Apple ordered to end exclusive iPhone deal with France's Orange

[AppleInsider]

Apple must immediately cease its exclusive relationship with France Telecom's Orange and allow other local carriers to offer the iPhone to its subscribers, the French competition counsel ruled Wednesday.

On September 18th, France's third largest mobile operator Bouygues Telecom filed a complaint with the regulator, arguing the deal between Apple and its larger rival violates local freedom of competition and pricing laws.

The ruling handed down this week is reportedly a temporary and precautionary measure while the counsel continues to investigate the merits of Bouygues' claims.

In addition to being ordered to open up the iPhone to other French carriers, Apple and France Telecom are also prohibited from entering into any other exclusive agreements for future iPhone models during the precautionary period.

The French competition counsel said Apple's exclusive arrangement with Orange poses a serious and immediate threat to competition in the wireless sector and causes consumers to incur hefty and unjust fees should they attempt to switch providers. (A copy of the 48 page ruling can be seen here [PDF] in French.)

Representatives for Bouygues Telecom applauded the counsel's decision and said the carrier is looking forward to offering the iPhone to its customers in the near future.

France Telecom plans to appeal the decision.

[ View this article at AppleInsider.com ]

[TimUSCA]

I don't see why this is anti-competitive... other carriers have other cell phone. You don't go telling Sony they're illegally offering God of War, do you? Or Microsoft offering Halo?

These companies should NOT be forced into allowing their hardware on other carriers anymore than gaming companies should have to offer their software for other consoles.

[ltcommander.data]

I guess this and the OS X EULA lawsuits go back to the core issue of whether you are required to sell to everyone or whether you can choose who you want to sell to. Personally I think distribution rights should still hold in this case. Apple doesn't have a monopoly in the smartphone market much less the whole cellphone market so it really isn't anti-competitive. I'm pretty sure there have been other phones with exclusivity arrangements too. It's a valid marketing tactic.

[Rot'nApple]

Hey France, you want some cheeze with that "whine"?!

[monstrosity]

bloody socialists dont know the meaning of the word competition.



All this does is hinder innovation and rule out a business model which in my opinion works better. So rather than the industry competing with similar business model to Apple, the industry cries like a little girl, and Apple are forced to use the outdated model.

And then the whole thing stagnates, progression halted, but thats socialism for ya.

[Virgil-TB2]

Personally, I absolutely love it when some old-fashioned right-wing capitalist company gets blind-sided by decent modern European laws designed to give the consumers a chance for a change.

Liberté, égalité, fraternité!

[potterhead4]

EVERYONE! Unlocked no-contract iPhone party in France!!!

Ebayers, start your engines.

[hok]

Comparing a phone and a game is stupid, there are technical reasons that a game can have exclusive agreement, but there is no such thing for a phone that is based on common interfaces.

This is pro consumer, pro competition, carrier will have to make better offer, than try to lock users with their exclusive partnership. Some people of this site are masochists.

[godrifle]

Agreed. Viva la competition and consumer rights!

Originally Posted by Virgil-TB2

Personally, I absolutely love it when some old-fashioned right-wing capitalist company gets blind-sided by decent modern European laws designed to give the consumers a chance for a change.

Liberté, égalité, fraternité!

[monstrosity]

Originally Posted by hok

This is pro consumer, pro competition

No, its merely disguised as "pro consumer, pro competition".

In the long term it's bad for the consumer.

[godrifle]

Yeah, because limiting consumers to AT&T's network is good for consumers.

Originally Posted by monstrosity

No, its merely disguised as "pro consumer, pro competition".

In the long term it's bad for the consumer.

[JeffDM]

Originally Posted by monstrosity

No, its merely disguised as "pro consumer, pro competition".

In the long term it's bad for the consumer.

And a fine job you did explaining why that's the case. Or not.

[crees!]

Originally Posted by monstrosity

bloody socialists dont know the meaning of the word competition.



