Apple fined for price fixing
mobile.itnews.com.au
mobile.itnews.com.au
I, for one, am thankful that Android rose to keep Apple in check, because a world where Apple would be a monopoly frightens me about as much, if not more, that when it was Microsoft pulling the same kind of dirty and illegal tricks.
Not to trust them because they seem nice and "don't be evil"-ish.
Not to trust the government to stop them from abusing it (clearly).
But supporting competitors. Competition is the regular individual's best weapon.
And that is why, where possible, I strive to support underdogs wherever possible. I use a Windows Phone (with a Jolla on the way), read on a Nook e-reader, use duckduckgo for search, and avoid lock-in wherever possible (upload my music to your cloud? No thanks), etc.
And I encourage others to do so, or at least give it a try
Some examples: Messenger seems to be in the process of being phased out in favor of Google Hangouts; Gallery and Photos duplicate functionality to such an extent that I suspect one of them will not last; even the main keyboard is no longer open source, as Google has more or less abandoned the default Android keyboard and is rolling all improvements into the default-on-Google-devices Google Keyboard app.
Which parts of the "core open-source OS" are "less and less maintained"?
The OEMs and carriers delaying updates. By moving as much code as possible out of the core OS and into apps that they can update via the Play Store, they managed to make an end run around the OEMs/carriers. Notice how no one is really complaining about not having KitKat - the majority of the important updates are available on all Android 4.x devices, since they're in the Play Store.
If Google really cared, they could split them out into a separte service and still require them for official Android licensing.
I think this notion that they have to be closed source is a very strange redherring that people have bought for some reason.
http://www.mercurynews.com/business/ci_24390480/judge-oks-cl...
http://www.justice.gov/opa/pr/2010/September/10-at-1076.html
Grandparent mentioned companies like Amazon or Ouya: These companies use Android, but they do not license Google Apps and they therefore do not have Google Play Services on their systems.
Shipping propritary applications with open source software is common and does not make the open source project any less open source.
It's a little bit more complicated than that. Amazon is probably also fixing eBook prices at $9.99 and taking a loss to gain volume and market share. Apple probably wanted to break that monopoly. http://news.yahoo.com/potentially-damning-steve-jobs-email-d...
The way that cell phone subsidies work is completely different from how ebooks are priced. It's a disservice to conflate the two.
It could be argued that Google gives away Android to prop up its advertising revenue.
Apple, Google, Amazon have asymmetric business models and we are seeing them battle each other by trying to commoditize each others business.
There was no iBook price fixing -- if anything the deals they made made ebooks cheaper.
The contract is attached to the iPhone, and Apple doesn't want the contract sold for less than $X. If the carrier doesn't want to do that, they can choose not to sell the phone. What's the issue?
https://en.wikipedia.org/wiki/Price_fixing
"In neo-classical economics, price fixing is inefficient. The anti-competitive agreement by producers to fix prices above the market price transfers some of the consumer surplus to those producers and also results in a deadweight loss."
It also send invalid signals into the economy about the value of an item that may create bubbles or unreasonable expectations for low prices that are unsustainable (and therefore anti-competitive).
The Diamond trade is a very good example of price fixing where otherwise plentiful and cheap stones are controlled on the supply-side to keep prices artificially high.
At the same time, it is likely to be anti-competitive to allow an upstream manufacturer to fix prices with all retailers on the basis that customers are prejudiced and retailers are unable to compete on price. This is the main answer to your question. Also if only one retailer plays ball with Apple then they have a monopoly position again to the likely detriment of customers.
The arrangement is however acceptable where the retailer plays the role of mere agent in the arrangement (i.e. takes minimal risk in the transaction as compared to a distributor) as here it is reasonable for the manufacturer to set downstream prices.
However here if the article is correct, then the presence of a clear right for the distributor to set prices which is then subsequently ignored by Apple would seem to justify action by Taiwanese FTC. If anything this would be a breach of contract issue also providing another ground for the FTC to intervene.
