Apple has agreed to pay $250 million to settle a class-action lawsuit alleging that it misled consumers about the artificial intelligence capabilities of the iPhone 16, a case that crystallises the company's troubled relationship with AI over the past two years.
The lawsuit, filed by the Clarkson Law Firm in the Northern District of California, alleged that Apple promoted AI capabilities that did not exist at the time of the iPhone 16's launch in September 2024, saturating television, the internet and other media with advertisements that created a reasonable consumer expectation that a dramatically upgraded, AI-powered Siri would ship with the device.
It did not. The features shown in advertisements, including Siri's ability to recall the name of a person from a meeting months earlier, to summarise complex queries and to interact naturally with on-screen content, were not functional when the phone went on sale and remain unavailable to end users nearly two years later.
Apple pulled the advertisements in March 2025 after publicly delaying the AI-powered Siri upgrade, but by that point the ads had been running for roughly six months, spanning the iPhone 16's crucial holiday sales period.
Under the settlement, which was filed for preliminary court approval this week, eligible buyers of iPhones purchased between June 2024 and March 2025 can claim $25 per device, rising to as much as $95 if the volume of claims is low. Eligible devices include the entire iPhone 16 range and the iPhone 15 Pro and Pro Max. Apple is not admitting wrongdoing.
The timing is pointed. The delayed Siri features are widely expected to be previewed at Apple's Worldwide Developers Conference on 8 June, nearly two years after they were first demonstrated on stage. The upgraded assistant is now expected to be powered by Google's Gemini rather than Apple's own technology, and iOS 27 will reportedly allow users to swap in competing models such as ChatGPT and Claude, a tacit acknowledgement that Apple could not deliver the AI experience it advertised using its own capabilities.
The settlement is modest by Apple's standards, representing roughly two hours of the company's net income, but its significance lies in the precedent rather than the sum. Apple built an entire marketing campaign around a technology that was not ready, used it to sell hardware during the most commercially important product launch of the year, and then quietly withdrew the promises when the technology failed to materialise.
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The episode also illustrates a broader problem in the technology industry: the gap between what companies announce and what they can deliver has widened dramatically in the AI era. Apple is not the only offender, but it is the most prominent company to face a financial consequence for it, and the settlement serves as a reminder that marketing AI capabilities as present-tense features when they are, at best, future-tense aspirations carries a measurable cost.
A separate securities fraud lawsuit, alleging that Apple's AI promises inflated its share price, remains ongoing.