news Dozens of frustrated Australians describing themselves as concerned private citizens have flooded the Government’s IT price hike inquiry with hundreds of examples where they allege technology retailers and vendors have been ripping them off with unfair markups, while the major vendors concerned have yet to formally respond.
In late April, Communications Minister Stephen Conroy confirmed the Government would hold an official parliamentary inquiry into the issue of technology companies marking up goods and services for Australia, following a long-running campaign by Federal Labor MP Ed Husic. Husic has been raising the issue in Parliament and publicly since the beginning of 2011 (he was elected in the 2010 Federal Election), in an attempt to get answers from technology giants such as Adobe, Microsoft, Apple and others as to why they felt it was appropriate to price products significantly higher in Australia (even after taking into consideration factors such as exchange rates and shipping) than the United States.
In May, the House of Representatives Standing Committee on Infrastructure and Communications called for submissions to help inform the inquiry, publishing the terms of reference for the initiative on its web site. The results have demonstrated a strong groundswell of public anger about ongoing markups on technology goods sold in Australia. Of the 31 submissions made to the inquiry so far, 28 have been from individuals or small groups of individuals who have been frustrated by what they have seen as high prices in Australia.
“I am making my submission as an ordinary consumer of IT products,” wrote one respondent, Dane Weber, who focused their criticism on the price of software, games and music in Australia.
“I’m just a consumer; I do my best to purchase from overseas and am willing to employ mail-forwarding services on items that overseas distributors refuse to ship here. I do this because, with no exaggeration, I save thousands of dollars per year. The only thing I can suggest is increased power for the ACCC to investigate price-fixing and fine those involved. I can only provide my experiences with being completely and utterly gouged; I leave it up to those far more qualified to develop policy to remedy the situation for every Australian.”
Another wrote: “Greetings, I’m writing following the invitation for a submission into the issue of IT price discrimination in Australia. I’m not exactly sure how such a document should be worded, nor am I affiliated with any group or organisation – though if pressed I would claim to represent the average Aussie Gamer, with (more importantly) an average wage.”
Dozens of such submissions have been made to the inquiry in the few short weeks in which it has invited responses, with most following a standardised format. Uniformly, the submissions have been made by Australians describing themselves as “ordinary” consumers frustrated by what they see as unfair price markups.
The submissions are generally formatted in a way which can appear unprofessional, reinforcing the impression that they have been made by ‘ordinary’ Australians rather than large organisations, and focus heavily on detailed examples in several key areas of concern, namely the price differentials existing between games sold in Australia and overseas, particularly through online platforms such as Valve’s Steam (probably the most common platform mentioned in the submissions), as well as other software categories from vendors such as Microsoft, Adobe, Autodesk and others. Hardware manufacturers such as Dell, Cisco, HP, Lenovo, Apple and even video card manufacturers also came in for a heavy dose of criticism. And even the eBook category attracted some submissions.
“I am a disabled person, with a progressive neurological disease,” wrote local resident Clytie Siddall in her submission. “As you can imagine, I spend a great deal of time reading. Due to my disability, I am unable to read paper books (difficulty with the reflection off the page, difficulty holding books, difficulty turning pages). I read, and buy, a great many ebooks.”
“Just before Christmas 2011, international publishers Hachette and HarperCollins more than doubled their ebook prices for Australians. New popular fiction titles were hiked to nearly three times the new paperback price (ebooks over $20, new paperbacks around $7: prices from Amazon). Penguin and Macmillan have since followed suit. This behaviour is not only illogical (ebooks cost a great deal less to produce than paperbacks do), it is also discriminatory. I am one of many disabled people in this country who are dependent on electronic text. Why should we pay more than twice as much as people do in the US?”
Some small distributors responded to the Government’s review, but so far, not a single major technology vendor, retailer or distributor of any kind has made a submission to the review.
Top-ranking executives from major companies are often invited to appear before such parliamentary inquiries into their sectors. In this case, it is likely that high-profile companies such as Adobe, Microsoft, Apple, Lenovo and so on, would be invited to attend, due to their existing position in the line of fire, as well as companies retailing video games for the local market, which has also been an area of focus for the criticism, and other companies ranging from top-end camera manufacturers to business software vendors.
After the inquiry was first announced, Delimiter invited global vendors Adobe, Microsoft, Apple, Lenovo and Amazon, which are some of the most visible companies selling high-profile technology goods and services to Australians, whether they would commit to attending the parliamentary inquiry if invited, and whether they had any other statement to make on the matter. Adobe said it would cooperate with the inquiry, and Microsoft said it would review the terms of reference. However, the other companies did not respond to requests for comment on the matter.
Technology vendors such as Adobe and Microsoft have in the past offered a number of reasons for why prices were set differently in Australia compared with their home country of the US. In August last year, Microsoft responded to Husic’s comments about Australian markups on its products by stating that it doesn’t set final prices to local customers — and stating that it was difficult to make direct pricing comparisons between countries, given differing local conditions in each jurisdiction.
Adobe stated the issue wasn’t one for the technology industry alone — claiming it was a wider problem affecting other areas such as the automotive sector as well. At the time, the company said the majority of Adobe’s software in Australia was sold through channel partners — and so the prices listed on its online store may not reflect competitive pricing in the market. In fact, the price through its own online store would reflect a price towards the upper end of the range which its channel partners were charging. The company didn’t want to undercut its channel partners in Australia.
PC manufacturer Lenovo has also attempted to defend of its Australian pricing, despite in 2011 launching its flagship new ThinkPad X1 laptop in Sydney for $560 more than the same hardware will cost in the United States. Apple has in the past charged more for its products in Australia, although the company has made some moves towards international price harmonisation over the past year.
Two things should be obvious here: Firstly, that ordinary Australians are very angry and frustrated with major technology and entertainment (especially gaming) companies over the issue of Australian price hikes. Angry enough that dozens of them are prepared to spend their personal time writing detailed analyses of these claimed price hikes to a Federal Government inquiry. I have to say, it is a rare inquiry which receives this amount of angry and detailed submissions from “ordinary” Australians; normally this kind of proceeding is dominated by responses from powerful corporations and lobby groups.
The second thing that should be obvious is the incredible arrogance of the vendors and retailers concerned. Not a single submission from a retailer or a technology vendor? Not one? When these guys have been publicly criticised for verging on a year now on this issue in Federal Parliament? What a joke. It’s been a while since I’ve seen such arrogance.
The House of Representatives Standing Committee on Infrastructure and Communications now has a clear mandate to firmly invite these companies in to take questions on their pricing habits. Australia’s consumers have spoken and they want action. This is the definition of a case where politicians should step in and represent their constituents to powerful commercial interests.