Perhaps in this case, Apple intended to make the contract transparent by granting the right to the retailer to determine resale prices (in compliance with local law potentially) but then behind the scenes exerted pressure. This is pure speculation of course.
This phrasing betrays a complete ignorance of how the mobile market works outside of the US. Most markets have decided that a device and the network connection are separate entities and a vast majority of the world's population buys their "device" and "sim card" separately.
Hence a device manufacturer trying to set the price of a related but distinct product (the network connectivity) is something like -- to pick a favorite American analogy -- Ford not only dictating what brand of gasoline you'd put in the car, but also dictating the price you'd pay for that gas.
That is incorrect.
It is similar to the US in the UK, but not at all elsewhere. There are some contract deals in EU that go along with a carrier locked phone (like in the US), but most are not. The unlocked phone is the mainstream case.
Here is a relevant article with the different practices: http://en.wikipedia.org/wiki/SIM_lock
That you bought a carrier-locked phone in France is not really relevant, as I didn't say there are not carrier-locked phones in Europe, just that the carrier system is not as it is in the US, and having unlocked phones, pre-paid cards, and even mandatory unlocking is (and has been) the norm since mid-nineties.
In France, for example, the law (in effect since 1998) states clearly that even if they sell it locked, the carrier must unlock your phone after 6 months. That's the reason the iPhone had to be sold unlocked in France even back in 2007, when there was no such option in the US.
Heck, the US didn't even have SIM cards and GSM phones until quite recently (late '00s).
Phones sold, in France on pay-as-you-go (forfait bloqué) and monthly deals (forfait) come with a locked phone. Yes, they may be unlocked at any time (http://assistance.orange.fr/desimlocker-votre-mobile-2839.ph... and http://assistance.sfr.fr/mobile_forfait/mobile/desimlocker-m...), much like the can in the UK (http://service.o2.co.uk/IQ/SRVS/CGI-BIN/WEBCGI.EXE?New,Kb=Co...) or indeed in Germany (http://www.t-mobile.de/sim-lock-entsperren/0,20638,23789-_,0...). The end user must still pay the remainder of their contract even if they choose to use another provider. SIM only deals; either 30 day, PAYG or 12 month contracts, are commonplace. Suggesting that in anyway they are the norm is incorrect.
EDIT: Funnily enough one of my parents, a resident of France, has had an iPhone 3G, 3Gs, 4s and 5s on contract with Orange. Not one was sold unlocked with their contract.
Still, a dictatorship implies central control, and there is quite a contrast between that and strong market-favoring.
Edit: missed a word that changes tone a bit
Not in Asia. Singapore is consistently ranked as one of the most economically free (pro-business and free market) countries in the world, yet they are essentially a one-party 'democracy.'
Hong Kong is another example of an entity consistently ranked as one of the most economically free, but less democratic.
They have done a ridiculous amount of dodgy, illegal and anti-user things before, during and after Job's reign. They aren't perfect nor should any sane person expect 100K+ people to be. Just like Google, Microsoft, IBM etc.
What about the Taiwanese businesses that are disadvantaged by this type of practice? Surely that's worth far more than $1M.
This strategy doesn't work very well with iPhones, since there is a lot of excess carrier profit in the 24-month subsidies, above the $700 or so cost of the iPhone.
Currently, AT&T charges you $199 for an iPhone 5S, then has to cover $19 of subsidy over the 24 months of the $80/month contract.
A new carrier could charge $99 for an iPhone 5S, and make a huge splash. That would require another $4 of subsidy per month, but it would be pretty easy to just raise their plan to $85. Since they aren't just a retailer selling a single product once, it's much easier to move costs around. Similar to how a car dealer can play games with funding to make a car cost less but not really cost any profit.
I cannot understand people who champion anticompetitive actions like Apple's ebook conspiracy with stupid logic like "They can afford an extra dollar for an ebook if it makes the market fair".
