Aussie Government To Go Ahead With Price Inquiry, Microsoft And Apple In Its Sights

This has been a long time coming. Heck, we might finally make some headway where our distant sauropod ancestors failed all those millions of years ago. At least, that's how long it feels like Australians have endured outrageous price differences on products like Microsoft Office and Adobe's Creative Suite, compared to the United States. While you have the inconvenient option of going overseas for these products, you really shouldn't have to.

Communications Minister Stephen Conroy yesterday give the inquiry his blessing, though things won't officially get under way until later this year, according to a story today in The Age. All the big names will be asked by the House of Representatives to come up with proper reasons for their gouging ways, including Microsoft, Apple and Adobe, though Labor MP Ed Husic believes the likes of Canon and Lenovo should also be looked at with closer scrutiny.

The Age mentions that last year, the Productivity Commission published a report that said price gouging was "one of the key reasons for the rise in consumers shopping on foreign websites", a fact I'm sure doesn't surprise anyone. The arguments we always hear from these companies — the size of the market, support costs, taxes and duties, etc — were found to be "not persuasive" by the Commission, says Husic.

I reckon most people would have swallowed a five, even 10 per cent price difference, but when you're asked to fork out numbers in the 50-80 per cent range (and sometimes higher)... well, that's just having a laugh, really.

Image: Cimexus / Flickr

[The Age]


Comments

    Well really we *have to* swallow at least a 10% difference for prices, when buying from the UK or US we don't pay VAT/Sales tax yet here we would have to pay GST. Though yes to me this can only justify up to a %15-20 difference, not %80.

      I think it was implied that the 5-10% difference would be acceptable on before tax prices.

    So how do you police prices from companies are located overseas..?

      DFAT

        I seriously doubt that the "Department of Foreign Affairs and Trade" has the ability, the power or the nads to do anything about it. Just sayin is all :)

          They won't be policing the prices on the overseas websites they will be forcing a reduced pricing difference in Australia when they bring items in I think part of the reason things are so much cheaper overseas than here is because relative to the US dollar the Aussie dollar is doing quite well and the scaling of price differences is based off of when the Aussie dollar was at 57c which means we are paying at least double what they would pay elsewhere because the prices never dropped to match our inflation

      They will have subsidiaries located in australia. if it has a .com.au it must be registered in australia as a company. They will go after that arm of the company.

    About time. I bought a Lenovo laptop from a company called PriceUSA for $1000 shipped. The same laptop from Lenovo AUS was $2,500 at the time and yet they are both made in the same place AND the one from PriceUSA traveled MUCH further to get here

    I think Apple prices are usually pretty good here, as mentioned in the article Adobe is a big culprit. I'd also mention Sony too as their prices here are crazy inflated even for digital distribution.

      Apple hardware prices are pretty comparable, but this inquiry was specifically aimed at software price discrepancy:

      ''People here scratch their heads trying to work out why they get fleeced on software downloads,'' Mr Husic said. ''When the Productivity Commission asked IT companies why they charge so much for downloads, even they found the answers were not persuasive.''

      Read more: http://www.theage.com.au/technology/technology-news/it-giants-in-price-probe-20120428-1xs16.html#ixzz1tOLj3m7L

        A song on iTunes in the US is 99c while a song here $1.79....

          Not to mention their rubbish DOUBLE THE PRICE IF IT'S A POPULAR SONG approach.

            It is not illegal to make a profit on popular products by selling them at an increased price. Likewise it is not illegal to sell unpopular, outdated, excess inventory etc products at a discount price or below cost. It is illegal to sell products below their cost of production when the intent is to hurt market competition.
            There is no legal impediment to selling the same product at different prices in different markets.
            For hardware the import and distribution costs for Australia vs USA are quite significantly different and can justify a different price, maybe not the large differences that we do see.
            For software however the economic arguments are quite different. We all know that copying a piece of software or music or video can be done at almost zero cost. Therefore downloading also has the same cost associated with it. A piece of properly Licensed software, music or video does have a small administration cost associated with it. The item can be tracked, the supplier (should) keep records if your copy is lost or damaged or needs to be replaced or tracked for free upgrades.
            So all in all it is an investigation that may not achieve much.
            As for me. I am visiting Singapore next week. I intend to fill up on as much cheap h/w and s/w as I can.

          The prices for music are set by the music records in Aus?

