Adobe, Apple and Microsoft facing IT pricing enquiry

Technology moves at such a swift pace, it’s understandable that goods and/or services can cost a premium, depending on what it is you’re paying for. However, in June 2012, a pricing inquiry started in Australia to determine why the country, as a whole, pays over the odds for their IT.

Now, the Australian House of Representatives Standing Committee on Infrastructure and Communications has summoned Adobe, Apple and Microsoft to attend the inquiry into IT pricing. Until now, each of them had refused to attend any of the previous parliamentary hearings.

Labor MP Ed Husic is heading up the inquiry. He has said:

These firms should have cooperated and been prepared to be more open and transparent about their pricing approaches. 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 enquiry.

There is a clear divide on the amount of money that consumers spend on their IT in Australia, compared with say the US or the UK. One example is overseas customers paying $10 to buy Toy Story in iTunes, but Australian consumers will pay $24. The argument is being made that the same server hosts the file(s) but you will pay a premium just for being Australian. Adobe responded to the summons via a spokesperson:

Adobe will cooperate with the Committee as we have done since the inquiry began.

Apple and Microsoft are yet to comment.

At least for once we're not hearing about "rip-off Britian."

Source: ZDNet

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Good for Australia. You know, some people think that Australia is a country that was founded by criminals. That's a slur. Australia was founded by the slow criminals who got caught. This explains much.

sadly this inquiry will be a waste of money and my tax dollars. If its anything like the inquiry around fuel prices. Every week the petrol stations raise the price at the pumps to peek on Thursday (most peoples payday) then drop off after the weekend. And guess what? even though there was no reflective patter I the world oil market, the government could not see any trend.

Basically everything in Australia is 200% the price of what it is in the US. Australians love to rip off Australians.

While digital content being higher is a joke if you purchase instore your going to be hit due to the astronomical rent the store is paying and the register monkeys sallary (well above US minimum wage for example) plus a wedge for whomever is importing stock to Australia. Add all the taxes Swan is handing out, Carbon for example and it's a nice little witch hunt setup by an idiotic government.

While I feel for the Aussies I really hope they end up lowering their prices and not raising ours because of this...

Hey austrailia,

You're a continent in the middle of nowhere that is really out of the way for everything.
Fiber optic networks
shipping lanes between other nations.

In all seriousness. If my Aussie friends are being gouged by the IT sector, I'd like to see this fixed.

Many people still buy the packaged game from a Walmart or Gameshop. What this means however is that they push back against the publishers to keep the prices the same on digital downloads so it doesn't steal too many of their sales. The box sales do have shipping and import taxes so they force the publishers to set the prices the same or they would just refuse to carry their games. Imagine the impact to a publisher if they still move 50-60% of their sales through retail channels.

Look at retail stores for a reason for high prices

Just out of curiosity, but what are Australia's import taxes like? I would wager this plays a roll. Most politicians don't seem to understand the ramifications of their policies... Like Obama passing a high tax on sugar and then complaining about how expensive sugar gets...

M_Lyons10 said,
Just out of curiosity, but what are Australia's import taxes like? I would wager this plays a roll. Most politicians don't seem to understand the ramifications of their policies... Like Obama passing a high tax on sugar and then complaining about how expensive sugar gets...

Not too bad, about 5% duty and then 10% tax on the lot including duty, but only if it is over $1000, otherwise no duty/tax at all, just shipping expenses
http://www.customs.gov.au/site/page5549.asp#Calculating
I think that cars are different

Go look up the AUSFTA (free trade agreement). Since the article is naming american companies, it's likely there is no tax at all. Specifically: "Duties on more than 97 per cent of US non-agricultural tariff lines became duty free from day one of the Agreement, with all trade in goods free of duty by 2015."

Just out of curiosity, but what are Australia's import taxes like? I would wager this plays a roll. Most politicians don't seem to understand the ramifications of their policies... Like Obama passing a high tax on sugar and then complaining about how expensive sugar gets...

M_Lyons10 said,
Just out of curiosity, but what are Australia's import taxes like?

There are no import taxes on digital downloads.

It's about time companies like Adobe got a smack in the chops for effectively charging Australians more than double the price for something like Photoshop when it is a digital purchase.

Go look up the AUSFTA (free trade agreement). Since the article is naming american companies, it's likely there is no tax at all. Specifically: "Duties on more than 97 per cent of US non-agricultural tariff lines became duty free from day one of the Agreement, with all trade in goods free of duty by 2015."

The best example I can think of is the one SMH runs whenever they talk about this topic, where they say it's cheaper to fly someone return from Australia to the US and buy Visual Studio there, than it is to purchase the exact same product locally, that you no doubt just download off MSDN.

One thing is Microsoft Hardware seems to be on a 12% rise for items like the Surface...

I believe the RT edition currently holds aprox 12-15% which when you consider the 10% GST rate isnt too bad of a difference...

However the digital and software sector is being screwed big time

Pricing in Australia will always be higher because they have to translate everything to Australian and ship it over there in armored containers because of all the dangerous wildlife that inhabits the continent.

fabspro said,
. And as for steam, http://www.steamprices.com/au will show you that there are cases of games in america that cost $9.99 costing $80 for australians.

Steam dosnt price games higher for aussies the publishers do. Steam dosnt care where you are from, as long as you buy the game from them...