All this does is hinder innovation and rule out a business model which in my opinion works better. So rather than the industry competing with similar business model to Apple, the industry cries like a little girl, and Apple are forced to use the outdated model.

And then whole thing stagnates, progression halted, but thats socialism for ya.

Exactly and a precursory view of the US for the next 4 years.

[irnchriz]

The carrier exclusive deals for the iPhone are no longer essential with the iPhone 3g. It actually will work in Apples favour as they can ship to whichever network wants to deal with them. It will be up to the network to setup the visual voicemail and foot the full cost for the hardware (e.g. the TOTAL cost including the cut apple gets from the connection).

[monstrosity]

Originally Posted by godrifle

Yeah, because limiting consumers to AT&T's network is good for consumers.

Yes it is, it means apple can create a more integrated service, which to me as a consumer is 'a good thing ' and it means other companies have to pull their finger out their ass to compete.
Tight integration ,simplified experience, greater efficiency, faster pace of innovation, these are all plus points for me!

[ncee]

It will be interesting to see if it has any kind of rippling effect?

Skip

[monstrosity]

Originally Posted by JeffDM

And a fine job you did explaining why that's the case. Or not.

my RSI is exceptionally painful today, so my comments may be more brief than normal.

[stottm]

Apple could just say "Screw France" and take their toys and go home. No French Apple Stores, No online presence in France, No Apple iPhones, ipods or anything else.

Mail all the Apple customers in France a nice later blaming their government and welcome them to find a duty free shop! Blast the EU newspapers with advertisements and press releases announcing the news of the French pull out.

If it was my business I sure as heck would consider it an option. Especially since I was already selling such huge quantities of product outside of lonely France. Apple doesn't need France. France needs Apple.

Of course, the board of directors and the stock holders wouldn't be too happy... But I bet money someone is looking at the option and just how much business they would really lose.

[razorpit]

Originally Posted by Virgil-TB2

Personally, I absolutely love it when some old-fashioned right-wing capitalist company gets blind-sided by decent modern European laws designed to give the consumers a chance for a change.

Liberté, égalité, fraternité!

Since when is capitalism a bad thing? You do realize that without capitalism you would not have a cellphone manufacturer or carrier to even worry about? Go move to a communist country and buy one of their left-wing socialist cellphones. I'm sure you'll be soo much happier.

[pmjoe]

So, doesn't that just mean they'll need to offer a higher priced unlocked model, like they do in other countries with better consumer protection laws?

[otwayross]

Originally Posted by stottm

Apple could just say "Screw France" and take their toys and go home. No French Apple Stores, No online presence in France, No Apple iPhones, ipods or anything else.

Mail all the Apple customers in France a nice later blaming their government and welcome them to find a duty free shop! Blast the EU newspapers with advertisements and press releases announcing the news of the French pull out.

If it was my business I sure as heck would consider it an option. Especially since I was already selling such huge quantities of product outside of lonely France. Apple doesn't need France. France needs Apple.

Of course, the board of directors and the stock holders wouldn't be too happy... But I bet money someone is looking at the option and just how much business they would really lose.

nice anti-french rant - have you been there?

have you compared this to how much apple would gain by going with more than one carrier?
no, thought not.

[frenchseb]

"France needs Apple", "Apple knows better what the user needs" ...

One day if I have nothing better to do, I will do a compilation of the best comments read on this site !

Yes France needs Apple, Apple please don't go, save us from our horrible government, Steve Jobs please contact Barack Obama and order him to cut all diplomatic ties in January with this country that doesn't understand anything.

Originally Posted by stottm

Apple could just say "Screw France" and take their toys and go home. No French Apple Stores, No online presence in France, No Apple iPhones, ipods or anything else.

Mail all the Apple customers in France a nice later blaming their government and welcome them to find a duty free shop! Blast the EU newspapers with advertisements and press releases announcing the news of the French pull out.

If it was my business I sure as heck would consider it an option. Especially since I was already selling such huge quantities of product outside of lonely France. Apple doesn't need France. France needs Apple.

