Why IT Pricing Inquiry Subpoenas Won’t Make Any Difference

It’s an appealing image: Apple, Adobe and Microsoft forced to front up to a parliamentary committee and explain why they overcharge Australians. But even if those organisations end up being subpoenaed and forced to testify before the IT Pricing Inquiry, we shouldn’t assume that means anything will be learned or anything will be changed.

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News from the House Standing Committee on Infrastructure and Communications Inquiry into IT Pricing, which is investigating why Australians often pay over the odds for technology products even when those products only exist in digital form, has been somewhat thin on the ground since public hearings were held back in July. So when the committee indicated in Parliament earlier this week that it was considering using a subpoena to force Apple, Adobe and Microsoft to front up, it was understandably widely reported.

You can understand the committee’s frustration. As committee head Nick Champion told Parliament on Monday, getting any kind of participation was like pulling teeth:

To date the committee has received only qualified and sporadic cooperation from industry groups and major IT companies. ARIA initially declined to appear before the committee but, after requests, finally did appear on 5 October. The AIIA, which is the industry association representing IT companies, provided a submission and appeared but was unable to provide specific information on behalf of its individual members. Once it became apparent to the committee that major companies did not intend to appear before the committee and give public evidence, we did ask the AIIA to reappear on behalf of the industry; but this request was refused. Apple made a confidential submission and provided a confidential briefing to members of the committee but have refused repeated written requests to make a public submission or to appear before the committee to give evidence. Adobe initially informed us that they would be represented through the AIIA, but, given that the AIIA’s inability to provide detailed answers to the committee’s satisfaction, we then sought further information and submissions from Adobe, which they provided on a confidential basis. They have offered to appear—but only if other companies in the sector appeared at the same time. Microsoft, to their credit, made a submission and some further supplementary submissions to the inquiry but have been unwilling to appear before the committee and have proposed alternative contributions instead.

Champion contrasted the behaviour of these companies with Australia’s major supermarkets. Woolworths and Coles are accused just as often of manipulative pricing behaviour, but have always appeared before parliamentary committees investigated those issues. Champion made it clear he wasn’t having a bar of this kind of slippery behaviour:

It is not good enough for the industry to simply stonewall the inquiry—or, for that matter, to ignore interested consumers who have a legitimate public interest in IT pricing. It would be far better for companies to defend their business model and their pricing structure in public before the committee. The committee has offered these companies more than once the chance to appear. We would give them a fair hearing; they have my public commitment on it. The companies’ failure to appear leaves the committee with an unenviable choice between compelling the attendance of individuals to give evidence and reporting without hearing in detail from industry. The choice between one or other of these alternatives can only be averted by the IT industry’s following the first rule of good public relations: always turn up and put your case.

Of course, the IT industry very often ignores this rule. Apple’s main PR strategy is to say “no comment” to practically everything, a strategy it continues to pursue in this instance. And (as I’ve noted before) Apple isn’t the worst offender in this area: its prices for music remain high in Australia, but Apple hardware is now generally on par with US pricing. The fact that even a company with a defensible record doesn’t want to show up does speak volumes for the general attitude of the industry, which might be summarised as “stuff you Australia, we don’t have to explain ourselves to anyone, government or not”.

Committee chair Paul Neville noted the ludicrous scenario that the AIIA, as the industry association, claims it can’t represent the industry:

We feel that we have come to a point where there is obstruction, avoidance and evasion. One of the silliest ones is that, on the one hand, the industry body says they are there to represent the industry, but, when we ask them a specific question, they say they cannot possibly talk for individual members. So we have this catch 22 going on.

That’s ridiculous. And it’s stonewalling. And it undermines any argument by these companies that they have the interests of consumers at the centre of their business.

I’m glad the issue isn’t being ignored entirely and that the committee is considering forcing attendance. But the fundamental problem hasn’t changed: even if those three companies are forced to explain their approach, even partially, there is no indication that anything would change as a result of those confessions.

As I discussed at length in a previous post, there is no obvious strategy that the Inquiry can pursue to actually force prices to change. Businesses in Australia can charge what they like and choose which payment mechanisms they want to accept. We’re not going to see legislation recommending that a specific category of products be exempt from the general laws that apply to every other business, especially for entirely discretionary items such as movies and music downloads. Nor will we see geo-blocking made illegal. If the government had the power to enforce such a law, it could also force takedowns of material on overseas servers, and generally interfere with sites hosted entirely overseas. It’s never going to happen.

The best we might hope for is that having their tactics exposed might result in a consumer revolt. But even if the information about their behaviour is public (not guaranteed if those companies demand confidentiality), consumers have known for years that this is a problem, and some have already resorted to piracy or other alternatives. The revolution is tepid at best, and meanwhile the rorts continue.

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