            Then what about the price of apps? Apple finally managed to bring it down to .99 after so long when AUD is stronger than USD

              They aren't dealing with the record companies when it comes to applications. God knows what the contracts look like but I doubt they are pretty.

          The prices of music from the iTunes store, really isn't Apples choice. The record companies in Australia held Apple to ransom for 12 months before we saw the iTunes store here. They pushed for a bigger piece of the pie. So go and ask the AMI what they do with the extra money they take from you, every time you buy a song from iTunes.

      Yeah I think Apple prices are very close tbh as long as you factor in tax and realise that the $199 or whatever iPhone is the price paid in addition to a phone contract. Those are the two things I find get overlooked by many complaining about pricing discrepancy with the US.

      Music prices already mentioned is a slightly sore point for individual song sale....for albums they are often fairly comparable to a physical copy too though (although given that, I'll go physical any day of the week).

    And the record companies before them got off scot free, still do. After decades of complaints, nothing...
    They were ripping us off long before Microsoft and Apple existed. Not just a few cents either.

    They should do one for camera equipment. The price for cameras and camera accessories (e.g. spare battery, electronic viewfinder attachment) in Australia can be 2x what it is in the USA.

      Amen. Nikon was the first to realise that we're not stupid. Thank god for grey importers like JB and Kogan that still offer warranties

        JB grey import?! Those smartarses -- I called them on their "find a lower price elsewhere and we'll match it" policy using grey import prices and the reason given for not obliging was that it was grey import pricing. Just a little bit hypocritical, I think. It was indeed a camera that was in question, that crazy red entry-level DSLR from Canon, I think it was.

      Why stop there? We get screwed on just about all imported goods. I think all the pricing is high because we don't produce anything in Australia anymore and the things we do produce cost more due to the higher cost of living life cycle.

    Steam and Origin should also be in the firing line. Paying the same price and sometimes more than a physical copy of a game is a little too much to ask. Max Payne 3 is a good example; Aussie EB Games $88 retail box (PC) $88 digital Steam. Please explain "market differences, shipping and taxes" for digital goods to me as I am not seeing the justified price here for a digital downloaded from servers maintained overseas.

      As said numerous times, thats the publishers fault, not the "stores" fault.
      Valve will not argue over the price for big games such as COD or DoW, purely because if they do, the publisher might just go elsewhere.

      and don't forget its $89.95US (well at least mine is all in USD)..... steam wouldn't exist if it charged those prices to its American customers! Its taking the piss big time

    I've seen prices getting a bit better recently. My latest gadget was about the same price to buy in a retail store here than Best Buy in the USA.

    Digital stuff still seems overpriced; and it's very annoying to see books available for sale overseas but not here.

    And how about we next start on books - both p and e books. Outrageous prices, restrictive trade practces What happened to "free trade"?

    All you need to do to see why prices are higher here is look at both the average wage and the minimum wage. In the US it is $26,000 and $7.50 or so, in Australia it is $62,000 and $17. If you cannot see how that adds to the cost of doing business here, there is something wrong with you. More importantly, if you cannot see how much more affordable everything is here compared to the US, in terms of how hard you have to work to pay for things, then there is absolutely no hope for you at all.

    Let's look at an example for the average Australian consumer vs the average US consumer. Adobe CS6 Production Premium upgrade is Au$626, compared to $375 in the US. That seems expensive, except that it represents just 1% of the average Australian wage but it is 1.4% of the average wage in the US, making it 40% more expensive in the US than it is here. How can you complain about things being more affordable here? Would you accept a 50% wage cut if it meant everything was the same price here as it is in the US?

      I was *just* about to post this.
      As much as it can't be correct for 100% of the cases, it has to be taken into account for all of them.
      +1

      Such things would only matter if they were made in the respective countries. owever as they are made for as cheap as possible in Asia your arguement doesn't hold any water.

      What if I earn the equivalent of someone in the US doing the same job?

      Your argument does not hold water. No arbitrary measure of earnings should be used to justify why foreign companies should/must be able to sell the same product at an inflated price.

      Where is the increasing cost of living for Australia factored in here , or home loan interest rates and respective property prices? Sydney and Melbourne are among the most expensive cities in the world to purchase property in.

      I concede the argument that on the surface it seems we earn more than those in the US - but "averages" as a measure can also be quite misleading. Just because we 'earn more' doesn't necessarily mean that a large percentage of it is disposable income.

        This is very true. The cost of living in every respect is far more here than what it is in the US- food, utilities, housing, everything is so much cheaper there.