Of course, the board of directors and the stock holders wouldn't be too happy... But I bet money someone is looking at the option and just how much business they would really lose.

[otwayross]

Originally Posted by pmjoe

So, doesn't that just mean they'll need to offer a higher priced unlocked model, like they do in other countries with better consumer protection laws?

they already offer a higher priced unlocked model in france

[dr_lha]

Originally Posted by monstrosity

Yes it is, it means apple can create a more integrated service, which to me as a consumer is 'a good thing ' and it means other companies have to pull their finger out their ass to compete.
Tight integration ,simplified experience, greater efficiency, faster pace of innovation, these are all plus points for me!

Apart from Visual Voicemail, what exactly have AT&T done that is so "integrated" with the iPhone?
Do you really think that T-Mobile couldn't replicate that if they were allowed to sell the iPhone on their network in the USA? (I'm not going to bother mentioning Verizon and Sprint, lets assume for now that Apple don't want to bother making a non-GSM iPhone, which is pretty reasonable assumption giving the limited market for CDMA).

AT&T exclusivity makes sense to Apple because they're the biggest GSM provider in the USA and I'm sure AT&T paid Apple a chunk of change for the privilege. In other countries where there are more GSM providers, it makes a lot less sense to the consumer. Consumer choice is a good thing. Having to allow the iPhone to work on multiple providers will make no different to how innovative the iPhone is, because in the end all those providers are giving is the phone/internet connection the iPhone needs to operate. The rest is the OS and iPhone hardware, which I'm sure Apple will continue to innovate with.

[robb01]

Originally Posted by otwayross

they already offer a higher priced unlocked model in france

How were sales on it?

_____________

[Wiggin]

Originally Posted by monstrosity

Yes it is, it means apple can create a more integrated service, which to me as a consumer is 'a good thing ' and it means other companies have to pull their finger out their ass to compete.
Tight integration ,simplified experience, greater efficiency, faster pace of innovation, these are all plus points for me!

Other than the visual voice mail, what other integration is there? I don't have an iPhone (largely because I will never, ever again be a customer of ATT wireless), so maybe there are some other features I'm not aware of. But as far as I know, every other feature of the iPhone is not tied to ATT and would easily work with any other network.

Originally Posted by stottm

Apple could just say "Screw France" and take their toys and go home. No French Apple Stores, No online presence in France, No Apple iPhones, ipods or anything else.

Or they could insist during contract negotiations on getting the same terms they have with Orange, which the other carriers may or may not be willing to agree to.

It seems the typical reaction in Europe for these types of cases is to presume guilt while you are deliberating the actual case; whereas in the US you'd have to have a pretty strong arguement going in for a preliminary injunction to be issued like this. I'm not saying one way is better than the other, just an observation. The US method would allow a potentially consumer unfriendly practice to continue while the case is heard. But the European way would create a mess if the court case ends up being decided in favor of the current exclusive arrangement and be potentially confusing for customers.

[otwayross]

Originally Posted by robb01

How were sales on it?

no idea

[pmjoe]

Originally Posted by otwayross

they already offer a higher priced unlocked model in france

I didn't know. This table says it's locked to the carrier.
http://support.apple.com/kb/HT1937

Is the issue really that you can only buy an iPhone directly from Orange (in other words, it has nothing to do with who you get wireless service from)?

What's to keep the quaint little cafe on the corner from saying Apple needs to let them sell iPhones too?

[Wiggin]

Originally Posted by otwayross

have you compared this to how much apple would gain by going with more than one carrier?
no, thought not.

Actually, Apple is probably able to leverage the popularity of the iPhone to get an exclusive carrier to pay more per phone because it would allow them to differentiate their service and increase their market share. Apple gains by a higher profit margin, the carrier gains by stealing customers away from their rivals.

If multilple carriers offered the iPhone then it is no longer a differentiater, and any one carrier will not be willing to pay Apple as much per phone because it is no longer a lever for increasing marketshare.

