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.


Comments

    They can always fine and sue the companies.

      Fine and sue them for what exactly?

        A bogus law we can pass just to suit our need to fine and sue them

          And the I's have it.. BANG... BANG

          Amend the Competition and consumer Act 2010 to define it as "Unconscionable Conduct" or "Other Unfair Practices" to ruthlessly markup an item beyond reasonable limits.

          Never going to hapen though.

    You know what I'd like to see ? An LH / Giz article rounding up all the freeware alternatives to the software in question e.g. Vectorian Giotto for Flash, OpenOffice for Office and so on. Most peeps probably know them of course, but some peeps won't. The more alternatives there are out there, the more likely we're going to see a consumer revolt which *will* have the effect of driving prices down if nothing else will !

    Get the AFP to turn a blind eye to piracy for awhile then watch how quickly they (software companies like Adobe) will come to the party.

      And then what will happen will, will be the same that happens in other countries that ignore piracy - all kinds of trade restrictions.

        So what's your solution??? Come back with something - sure poo poo the idea but come back with something otherwise all you are doing is contributing to digital white noise MATE!!!

          The solution is - LIVE WITH IT. They're private organisations. They can charge whatever they want, and should have that right. If they wanted to charge Australian's 10000 times what they charge in the US - again they should have that right. And you have the right not to purchase the product if you don't want to pay that - if enough people don't, market forces will lower the cost. And piracy is never excusable,

            So your saying that, if you owned a private company that produced, say a drug for curing cancer, that you should be allowed to charge whatever you want and people should just "LIVE WITH IT" ? Whatever happened to decency ? Should we do away with common courtesy and manners to ? What about respect, should be do away with that and "LIVE WITH IT" ?

              So you're comparing a life-saving cancer drug that you NEED, to a device that you don't need, but only WANT?

              And anyway, yes drug companies should be able to charge whatever they want - and they do. Look at how expensive some of these drugs are for serious conditions. In Australia, a lot (but not all) are on the PBS (so the Government pays for the majority of it), but for those that aren't, Aussie citizens are paying $500,000+ a year for some of these drugs. And in countries with no PBS equivalent, you're paying those figures for all the drugs.

              So you want the Government to subsidise your music/movie/tablet purchase?

    There is a solution - but it requires something our Government lacks: the Cajones to stand up to the US. If a company can't provide a product at appropriate price, copyright enforcement is suspended.
    Microsoft, allows piracy of their OS to run rampant in China - because the users get "locked in" to Windows. Prices in Southeast Asia for Photoshop and Autocad (even the legit copies) are incredibly low. Until similar price deals are in action, NO software copyright enforcement.

    In a similar vein - companies that decline to turn up to a hearing committe? Jail time for the chairman, assets frozen, fines of one million dollars per day imposed. On the company, AND the chairman of the board (or local head honcho).

      So you're suggestion is blackmail?

      And your suggestion could also lead those companies closing down their Australian offices. Can't jail anyone or fine a company if they don't operate in Australia.

        What benefit do we get from these companies having Australian offices? Apart from being a sales outlet, what do these offices do?

          Create employment, allow them to assist Australian police (Look at Conroy asking Twitter to open Aussie offices), provide better support

    Why can't the Government allow parallel imports of electronics and software in the same way they allowed it for music about 10 years ago? Music prices dropped by at least a third when that happened.

    It would make "grey" imports totally legal and manufacturers would be required to honour warranty on them in Australia.

      They do

      JB Hi-Fi sells a small range alongside the Australian distributed goods

      A lot of online stores - Kogan, etc. source their products from overseas, and not from Australian distributors. That's how they're so cheap.

      And manufacturers aren't required to honour the warranty - the retailers are.

      Grey imports are absolutely legal, and encouraged. But they can't demand the manufacturer honour the warranty, only that there is a warranty for the customer. There are lots of electronic grey importers, such as kogan.com.au, who are required to supply their own warranty for the products if the manufacturers won't.

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