"Apple Faces Renewed Reverse Discrimination Controversy Over US-Only Compensation... KFTC to Closely Investigate False Advertising" (Comprehensive)

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Apple is facing renewed controversy over reverse discrimination against Korean consumers, after being ordered to pay a settlement of $250 million (approximately 367 billion won) to U.S. consumers for failing to timely equip its new products, including the iPhone series, with artificial intelligence (AI) features. Each U.S. consumer is expected to receive up to 140,000 won in compensation, but since the compensation will be provided exclusively to consumers in the United States, concerns about fairness have arisen. In response, the Korea Fair Trade Commission (KFTC) has decided to review the matter by referencing the situation in the U.S. and to expedite its investigation.

On May 6, a KFTC official told The Asia Business Daily, "Seoul YMCA filed a complaint last April, alleging that Apple had delayed or failed to implement the core AI features it emphasized in its advertisements. As a result, we launched a full-scale investigation," adding, "Given that issues regarding fairness for Korean consumers have now surfaced, we are closely examining the situation."

According to major IT media outlets such as 9to5Mac on May 5 (local time), Apple reached a sudden settlement with shareholders and consumers in a class action lawsuit related to delays in introducing its AI service, Apple Intelligence, and the next-generation Siri. Apple did not admit any legal liability or wrongdoing as part of the settlement.

Under the settlement, consumers who purchased certain models of the iPhone 15 series (15 Pro, 15 Pro Max) and iPhone 16 series (iPhone 16, 16 Pro, 16 Pro Max, 16e) in the U.S. between June 10, 2024, and March 29, 2025, will be eligible for compensation. The compensation is $25 per device (about 36,700 won), and the final amount may vary depending on the number of claimants. The maximum compensation per person is $95 (about 140,000 won).

The plaintiffs in the lawsuit argued, "Apple deceived investors and consumers through false advertising, even though it did not have a working prototype."

Apple faced the class action lawsuit because it failed to deliver the major AI features it had announced. At the Worldwide Developers Conference (WWDC) 2024, Apple unveiled Apple Intelligence and announced that key features, including a personalized Siri, would be included in the iOS 18 mobile operating system to be released in the fall of that year.

Citizens line up in front of the Apple Myeongdong store in Jung-gu, Seoul, on the 19th, the official release date of Apple's new iPhone 17 series. Photo by Yonhap News

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However, due to development delays, the AI features made available to users were limited to writing tools, emoji generation, and image editing. Some features, such as personalized Siri, have still not been implemented. Personalized Siri is a function where the AI model learns from the user's personal data, such as text messages, emails, calendars, and frequently used apps, enabling the voice assistant Siri to respond to user requests in a customized manner.

While companies like OpenAI and Google moved quickly to develop models and infrastructure for AI services, including large language models (LLMs), Apple's initial response to the AI market was slow. As a result, Apple signed a contract with Google in January to use the Gemini model for its next-generation AI services. The new AI features based on Gemini are expected to be included in iOS 27, which will be unveiled at next month's WWDC 2026.

With Apple offering settlements only to U.S. consumers, controversy over discrimination against global consumers has become unavoidable. Apple is also facing a class action lawsuit in Canada for the same issue. In Korea, civic groups such as Seoul YMCA have reported Apple to the KFTC, claiming that the delayed release of AI features constitutes a violation of the Act on Fair Labeling and Advertising and constitutes fraudulent behavior.

A YMCA official stated, "When consumers purchase a smartphone, their decision is based not only on the hardware but also on essential software features such as AI. If the advertised AI features do not function properly and remain unimplemented, there is clearly a price premium built into the product." The official added, "Consumers need to be compensated for false advertising, and since consumers worldwide saw the same advertisements and purchased the products, compensation in Korea equivalent to that in the U.S. should also be provided."

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