news Federal Labor MP Ed Husic has warned technology vendors hiking prices for the Australian market that criticism and examination of their pricing strategies would not cease, despite the fact that they had so far been largely unresponsive on the issue.
Since the start of this year, Husic has been attempting to get answers from technology giants about why they feel it’s appropriate to rise prices significantly above those found in America — leading to the so-called tech tax — for Australians. The MP has raised the issue with the vendors themselves, in the House of Representatives several times and directly with senior figures such as David Bradbury, Parliamentary Secretary to the Treasurer.
Treasurer and Deputy Prime Minister Wayne Swan indicated in late October that the Government is keenly awaiting a report from the Productivity Commission which will detail the extent to which price hikes on imported technology goods and services are hurting Australian consumers, as part of the Commission’s overall report into the retail sector.
However, in a new speech in Parliament last night (the full text of which is available online), Husic expressed his disappointment at the lack of response from the technology sector to the Productivity Commission’s enquirt in general. “I understand from inquiries I made today that the Productivity Commission has submitted its overall review into the Economic Structure and Performance of the Australian Retail Industry – which the IT pricing discrimination issue will form a part of,” he said.
“When I scanned the submissions listed on the Productivity Commission website, something else became glaringly obvious: Not a single one of the major vendors took the opportunity to make a submission to the Commission. It’s staggering that with all the interest in this matter, the vendors and companies like Adobe, Apple, Lenovo or Microsoft didn’t take the chance to comment.”
Husic said he suspected the vendors believed they could “ride out this sustained public focus”.
However, he maintained the issue would continue to be in the spotlight, quoting a consumer who made a submission to the Productivity Commission’s review: “I believe these enforced price differentials, especially for online downloads, are baseless and exploitative of the average Australian consumer, who will not complain about the price for the sake of convenience and minimal hassle,” he said.
Adobe and Microsoft have stated that much Australian pricing for their products was actually set by the local distribution channel, and that the issue is a broader one that applies not only to the technology sector.
One new avenue for Husic in criticising the vendors may be through the Federal Government’s own IT procurement practices, which are largely carried out through departmental chief information officers and their IT departments, as well as centrally through the Australian Government Information Management Office.
Husic said he intended to follow up within the Government to see what measures were in place to ensure it was getting value for money and that the “inflated prices” that were affecting consumers were not being felt by the public sector.
“Frankly, I think that we need to ensure that there is value for money for government, for consumers and for small business,” he said. “If they think they can ride this out, I would beg to differ and urge them actually to be a lot more transparent in the way that they approach this issue.”
Image credit: Alpha, Creative Commons
I wish Husic all the best, but the problem is simple: the tech companies are charging what the market will bear. There’s an awful lot of momentum behind our current pricing, and no company is going to drop their prices without a compelling reason. The only compelling reasons that large companies understand is market share and profit, so the only way prices will drop is if people stop paying the higher prices. It’s that simple. If all Australian studios, photographers and post houses stopped buying Photoshop tomorrow, then Adobe would adjust their prices until they started buying again. Obviously those businesses have work to do and customers to satisfy so they can’t afford not to buy Photoshop, and so Adobe (and everyone else) will just hunker down until the mean man goes away.
The other problem with photoshop is it is region coded, a pathetic practice in this day and age. I don’t buy adobes argument that the channel sets the price that is rubbish. Comparison shop for creative suite and you realise that all the prices have the same floor, something that wouldnt happen if adobe set the wholesale at the US level
The main issue is the monopolistic distribution model that exists in this country. Single point distributors that are protected from overseas sellers.
Open up online sales from the US and Europe and you’ll quickly see prices drop in Australia.
Jason, local distributors are not protected from overseas sellers. Parallel importation of software and music has been legal for more than a decade. Adobe and Microsoft may attempt to put up technical hurdles for overseas buyers, but there’s nothing legally stopping you from purchasing their software directly from the US where possible.
However both Microsoft and adobe put restrictions on resellers selling in overseas markets, Both at the channel level and and the retail level. I believe using those restrictions to boost local prices is an abuse of market power under the trade practices act as they are reducing competition in market. They are right it does extend beyond the tech sector. Hasbro, Game workshop, Nike, Adidias, other sporting goods. When the retail price in similar developed economies is less than the Australian retail price even after taking into account one off freight and GST there is a problem.
