speaker 1: trying to prompt people to do to buy, to purchase
Speaker 1: more products that are not needed, and the courts have
Speaker 1: found often in the past in such situations there is deception,
Speaker 1: there is fraud, and if there is fraud then there
Speaker 1: is there will be damages under state consumer protection laws
Speaker 1: that could be very high. And I have to say, well,
Speaker 1: I think that many class actions regularly filed against tech
Speaker 1: companies are frivolous. This one since quite meritorious. Well now
Speaker 1: throwing at that point. As part of its public apology,
Speaker 1: Apple cut the prices of battery replacements in its stores
Speaker 1: from fifty doll from which was a fifty dollar discount.
Speaker 1: Would consumers get more than that realistically in a class action?
Speaker 1: I mean often you get coupons or reimbursements or some
Speaker 1: coupon for something in the future, and here there's already
Speaker 1: a fifty dollar discount that Apple is given. Yeah, that's
Speaker 1: a very good question. I think our class action apparatus
Speaker 1: does not do well in terms of getting money into
Speaker 1: the pockets of consumers. It does do well in terms
Speaker 1: of getting money out of the pockets of businesses. If
Speaker 1: Apple gets to pay into whatever fund to the lawyers
Speaker 1: and somewhat to the consumers, it could be expensive, especially
Speaker 1: its statutory images are triggered, it's gonna be hard to
Speaker 1: identify the exact loser users who were deceived, and therefore
Speaker 1: these class actions are not going to be easy to
Speaker 1: to succeed in overall. But the possibility is there for
Speaker 1: significant bill for Apple legal bill. So I'm read about
Speaker 1: a minute here, the government has requested information from Apple,
Speaker 1: According to people who asked not to be named, What
Speaker 1: kind of information would these agencies be looking for? Is
Speaker 1: it a smoking gun memo or something less the That's
Speaker 1: a good question. It's you know that Apple keeps insisting
Speaker 1: that what it did was in good faith, that it
Speaker 1: was not their intent to increase the demand for new
Speaker 1: devices to just to help consumers avoid unplanned shutdowns of
Speaker 1: their phones. That is the question, because under many of
Speaker 1: these statutes that create liability, the question is why towards
Speaker 1: Apple's intent and the I think that the information that
Speaker 1: the government and UH plaint exployers are trying to get
Speaker 1: out is information about what was going on lots for
Speaker 1: the Apple thinking about all right, about thirty seconds yes
Speaker 1: or no answer here? How likely is there to be
Speaker 1: an enforcement action here? Actually not yes or no? One
Speaker 1: to ten yes not probably not enforcement action, but yes,
Speaker 1: long dragging class actions and eventually probably a very large settlement.
Speaker 1: All right, Thanks so much. That's um re Ben Shahar,
Speaker 1: a professor at the University of Chicago School of Law.
Speaker 1: Thanks for listening to the Bloomberg Law Podcast. You can
Speaker 1: subscribe and listen to the show on Apple podcast, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcast. I'm June Brosso.
Speaker 1: This is Bloomberg