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Apple to Pay Fine in Rulings Due to Location Scandal

Tuesday, October 11th, 2011

A few months ago the Korea Communications Commission (KCC) investigated both Apple Inc. and Google to confirm rumors that the iPhone and Android operating systems were keeping a record of their users’ geographic locations in unsecured text files. Now, on August 3rd, the KCC has come to a conclusion with its investigations and slapped Apple with a 3 million fine. This comes right on the heels of an additional 1 million ruling last month when an administrative court ordered the company to pay a South Korean attorney who claimed damages through the iPhone retaining his location information. The combined 4 million in losses that Apple suffered these past two months are in South Korean won, however, not dollars. In dollars the two fines amount to about $3,700. To put this in perspective, Apple’s net profit for this quarter amounted to $7.31 billion. The penalties are extraordinarily lenient compared to what could have been done – the KCC could have suspended Apple’s business license and fined it up to 3 percent of the company’s profits.

The drop-in-the-bucket fine that the foreign company has to pay is only the first of possibly many more to come, however, as the ruling gives precedent to an upcoming class-action lawsuit being filed by Miraelaw in Seoul. Nearly 28,000 Korean owners of iPhones have signed up for the lawsuit, which if successful may cost the company up to 27 billion won, which works out to a slightly larger splash in the bucket of $25.5 million.

When asked for a statement, Google Korea was able to say that it had not received a fine. This comes several months after Google Korea’s offices were raided and the company’s computer hardware confiscated in a high-profile investigation into these allegations. Around the same time, Naver and Daum, South Korea’s two largest search engine companies, filed anti-trust complaints against the online search giant. Perhaps the Korean government thinks Google has already suffered enough harassment.

This location-tracking controversy originally came to light in April of this year in the United States, when interested parties discovered that the iPhone stored latitude, longitude, and timestamps in a hidden text file. While some smartphone users would no doubt like to publish that information in real-time to all of their friends, others might prefer to keep it a secret. Apple’s official response to the story was to issue an official statement clarifying what exactly was going on. The statement read, “The iPhone is not logging your location. Rather, it’s maintaining a database of Wi-Fi hotspots and cell towers around your current location, some of which may be located more than one hundred miles away from your iPhone, to help your iPhone rapidly and accurately calculate its location when requested.”

The KCC noted that the judgment against Apple is final and not eligible for appeal. The commission also instructed both Apple and Google Korea to stop the “illegal action” of saving user locations and encouraged both companies to help their users better understand the capabilities of their handsets in tracking their location.

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