          Yes the cost of living is down there, but so is their wages, its all relative.

      For a physical product, sold from a bricks-and-mortar retail organisation with local employees and delivery costs? Sure, makes sense. But for a collection of ones and zeroes pulled from a web service? Bollocks. Apple's servers don't have to do any more work servicing a customer in Australia than they do servicing one in Cupertino, so why should they be able to jack up prices over here simply because our economy hasn't tanked?

      The short answer is, they do it because they can - retailers fit the price to the market, and they don't like to discuss their margin. Your argument satisfies the question of why Aussies CAN afford to pay more for software, not why we SHOULD.

      You do realise that on the 22nd of april the AUSD was 1.05 to 1.00 the USD? making adobe at $625 AUS and $375 a complete ripoff.

        I do sympathise a bit with some of the companies though as out dollar has fluctuated in relation to the US a bit over the past few years. At points it was down in the high 80's or low 90's vs the US dollar. Companies probably are better served setting a fixed local price in many cases and need to cater for such fluctuations.

        But theres fair cases (personally I think after the adjustments late last year, the Apple App stores prices are quite decent) , and then theres stupid, such as the 200% markup you mentioned.

      MotorMouth - as others have pointed out, the cost of living argument only makes sense if you are talking about physical products manufactured in different locations. For example, cars made in Australia might cost more than the equivalent cars made in the US because labour costs are higher in Aus (even though they often use the same engine designs).

      Your argument shouldn't hold for Apple products, which are made in China, not the US. The only difference should be the shipping costs (if any) and retail margin, because average retail wages and rents are higher in Aus than the US.

      Your argument certainly does not apply to software purchased online. The only argument for differential pricing is differences in the cost of after sales support. However, if that software support is outsourced to countries like India, the support costs should also be the same.

        I use to think if its Australian made it will cost more etc etc but then it got me thinking exactly how much more because when you get a car, lets say, the Monaro sell it here for $80,000+ then you get the same car and ship it to the other side of the world and change a badge or two and they can sell it for around $30,000US... Even though at that time the dollar was around the 80 cent mark it still doesn't add up. We are definitely getting screwed over left right and centre.

      In addition to the pint about digital vs 'bricks and mortar', this argument is also largely invalid when you consider that the primary justification for tech pricing in the first place is to cover the associated R&D in developing them, and then securing the relevant patents. Any mark-up we pay in Australia on top of the OS list price is also us paying a premium for the wages assocaited with development and licensing, which our wage prices affect not one jot!

      Essentially, we get to subsidise their lower-cost R&D work at a premium rate, at the cost of our own ability to develop something similar.

      Compared to that, our bricks and mortar costs are negligible at best. And added to that, overall averages and minimums in wage aren't comparable. Australia has an across-the-board base rate, while the US minimum has had a rate-reduced services sector since Roosevelt's New Deal, where workers are often (usually?) expected to make 50-70% of their income through tips. The median income (though having it's own problems) is a better indicator at the national level, and shows the US is well AHEAD of Australia.

      You have nfi what you're talking about. Purchasing power parity is the highest in the united states. Go read a book.

    Not just tech. I bought a few pairs of asics tigers in oz for around $200. Went to an upmarket shoe store in manhattan NYC and bought the same shoes for $65. No wonder I order all of my stuff from OS.

    As someone who works in the distribution side of IT, this is welcome news. The Australian dollar reached parity with the US dollar in October, 2010 - and yet for the past one and a half years the software (and hardware to a lesser degree) companies have continued to gouge Australian customers with significantly higher prices that what they sell for overseas. Unfortunately its the local IT stores that get blamed blamed by the customers for the high prices, when in reality their pricing is a reflection of their costs (I'm not talking about the big retail stores like Harvery Norman, Dick Smith, etc, but the smaller guys). This is why you will never see a localised Ozgameshop or Play Asia - even the on-line only stores can't compete when their costs are so much higher.

    I hope graphisoft are part of the enquiry, as there is only one supplier in Australia of ArchiCad the price gouging is massive. Autocad has in a similar monopoly I belive but the US vs Au price is a bit better.

    I will probably just move to the States when I am older, screw getting, urm, screwed by the prices for everything over here.

      This is so ignorant it's staggering. You'll move to the US? Really? You think it's just that easy to get a greencard and relocate? You willing to take the hit to your paycheque too? No safety net, no medicare,every industry but IT and service going down the shitter? Yeah... I love America and enjoy every time I go there, but moving to buy cheaper crap is an awfully juvenile reason.

