Australia to question Microsoft, Apple, others in 'price gouging' probe
Summary: Australia's parliament will hold an inquiry to determine why major digital content providers are charging significantly more for content than elsewhere in the world.
If you thought London was expensive compared to New York or San Francisco, spare a moment's thought for our Australian counterparts.
Apple, Microsoft, and others will soon face questions in the Australian Parliament over why their products and services cost significantly more than other regions --- known as 'price gouging' --- particularly in digital markets such as Apple's iTunes and e-book stores.
Australia's Communications Minister, Stephen Conroy, ordered the inquiry which could lead to a massive drop in prices across the country.
The companies may be asked how they price their applications and downloads, and justify why the increase in cost.
But could it simply be because, "it's Australia?"
In 2011, Apple lowered the price of iPhone and iPad applications by up to 25 percent after Ed Husic MP criticised Apple in parliament for its unfair prices, despite reportedly being a fan of the company's products.
But hardware prices remain higher than that of the U.S. market.
Conroy recently wrote in a letter to Husic: "There is evidence to suggest that the innovative use of technology is not always matched with innovative new business models in the case of products and services distributed online," reports the Sydney Morning Herald.
The issue reared its ugly head once again with the release of Adobe's Photoshop CS6, after Australians found the price to be $1,400 more than for U.S. customers.
The e-book market may also be examined, particularly in light of the U.S. and European antitrust probe into Apple and five other publishers over the alleged fixing of e-book prices.
Australia's Competition and Consumer Commission recently asked local retailers and book sellers to submit complaints with the possibility of a third antitrust investigation, only weeks after it jabbed Apple for "misleading" consumers over the capability of its 4G-enabled iPad 3.
Consumer groups have continued to complain about the excessive pricing, citing Australia's tax system and its smaller market size, meaning technology companies' bump up the price of digital products in order to break even.
With 23 million citizens, Australia has a third of the UK's population. This causes headaches for companies like Microsoft and Apple who have to set up shop in the region at their own expense. Plus, Australia's tax system often means major companies have to pay more into the country which gets picked up in the price of goods by the end consumer.
The parliamentary inquiry will begin later this year.
Image source: CNET. Article source: Sydney Morning Herald.
Related:
- DoJ sues Apple, publishers in e-book price fixing antitrust suit
- CNET: Australia probes download, software pricing disparities
- ZDNet: Australia vs. Apple: Take two on e-book price fixing
- Apple will refund ‘misled’ Australian iPad 3 customers
- Apple to fight on in e-book price-fixing ‘cartel’ case
- Australian court rules Google 'misled' users over search ads
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Talkback
So in other words
Sounds like business as usual for any government,
Yep. Hence the use of the word "gouging"
But here is how governments define it:
Gouging = charging a price the govt thinks is too high when the govt wants to make you out to be the bad guy.
Dumping = charging a price the govt thinks is too low when the govt wants to make you out to be the bad guy.
It's all about shifting blame (from typically a government created problem) on to whatever company the govt wants to criticize.
It used to only be M$, now Apple and others get to be the hated companies of the month.
Australia have high tax is the biggest con
The question is
Re: The question is
Also Australia has lower Company tax rate, it's a flat 30%. Where as US rate is
Taxable Income ($) Tax Rate[22]
0 to 50,000 15%
50,000 to 75,000 $7,500 + 25% Of the amount over 50,000
75,000 to 100,000 $13,750 + 34% Of the amount over 75,000
100,000 to 335,000 $22,250 + 39% Of the amount over 100,000
335,000 to 10,000,000 $113,900 + 34% Of the amount over 335,000
10,000,000 to 15,000,000 $3,400,000 + 35% Of the amount over 10,000,000
15,000,000 to 18,333,333 $5,150,000 + 38% Of the amount over 15,000,000
18,333,333 and up 35%
Of course expences are higher because businesses gouge the consumers and each other.
Currency Volatility is also a factor
How currency traders be less certain about the currency of a stable, highly-educated, mineral-packed, democracy - with very low private and public debt levels (by international standards) - than they are about an impoverished African nation, run by an insane, murderous dictator is a little beyond my grasp, but it happened. Perhaps currency traders simply couldn't be bothered looking up the data about Australia's economy for a month. (After about a month, the $AUD stabilised and started its upward rise against the $US, while staying steady against the euro. More recently, the $AUD has been steady against the $USD, rising against the euro and falling against the GBP.)