Apple could potentially make up for the lost profit per phone by selling more phones through multiple carriers, but then that also makes the iPhone a commodity which hurts its value down the road and could turn into a downward spiral like the RAZR.

[otwayross]

Originally Posted by pmjoe

I didn't know. This table says it's locked to the carrier.
http://support.apple.com/kb/HT1937

Is the issue really that you can only buy an iPhone directly from Orange (in other words, it has nothing to do with who you get wireless service from)?

What's to keep the quaint little cafe on the corner from saying Apple needs to let them sell iPhones too?

check this out
only for 1st month - figures are hard to find
but this is 5% selling unlocked - be interesting to know if this has increased or not thu 2008
not surprising given the price (650 euros)

[NeilM]

Originally Posted by monstrosity

bloody socialists dont know the meaning of the word competition. ...And then the whole thing stagnates, progression halted, but thats socialism for ya.

Of course the one thing that tends to undermine this argument is that France doesn't have a socialist government. Oops...

[monstrosity]

Originally Posted by NeilM

Of course the one thing that tends to undermine this argument is that France doesn't have a socialist government. Oops...

The whole continent in general and in comparison leans towards socialism.
Socialist tendencies.
Whether they choose to call themselves socialist is altogether a different fish.
A duck may not call itself a duck, but it's still a duck.

haha, can you tell it's dinner time.

[parky]

Personally I think I would just withdraw the iPhone for sale in France.
It is easier and would not make that much of a difference in the total iPhone global market.

Apple do have a choice in this matter they do not HAVE to sell the phone to anyone via anyone if they don't like the terms of the deal. Simple answer - don't sell in that market.

Just the same with the DRM issue in Norway, withdraw the iTunes Store from that country, therefore meeting all regualtions.

Ian

[dr_lha]

Originally Posted by parky

Personally I think I would just withdraw the iPhone for sale in France.
It is easier and would not make that much of a difference in the total iPhone global market.

Right. Clearly it would be in Apple's financial interest to withdraw from a large market such as France. Good business sense there (s)parky.

[Cubert]

Not too surprising from a country that makes it illegal to work more than 36 hours a week.

[parky]

I said "if I was Apple" not "Apple should".

I also said withdraw the iPhone not everything.

Has the iPhone been a big seller in France? It did not appear so the last figures I saw.

What impact would the loss of sales be compared to the ever increasing iPhone Market.

When have Apple ever actually done what is best for there business? I can think of examples where they have not perhaps made the best business choice. My guess is that Steve is hopping made and will need to be stopped from withdrawing the phone from FR.

[PXT]

Isn't this the French law whereby a consumer should not have to buy product B in order to buy product A?

I think this is a reasonable pro-consumer principle, but of course like all such regulation will have good and bad consequences.

I wonder how this works out in practice for Apple. For example, surely Apple have the right to demand the same terms and conditions from all the other networks as are in the deal with Orange? I have often thought that Apple would get more out of selling the iPhone to all comers and then selling further products through it. Through the iTunes halo, I bought an iPhone this summer, and through the iTunes/iPhone halo I have just bought a unibody Macbook - and very happy, thank you very much.

[voodooru]

we should have the same thing here in the US.

[TenoBell]

The reason the iPhone even exists is because of AT&T. Apple did not have a prototype of the phone to show AT&T when they agreed to carry it. AT&T just went on faith that Apple could produce a great phone.

AT&T did not force stipulations on Apple as to the hardware on the phone or force Apple to tie the phone into AT&T services. These are all common practices of every major carrier.

AT&T allowed the iPhone to have unlimited data at a comparatively low price. AT&T does not charge extra for services such as visual voice mail, GPS, media downloads as Verizon and other carriers do.

Originally Posted by dr_lha

Apart from Visual Voicemail, what exactly have AT&T done that is so "integrated" with the iPhone?

[TenoBell]

This would force T-Mobile, Sprint, and Verizon to all unlock their exclusive phones also.

Originally Posted by voodooru

we should have the same thing here in the US.