IT price inquiry: more testimony to come

The inquiry investigating IT price discrepancies in Australia is nearing its end, but will first hold public hearings with local arms of international record labels, committee member Ed Husic told iTnews. 

The parliamentary IT pricing committee held three public hearings with Microsoft, Apple and Adobe over their pricing structures late last week.

The three companies had been subpoenaed to appear after repeatedly resisting the committee's efforts to ahve them participate beyond merely issuing written submissions.

Finally appearing on Friday, neither company was deemed to have provided an adaquate explanation of their international pricing structures, Husic said.

He said he was impressed with Apple’s openness, concerned with Microsoft’s admission it indulged in price discrimination and had no plans to stop doing so, but was overall frustrated at not receiving answers to direct questions — a sentiment he said was felt throughout the committee.

“A number of us felt we hadn’t had our questions answered, particularly around how prices are set,” Husic said. 

“There’s no clear or comprehendable way that any of them were able to demonstrate the way they set prices.

"There was not a thorough sense of geo-blocking, other than it’s used as an internal accounting mechanism to be able to easily segment markets based on performance.”

He said the committee found it unbelievable that the representatives of Microsoft, Apple and Adobe at the hearing purported to not be across the pricing and revenue structures of other regions within their own companies. 

“It seemed hard to believe they wouldn’t know that, given they’d all be internally very competitive against each other, which means we can’t get a handle on how prices are set," Husic said.

Apple Australia regional vice president Tony King represented the consumer giant at last Friday’s hearing. He attributed decisions on pricing to its executives in the US while blaming retail partners and digital content owners for higher local prices.

When questioned on price disparities of content within Apple’s iTunes store, King denied any responsibility and said music labels, studios and TV networks region-specified prices for digital content, with big mark-ups. 

He urged the committee to take the issue up with the digital content rights holders — a move Husic said it will make soon. 

Legal focus

The committee will now focus on geo-blocking, potential competition law reform and trade agreements, leaning on the Department of Foreign Affairs and Trade’s discussions with its Trans-Pacific partners, as well as a recent court ruling in the US which found copyright holders cannot block the resale of products that are made outside of the country in the US.

The US Supreme Court last week found goods made and sold out of the US could be resold in the States without violating copyright law.

General counsel of the US’ Software and Information Industry Association Keith Kupferschmid said in a statement the ruling would harm US businesses and consumers around the world. 

“[The] decision will create a strong disincentive for publishers to market different versions and sell copies at different prices in different regions. The practical result may very well be that consumers and students abroad will see dramatic price increases or entirely lose their access to valuable US resources created specifically for them,” Kupferschmid said. 

Husic said the committee would discuss the case with Australian industry and the Australian Digital Alliance. 

“So we have a few more discussions to hold, but we’ll be moving shortly to report back in the near future,” he said.

Husic also signalled an interest in producing a draft report prior to the final report tabled in Parliament.