LOL
ACCC has no jurisdiction on foreign dealings between Apple Inc (US) and US retailers.
No but if their local office is taking advantage of such deals that restrict competition to impose artificially high prices then there is a problem.
Apple Inc has no operations in Australia.
Apple Aust Pty Ltd is a locally-registered company that passively imports products from Apple Inc for resale in Australian markets in arms-length transactions.
the ACCC has no jurisdiction over the behaviour of a foreign entity that does not even have a legal presence in this country, and Apple Aust cannot be held responsible for the behaviour of Apple Inc because they are legally distinct entities.
“Apple Aust Pty Ltd is a locally-registered company that passively imports products from Apple Inc for resale in Australian markets in arms-length transactions.”
Bullshit. That may be technically legally true, but Apple in Australia is precisely the same company as Apple in the US.
well, intuitively, (assuming some law has actually been breached) i can see how the ACCC may seek some form of court injunction on Apple Aust which is a legal entity operating in Australia. but, i don’t see how our local courts would have jurisdiction to issue injunctions against Apple Inc, which is a foreign entity with no legal presence in Aust (unless there is some special provision under US-enacted law under an international trade treaty).
now, bear in mind, Apple Aust, as a legal entity, would itself not be a party to any agreement on any restrictive practices on resale by US retailers to overseas markets. any such agreement would be between Apple Inc (or some foreign subsidiary) and the overseas retailers. how could a local court enjoin a locally-incorporated entity, Apple Aust, from not “participating” in any trade restrictive agreement which it is not a legal party to in the first place? it would be legally absurd.
at the end of the day, Apple Aust is just a shell importer passively purchasing Apple products from Apple Inc (or some foreign subsidiary) under contractual terms (price, quantity, royalties, payment terms) dictated by Apple Inc. you can’t hold them responsible for international marketing policies and commercial agreements that they are not a legal party to. the whole point of “incorporation” is to clearly demarcate and limit legal personage, liability and responsibility.
Hi Renai
This rise‘s some questions about the enquirt in general.
Bit of a waste of time IMO, it isn’t like there is anything they can do about companies selling products with 3 times the markup when compared to the US.
As much as I hate it, I don’t think there is much that can be done except a name and shame campaign.
Just had a thought. The way the “parent company” (that has no impact on pricing honest!!) should be treated, is similar to Telstra. Force them to wholesale their product to any comers. That way the “channel partner” (whatever that means – fancy word for scapegoat?) can sell at whatever price he wants, alternative retailers can sell at whatever price *they* want. And the wholesale price is available to everyone (and this whole “channel partners set the price” crap can be made plain – ie the huge markup is clearly the wholesaler, or the retailer).
Obviously a crazy pipe-dream. But how else do you get competition in the market against these established players?
It isn’t like someone is going to go and spend the millions of dollars needed to write an Adobe-Photoshop killer, because Adobe has a locked in market with proprietary technology, and has been reaping huge markups to the point where they could afford to drop their prices 75-90% for long enough to ensure any competitor goes under.
;)
Jeff’s comment about the region locking is interesting: maybe the solution is to ban region locking? It’s already something that the ACCC has come out in favour of (in relation to modchips and buying games overseas), so it’s not necessarily a new policy. If Adobe couldn’t sell region locked products in Australia, parralel importation would perhaps be more viable (assuming that a US version would run here).
That said, it’s only a tactic that would work against a particular type of software (Adobe, Autodesk, etc), and wouldn’t address physical goods or other online stores (AppStore etc.).
There is no region locking on a lot of the products affected it is just that adobe and likes put restriction on retailers and channel resellers to only sell within their market making it difficult to even buy the products from other markets.
Have a read of this at El Reg for an interesting and related story:
http://www.channelregister.co.uk/2011/11/22/vendors_fury_as_retailers_buck_price_fix/
So, if the mark up is in Australia, does that mean the profit is more or even declared or made in Australia and that the resultant taxes are made in Australia, or are they transfered off shore to pay the loans from off shore we allow Microsoft to deduct so they cna transfer their profits to a low tax or zero tax envirionment? in other words, are we being ripped of at both ends of the deal.
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