There has been much said about the IT Pricing — or Australia Tax — Inquiry. Will it work? What will it achieve? When will we see results? Interestingly, there already have been behind-the-scenes benefits. The punchline? Microsoft Australia is reportedly making less money than ever from the Federal Government thanks to its testimony. About $100 million less, actually.
The IT Pricing Inquiry was set up some time last year as an attempt to tackle companies like Adobe, Microsoft and Apple over the so-called Australia Tax: the idea that Aussies pay more for music, movies and software, despite much of it being distributed digitally and attracting no freight or packaging costs.
Microsoft was one of three tech companies called to appear a few months ago, and the company’s local managing director, Pip Marlow, went down to Canberra to testify.
As part of her testimony, Marlow said that Microsoft doesn’t set its prices globally, instead it lets its local offices decide prices as required for the local region. In short, Australia is charged more because it’s generally prepared to pay it.
That statement set the hairs of some on end, including the folks from AGIMO. That is, the Australian Government Information Management Office which deals — among other things — with IT procurement and the gadget buying power of the Federal Government. It’s handling the government’s cloud strategy, the government’s device strategy and more interesting stuff.
Gizmodo understands that as a result of Microsoft Australia’s testimony before the IT pricing inquiry, AGIMO staff have been able to gain leverage over Microsoft to negotiate the cost of IT procurement down, achieving savings in the vein of about $100 million. Admittedly, they already get a cheaper price than you or I could for buying in bulk as a big government contract, but now it’s apparently even cheaper!
While this won’t immediately get you cheaper music or less expensive software from the likes of Adobe, it means that one of Microsoft’s largest government customers now has some leverage over a large supplier. The more you know.
We’ve reached out to Microsoft for comment, but we haven’t heard back yet.