Major software and content players such as Apple, Adobe, and Microsoft face a raft of measures which could dismantle their business models and their ability to enforce regional restrictions, or ‘geoblocking’, on the use of their products if key recommendations of the Australian Government’s Inquiry into IT Pricing report are adopted.
The Inquiry was established a year ago with the intention of explaining why Australians pay significantly higher prices for hardware, software and services compared to similar countries such as the US and UK.
According to the Inquiry’s report, ‘geoblocking’ – the method of keeping consumers separate and segmented – has been viewed by IT vendors as a legitimate and legal business practice and a means of maximising profits.
However, the practice has harmed consumers through reductions in competition, overcharging for IT products and discrimination all while players such as Apple, Adobe, and Microsoft; have sought to shift the blame onto the high cost of doing business in Australia and higher rates charged by content copyright holders in the country.
As a result, Australian consumers have turned to a number of different services – which can create US-based IP addresses and shipping addresses – to help them circumvent geoblocking. But, many of these are of questionable legality, leaving consumers exposed to potential prosecution.
Recognising this, the report recommends that Australian consumers be afforded greater protection under the law when they seek to circumvent geoblocking.
“The Committee recommends that the Australian Government amend the Copyright Act’s section 10(1) anti-circumvention provisions to clarify and secure consumers’ rights to circumvent technological protection measures that control geographic market segmentation,” the report reads.
Contracts or terms of service which seek to enforce geoblocking could also be “considered void” under another recommendation, which argues for amendments protecting consumers to be made to the Competition and Consumer Act.
The Australian Government, under another recommendation, could also move to educate consumers and businesses on the extent to which they may circumvent geoblocking, the tools and techniques available to them, and the extent to which bypassing geoblocking may forfeit their rights under the Australian Consumer Law.
A blanket ban on geoblocking enacted by the Australian Government could also be considered as “an option of last resort, should persistent market failure exist in spite of the changes to the Competition and Consumer Act and the Copyright Act recommended in this report.”
In a move which could dramatically undermine the business models of major cloud and content players such as Apple and digital distribution services such as Steam, the report also recommends that a ‘right of resale’ be created for digitally distributed content.
A clarification of ‘fair use’ rights for consumers, businesses, and educational institutions, including restrictions on vendors’ ability to ‘lock’ digital content into a particular ecosystem, should also be considered.