Not good enough: that’s the message the technology sector has delivered to its giant competitors like Apple and Microsoft after last week’s parliamentary inquiry into pricing in the IT sector didn’t reveal any sufficient explanations as to why local consumers pay so much.
The organisation which helped push for the inquiry in the first place, Choice, says the companies involved didn’t offer appropriate explanations and, in some cases, gave “bizarre” alternatives.
“Adobe gave some bizarre comments around the personalised nature of its website, and how that somehow justified charging people $1200 more for its Creative Suite,” spokesperson Matt Levey said.
Levey says while the pressure placed on these companies by having to appear at the inquiry is a positive outcome, Choice wants to see a recommendation on geoblocking — a tool used by companies to prevent local users from accessing prices used in other countries. “We think there’s a strong case for that to be looked at, and we’d like to see some strong recommendations there,” he said.
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Three major companies appeared before the inquiry — Microsoft, Adobe and, in a rare appearance, Apple. Apple local managing director Tony King, who is seldom seen in public, shifted much of the blame from the company onto the local rights holders. As a result, he told the inquiry, local users pay more for iTunes content than in other countries:
“Apple must pay the rights holders to distribute content in each of the territories in which the iTunes store exist. The retail pricing of digital content is based on many factors and foreign exchange is not a major factor. The main differentiator is the wholesale price.”
Apple has faced scrutiny in the past due to the price disconnect between countries. Users in Australia often pay much higher prices for music than customers in the United States. Levey says the argument carries some weight, but he likened Apple’s market power to the same kind used by Woolworths and Coles to reduce the price of milk.
Microsoft took a much more defensive stance, with local head Pip Marlow saying the current prices were set and if customers were unhappy they could shop elsewhere. “If they don’t like it, they vote with their wallets,” she said, adding there isn’t a “silver bullet” for addressing pricing issues.
Adobe took an aggressive approach, suggesting customers could even fly to the United States and purchase products if the end result was cheaper. Local managing director Paul Robson told the inquiry the company’s policy of geoblocking, in which customers are directed to the local store and cannot access lower prices in other countries, is completely valid.
“The personalisation is relevant to the experience you get when online. One of our key interactions is to allow [buyers] to talk among themselves and ask them to contribute to the future of our product,” he said.
Levey says the inquiry provided “three different approaches but no real explanation”.
*This article was originally published at SmartCompany