iOS 15.1 Beta 2 Fixes Bug Preventing iPhone 13 Users From Unlocking With Apple Watch When Masked
Apple today seeded the second beta of iOS 15.1 to developers, and the update includes a fix for an annoying bug that's been affecting iPhone 13 owners who also have an Apple Watch.

With beta 2, the Unlock with Apple Watch feature that was broken has been fixed, and an authenticated Apple Watch can once again be used to unlock an iPhone 13 model when wearing a mask.
Prior to the update, attempting to enable the Unlock with Apple Watch feature under Settings > Face ID & Passcode would result in an error that said the iPhone was unable to communicate with the Apple Watch. That error message has now been addressed, and the feature can be successfully toggled on after updating to iOS 15.1 beta 2.
Apple in a support document promised that a fix for the issue would be coming in a future update, and it appears that update may be iOS 15.1. It's not clear if we'll also see an iOS 15.0.1 update that has a fix, as it could still be several weeks before iOS 15.1 sees a public release.
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