"At least for once we're not hearing about "rip-off Britian."

You are correct people don't say that, they said rip-off Britain

Btw the standard of living in australia is very high, that's why their prices are higher.

torrentthief said,
Btw the standard of living in australia is very high, that's why their prices are higher.

That doesn't really make much sense for software though. I mean, I can understand raising the cost of physical resources sold in Australia because they're subject to the rules of supply and demand. With a high standard of living and low costs, people here would just buy everything and supply would be affected.

But software and digital media are infinitely reproducible (supply is technically infinite). There is no reason why the value of these things should be any higher than the exchange rate + difference in taxes. Software sold in the US should be sold at equivalent prices worldwide. Anything else is just ripping us off for the sole reason that 'we can afford it'.

Shannon said,

That doesn't really make much sense for software though. I mean, I can understand raising the cost of physical resources sold in Australia because they're subject to the rules of supply and demand.

What's the problem, then?

http://en.wikipedia.org/wiki/Supply_and_demand

Set your supply curve S to a vertical line (i.e. unlimited supply at any demand level), and microeconomic theory still dictates it's the intersection of the two curves. Even if you don't shift supply, demand will still have a huge effect - yes, even if your product is "infinitely" reproducable.

No, sir, I think what you don't understand is that nobody ever said upholding the laws of supply and demand is was the morally correct thing to do.

you misunderstood, it isn't about demand, it is about whether they can afford to pay the higher prices. Chinese people can't afford £100k cars, australians can, therefore you can sell high priced items and they will sell well. This is one of the reasons why they sell consoles for more than the additional tax rates in the uk compared to other countries.

The problem is that australia has laws which make these price practices illegal. For starters, it may be under unconscionable conduct. Then there's profiteering and price gouging laws.

I don't normally equate the term "IT" with sales of products... just because it's on a computer doesn't make it "IT" I was expecting this to be oh an IT service provider was overcharging us in AUS for installing software / maintenance... not it cost more to buy movies like toy story......

neufuse said,
I don't normally equate the term "IT" with sales of products... just because it's on a computer doesn't make it "IT" I was expecting this to be oh an IT service provider was overcharging us in AUS for installing software / maintenance... not it cost more to buy movies like toy story......

Yeah, same here. I thought it was talking about either IT services or at the very least IT devices.

The proper term would have been "digital goods' or something of that sort.

hence some Australian's Creating there address in the USA as the price of 1 song in the us is 0.99c and in AUS now at ~$2.69 for a song by popular artist.

Luke Baldwin said,
hence some Australian's Creating there address in the USA as the price of 1 song in the us is 0.99c and in AUS now at ~$2.69 for a song by popular artist.

iTunes hasn't been 0.99 for a song by a popular artist for quite some time. It's still less than what you are paying there, but it's a 30% difference from your estimate, so I think it's important to note. As for the difference beyond that, I don't know what the difference in taxes are to be honest, but I would imagine this plays a roll. People always like to pretend that high taxes don't affect the price of a good.

In Australia we pay on average an extra 400%, another example is the iPhone in the US ~$200 in Australia ~$800 for the same phone, it's just company ripping us off, also in the gaming industry. i here US and UK players complaining about $50 where he in Australia it $120 for a AAA rated game. lets hope some think happens soon not like the R18+ rating which took 10 years plus.

I'm from Australia and, while you are going in the right direction, you are a little off. An iPhone is $200 in the US ON CONTACT. It is not $200 outright and unlocked. As for games, Crysis 3 is $60 in the US (wallmart) and its $79 in Aust (jbhifi).

The "pure" example of Australian price hikes for the fun of it is the example used in the article - digital downloads. Charging $0.99 for a song in the US and $1.25 for the same thing in Australia. No shipping there!

MS has done "fairly" with the surface but. $500 in the US, $550 in Aust - %10 for shipping and (probably) taxes is about right.

Dell, with the alienware stuff, has NOT. M14x - $1500 in US, $2500 in Aust.

i under stand that but living in a rural town with just EB-Games and Telstra they tend to price ate the extreme. and company wonder why Internet sales and Steam/origin are doing so well.

Luke Baldwin said,
i under stand that but living in a rural town with just EB-Games and Telstra they tend to price ate the extreme. and company wonder why Internet sales and Steam/origin are doing so well.

Your English is terrible. How come?

scorpian007 said,
Isn't it locked to a carrier at $200?

Correct. And subsidesed... Once people get the figures right, it might just be the result of import taxes and additional costs if I had to guess.

UseLess said,
The "pure" example of Australian price hikes for the fun of it is the example used in the article - digital downloads. Charging $0.99 for a song in the US and $1.25 for the same thing in Australia. No shipping there!

This is a terrible example.

The price of a song is dominated by the licensing costs, which may differ depending on the territory that it is being licensed for.

deadonthefloor said,

Yeah, the fiber optics grow organically under the seas between continents.

Which has nothing to do with the cost of items we purchase and download in Australia. We already pay this cost in our monthly Internet charges with (Compared to the US) substantially higher rates and low download limits.

Mate, even though australian ISPs already pay for a lion's share of cable maintenance, you'll find that sending an 8GB file from america to australia does not cost more than $5 even at an expensive data rate. Compared with the thousands of dollars of difference to fly there...