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Apple has agreed to pay $490 million to settle a class-action lawsuit. The suit alleges that Tim Cook, Apple’s chief executive, defrauded shareholders by hiding the fact that iPhone demand was falling in China.
The preliminary settlement was filed on Friday, March 15, 2024, with the US District Court in Oakland, California. According to Reuters, this lawsuit came about following Apple’s announcement on Jan 2, 2019, that the company would cut its quarterly revenue forecast by up to $9 billion due to tensions between the US and China.
In an analyst call on November 1, 2018, Cook told investors that while Apple faced sales pressure in other markets, including Turkey, Russia, India, and Brazil, he would “not put China in that category.” Then, some days later, Apple told suppliers to cease production on iPhones in China.
Despite settling, Apple denies liability
Following this, Apple’s shares fell by 10% the next day, wiping out $74 billion of market value. Legal papers viewed by Reuters found that while Apple denied liability, the company settled to avoid a full legal case.
According to Reuters, this settlement will cover investors who bought shares in Apple following Cook’s comments. US District Judge Yvonne Gonzalez Roger refused to dismiss the lawsuit when it was filed last June because she deemed it “plausible” that Cook could have been discussing Apple’s sales outlook in relation to China rather than currency changes. She also claimed that Apple already knew that China’s economy was slowing down.
Reuters also reported that lawyers for the shareholders will be able to seek fees of up to 25% of the settlement’s amount.
This isn’t the only legal crisis Apple has been facing recently. After a lengthy legal battle in the past, Epic Games has filed another lawsuit against Apple over App Store commission.
Featured Image: Photo by Torsten Dettlaff; Pexels
