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Australian Parliament Subpoenas Microsoft, Apple on Price Hikes

| 12 Feb 2013 23:20
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The move ends months of stalling by the software giants, forcing them to appear before an official inquiry into price hikes in Australia.

Australia's federal parliament has compelled three of the biggest American IT firms, Apple, Microsoft and Adobe, to appear before its inquiry into price hikes via a formal subpoena. The move finally puts an end to the software giants' unwillingness to discuss their pricing policies in public. "These firms should have cooperated and been prepared to be more open and transparent about their pricing approaches. In what's probably the first time anywhere in the world, these IT firms are now being called by the Australian Parliament to explain why they price their products so much higher in Australia compared to the US," Labor backbencher Ed Husic, who issued the inquiry last May, said regarding the subpoena.

The price of technology has always been high in Australia. The PS3, which cost up to $599 in the US on launch, cost up to a mind-boggling $1000 AUD in Australia. New release videogames, which cost $40-$60 US in America, average around $90-$120 AUD on the other side of the Pacific. A long time ago, when America's economy was stronger that it is today, and one Australian dollar bought around 80 US cents, the price hikes were justified, especially considering the costs of shipping to Australia. Now, the Australian and American dollar are almost one-to-one, and the increasing popularity of digital distribution methods such as Apple's App store and Microsoft's Xbox Live eliminates any legitimate reasons for companies to hike up prices for Aussies. Yet, it still happens.

Well, Australians have had enough, and last May an inquiry was issued into the pricing of technology and services in Australia. The results revealed a strong outcry of public anger regarding ongoing markups on technology goods and services sold in Australia. The complaints focused on the fact that online stores such as Apple's iTunes and App store, Valve's Steam, Microsoft's Xbox Live, Sony's PlayStation Network, Amazon's Kindle store and Adobe's software store charged Australians higher prices for the exact same software and content than residents of other countries.

"Adobe, Apple and Microsoft are just a few firms that have continually defied the public's call for answers and refused to appear before the IT Pricing Inquiry. While television and computer prices fell 14 per cent according the to the latest Consumer Price Index Figures, there's still a long way to go - with some estimates suggesting that Australian prices are up to 60 per cent higher than the US." - Ed Husic

These three companies in particular have all run campaigns to mark up prices in the last few years. In April 2012, Adobe said it would continue a long-running tradition of marking up its prices for the Australian market, revealing that the company would charge Australians up to $1,400 more for the exact same software that is sold worldwide. Apple recently released the AC/DC complete collection over iTunes (an Australian band, mind you), for 54%, or $80, more than what it costs people in other countries. 3000 Microsoft points in the US works out to about $37, yet in Australia the RRP is $59.99 AUD.

So what does this mean for Australian consumers? Well, nothing much, at least not yet. The three companies in question have merely been asked to formally explain themselves, after which policy may or may not be put into place to force them to equalize price disparities.

"Gray importing," the act of sidestepping regular distribution channels by importing goods from overseas markets, is not only legal in Australia, but encouraged. Retailers that follow official distribution channels, such as GAME, which recently went into administration, have been feeling the sting of customers who are willing to gray import their games for cheaper, whether via retailers such as GameTraders or online over websites such as Play-Asia.

Source: Delimiter

Update: Shortly after being summoned to appear before the inquiry, Adobe announced that it will slash the price of some of its products in the Australian market. Photoshop and Creative Cloud will both have their prices lowered for individual licences, bringing them in-line with what people in the US and other markets around the world pay. Business licences of these products remain unaffected.

Source: Australian Financial Review

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