Clearly I need to phone up the Oxford dictionary as they say nothing about the consumer or market fairness so they must have gotten it wrong all these years...
Another potential effect is less outlets selling the iPad, because if there is the potential for others to undercut the price on the same product, it becomes less valuable item in the lineup.
Another potential effect is less sales through Apple's own retail channels if some other outlets are selling below Apple's price but Apple tries to maintain it, which could mean more sales but still less money going to Apple.
No, it exists to make things better for the capitalist, which is why the socialists who named the system called it "capitalism" -- the entire system revolves around the interests of capital.
Its true that part of the sales pitch that capitalists use to the masses (who significantly outnumber them, and without whose complacency capitalism could not stand) is that it has the effect of making things better for the consumer, but that's not the purpose of capitalism at all.
Free markets need not have capitalism, and vice versa, but capitalism will likely arise in any free market.
If Bob produces X, and he wants to sell X for Y dollars, how is it immoral or bad to allow others to sell X for Y dollars, but no less?
This is like saying it's "price fixing" when an app developer charges the same for his product on the play store and the App Store.
Apple did not collude with HTC; they set the price for their product.
Apple can always control prices by being the exclusive seller of their products, that would be a valid way to do it. By selling it to a third party they, I think (again, am undecided) they give up the right to say how much it can be sold for. In the same way they can't stop you from selling your iPhone to a friend for cheap.
What they can do is not to sell to retailers who they feel are damaging their brand. In effect, this is exactly what they are doing, however they are doing it through written agreements rather than through observation.
Whether it is or not, I'm not sure that the fines are the way to go. If "the public" thinks that these practices are anticompetitive, why not simply declare that contract provisions to that effect won't be enforced in their jurisdiction?
Yes, the practice benefits the retailers and Apple, but its effect on consumers is commonly believed to be negative hence it is prohibited in some markets.
"Apple Asia ... required carriers to obtain its permission before setting contract prices on iPhones..."
This sounds like Apple Asia explicitly approved contract prices, but it depends on how you interpret "setting contract prices". If that literally means setting the price that the customer will pay, then this is not (to my knowledge) the exact mechanism used in the U.S., because the manufacturers cannot approve or deny the actual selling price. Instead, manufacturers rely on a loophole.
Rather than saying, "You can't sell an iPhone for less than $199 with contract," Apple says, "You can't advertise an iPhone for less than $1xx with contract." The actual number isn't $199, as we regularly see advertisements for iPhones at discounts from retail, but not much lower. We haven't seen the agreements, so we don't know the actual terms. It may be that Apple has the ability to approve/deny all advertised prices individually.
Keep in mind that a retailer is free to sell an iPhone at whatever price point they'd like. The problem is that they have no incentive to do so. Sale prices are a means to get customers in to the store. Imagine a ridiculous hypothetical situation where Walmart advertised the iPhone 5S at $99; that would draw in a lot of customers. However, their reseller terms prevent them from doing so, therefore there is far less incentive to do so. If they can't advertise the crazy sale price, then they can't draw in the number of customers required to meet their ROI requirements for an iPhone loss-leader. The inability to advertise props up the iPhone selling price.
Apple doesn't do this just with iPhones, and this is not the only mechanism Apple uses to prop up their prices. We don't know the specific margins retailers make on Apple products, but everyone I know who has worked in the retail industry tells me that the margin on Apple products is much lower than every other PC manufacturer. I can't speak for mobile devices, as I don't know anyone in that industry.
It's also worth noting that Apple isn't the only company who employs these practices. There are a number of "high-value" brands that support their pricing this way. Tempurpedic and Rolex come to mind immediately, but I'm certain there are many more.
When the first iPhones were introduced it had the first affordable data plan I'd ever seen in the UK. I think o2 we're asking around £50/month for some tiny data plan on my Nokia N95, on top of the contract cost(there was no data bundles). The iPhone was £35 month on contract, phone and unlimited data.