I don't know how far ahead Apple looks when it comes to cost and pricing (which seems to be fixed at the time of a product's release) but there must be a premium added to costs because of the historical volatility of the $AUD
When it comes to hardware, like iPhones and iPads, I cannot see that Australia's 'remoteness' is an issue: we're closer to China, where these products are made, than the US or Europe.
As for software, the whole beauty of the internet is that it costs no more to sell goods on the other side of the planet than it does to sell locally. The only caveats are: that Australia is in Region 4 for DVDs and many films (why not Region 2, like Japan and Europe?); the exchange rates mentioned before, and the arcane book copyright law, which used to have Australia as a subsidiary of the UK but now seems to be a no-man's land.
Apple price gouges in the US too. Look at what it costs them to get an ipad
Australia is a very low tax country
It is sometimes assumed that our taxes are high because we provide a social safety net for the unemployed and disabled, and universal health care (which gives us an extra four years of average life expectancy, compared to the US). However these things are really not that expensive; preventing poverty and ill health make the whole society better off. We are more productive and richer as a result of our social policies, which leads to lower tax in the long term.
My guess for the higher prices is that we're a smaller market, so there is less competition; and competition drives prices down. We also have exceptionally restrictive copyright laws which make streaming music hard to do here, and a thriving local rights clearance mafia that makes it hard to get hold of many ebooks and movies at all. Without Spotify and Netflix in the mix, there's no-one pushing Apple to increase their range or lower their prices on the iTunes store.
so how come there is private health insurance there?
Australian Health insurance is like Canada's
There's also some snob value to private health insurance, just as there is with private schools. The simple fact is that, even if you have private health insurance, if you have a serious problem (e.g. a heart attack) your chances of recovery are better in a public hospital, because that's where the most innovative work is done.
Also, even the private health system benefits from the bulk-buying power and subsidies provided by the Pharmaceutical Benefit Scheme, which will only consider newer, pricier drugs if they have a proven, documented record of superior health outcomes. (The US pharma industry, via the US government has been putting pressure on Australia to abandon this scheme for decades.) Personally, I know that a prescription that cost me $120 in New Jersey, was a standard $2.75 in Australia.
Missed a word: comparatively
Funny our current government would be criticising anyone; members using union cards to buy prostitutes, their anointed Speaker stepping aside (on full pay) for sexual harassment and entitlement rorting charges. Popularity at annihilation levels come next election.
Then Conroy himself, leading the charge to restrict free speech with his media regulations, his cancelling of tenders so he can award them directly, and his huge white elephant the National Broadband Network. The AUD50+ billion for the later keep off budget, years behind schedule and a legislated monopoly.
It's a mistake to compare Australia with countries whose economies have been destroyed by their governments.
Forget the taxes
Now they also get to have separate packing, documentation, help lines, warranty contracts, etc... Another development cost.
And for cell enabled devices such as iPhones and some iPads they get to go through certification with the various carriers.
And I'm sure the Australian government has a few regulations and approvals that have to be addressed, permits issued, etc...
All for a total population about 1/3 that of the UK. So way fewer devices sold to amortize all these fixed expenses across.
Then you get to the media. It's not Apple's fault that the publishing industries treat OZ and NZ many times as if they speak a different language than anything spoken in the UK or US. So contracts with publishers for movies, books, music, etc... are either separate or tied to southeast Asia.
This is why many companies don't even bother. You want their stuff? Buy it in the US or UK and ship it yourself.
You want to live in a small population country on the other side of the planet? Expect physical or licensed goods to be a pain at times.
Adobe CS6 is software
Possibly apart from the sticker on the box that says "Not for sale in the US", I doubt there's much if any difference between it and the US versions. Software doesn't require such certification as far as I'm aware, so there should be no discrepancy.
Hell, most discs are duplicated in Singapore, which if anything means it should be cheaper because Singapore is closer to Australia then it is the US, so should be cheaper to ship to.
Adobe CS vs Hardware
I'm also a firm believer a company can set a price to whatever they want. As long as they didn't drive others out of the marketplace via unlawful or shady means.