        Hahaha insanely stupid. "Yeah I can't be bothered paying more for video games on Steam I'm LEAVING WAHHH". Excellent idea. Enjoy high murder rates, rednecks, and getting fat.

        There are a lot of disadvantages, and the the dirt cheap cost of living is offset by the low wages... BUT there are SO many more opportunities for people in a lot more and varied industries that Oz just can't support because of our size, AND a lot more variety of products, food choices etc that are always available to you that is staggering compared to the paltry pittance we have here at even our very best retail shops.

    Slightly left of center here... but if I buy the students edition of Photoshop CS6 from Amazon at roughly $250.00, is there any reason I wouldn't be able to actually use it even though I'm not a student..? I know, I know, it makes me a bad boy but at $700.00 it's a joke in both countries.!

      No reason you can't use it - though your retailer is supposed to ask for student ID before selling it to you.

      When you go to the checkout Amazon will probably refuse to ship it to a non-US address. So likely doesn't matter either way.

      I'm pretty sure that the student versions of some adobe products include a notation in the file that it was made using a student version. Also, the licensing conditions on the student versions of the software require that you agree to not use it for commercial purposes.

      Student edition of photoshop doesn't come with a license key- you have to email Adobe a copy of your valid student ID / documentation.
      I did this after buying for $180 from studentsoftware.com.au. Emailed Adobe my student card, got a reply back within an hour with a licence key.

    Totally off topic but I see this a lot in journalism and I don't understand why...."most people would have swallowed a five, even 10 per cent price difference" - what is with the practice of switching from "five" ie letters to "10" ie numbers? Five, or even ten per cent? 5, or even 10 percent? Apples, oranges.
    Is there some rule of grammar I don't know about aside from the obviously badly worded question you are reading now?

      Don't hold me to this, but according to my old statistics lecturer, when you source numbers and percentages, anything under 10 would use the word eg. one, five and eight percent. While anything above it would use the number form eg 47%.

        This +1

        +1.
        Also, the ISO standard states that a space should be used between the number and the unit.

      As far as I know, this comes from the Australian Style Manual (6th edition): "Statistically oriented text: Use numerals for numbers over nine in documents where numbers occur frequently".

      For what it calls "General text", you should "use words for numbers up to one hundred". Then you get a list of reasons where these rules might not apply.

      Don't mean to be pedantic, I just need to take every opportunity to justify the $50 I spent on this sleeping pill.

    They should do a broad range enquiry into many items...
    Earlier this year I bought a pro Nikon lens (70-200mm f/2.8 VR2) for $2150, in the shops here it will cost you up to $3299. A few weeks ago I bought 2 Nikon SB-910 flashes with 3 year 3rd party warranty for $470 each (can be bought for as low as $441) but if you walk into a shop to buy them here they will cost you up to $749 each.
    Just why are we paying 50-70% more for these items..?

    22 AA Energizer and Duracell batteries cost $6 AU in Hong Kong and u get a free gift ............can't even buy 2 for that price in Aust!

    I hope they'll start to look into the price of cars too.

    What about the DVD rort set up by the real video pirates -- the movie industry?
    When the Boat Comes In - Complete Boxset £46.99 (AUD 73) on Amazon UK, ABC Shop wants AUD299.99 -- FOUR times the price. What a ripoff industry!

    Every big business in australia is a cartel i tell you, they know they could lower the prices, but why would they? They've been charging us so high for years, even though they knew the game was up, they already have a huge profit from us.

    Download content should be the same price for all world wide. EA have direct download games for $80 Australia but the same in USA is about $40-$50. This is the same as Microsoft as well, there download version of TechNet is over double here than in the US. I would be VERY happy if the downloads carry the SAME cost as the rest of the world and not double just here.

    About F*cking time! The Adobe price inflation's here are criminal. It is actually cheaper in some cases to fly to the US and purchase the software! I have resorted to purchasing through US stores, or getting a friend in the US to purchase software for me. If the price was bought down to 5-10% price difference I would actually buy it in Aus.

    For every enlightened consumer who's disgusted at the excessive pricing of most retail goods in Australia, there are probably 10 or more people who either don't know any better or who are too lazy to do anything about it. That's why Australians are and will continue to be ripped off. I, for one, don't expect anything to change as a result of this enquiry.

    not just software... everything is too expensiver

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