Apple's iPhone sales tactics in Europe under antitrust investigation

Posted:
in iPhone edited January 2014
The executive body of the European Union is investigating whether Apple is engaging in anticompetitive practices with its iPhone sales tactics across the continent.

Documents obtained by the Financial Times show that the European Commission has begun looking into whether Apple's agreements with carriers are illegal. The commission has expressed concern that the deals could ensure Apple's rivals cannot secure better sales agreements.

European Commission HQ


The investigation reportedly began after the commission received "private complaints from mobile operators." The commission's investigation remains preliminary, and no formal charges have been brought against Apple.

The investigation was brought to light by questionnaires sent by the commission to mobile operators across Europe. The nine-page document reportedly inquires whether carriers are being forced to buy a minimum number of iPhones, or if they are restricted on how to use their marketing budgets.

The document also asks whether Apple enforces any clauses on subsidies for handsets that compete with the iPhone, and it quizzes operators on whether contractual restrictions prevent the iPhone 5 from accessing high-speed 4G networks in Europe. Carriers have until June 17 to reply to the questionnaire.

Previous European Union investigations of Apple have taken a closer look at the company's warranty practices and the iPad maker's e-book deals with publishers. But those inquiries have not led to formal antitrust lawsuits.
«134

Comments

  • Reply 1 of 74
    MacProMacPro Posts: 17,586member
    Surely any manufacturer can set the terms of its own distribution agreement? If you don't like them don't sign up.
  • Reply 2 of 74
    froodfrood Posts: 771member

    Quote:

    Originally Posted by digitalclips View Post



    Surely any manufacturer can set the terms of its own distribution agreement?


     


    As long as they don't violate any laws...


     


    Competing with your products instead of distribution clauses is the way to go. 

  • Reply 3 of 74
    joshuarayerjoshuarayer Posts: 151member

    Quote:

    Originally Posted by digitalclips View Post



    Surely any manufacturer can set the terms of its own distribution agreement? If you don't like them don't sign up.


     


    Apple pretty much sets the contract from my understanding and if the carrier doesnt like it, they dont get the iPhone. It has already been made known that Sprint is losing money from carrying the iPhone because of the contract that Apple requires. For other carriers, they probably see it as, "If we dont have the iPhone, we will lose our customers to the competition who have been waiting for their contract to end so they can get the iPhone with someone else."

  • Reply 4 of 74
    zoffdinozoffdino Posts: 192member


    I don't see anything illegal in making a product that the market really really wants, then squeeze the balls on everyone who's trying to sell that product to extract maximum profit from it.


     


    Yet legality away, Apple is a bitch when it comes to negotiation. Apple wants deals that are often favorable to them, at the expense of its partners. I wouldn't mind seeing Apple lower the bar a bit and make the phones available to more carriers to increase its customer base.

  • Reply 5 of 74
    herbapouherbapou Posts: 2,208member

    Quote:

    Originally Posted by joshuarayer View Post


     


    Apple pretty much sets the contract from my understanding and if the carrier doesnt like it, they dont get the iPhone. It has already been made known that Sprint is losing money from carrying the iPhone because of the contract that Apple requires. For other carriers, they probably see it as, "If we dont have the iPhone, we will lose our customers to the competition who have been waiting for their contract to end so they can get the iPhone with someone else."



     


    Indeed. Apple way of dealing with the carriers is rotten to the bone. All the concerns in the investigation are valid. Bullying the carriers is a double edge sword, especially when youre products are on the decline.


     


    Because of the big market share in the US, the US carriers have no choice to accept Apple terms. I have seen numerous times Verizon and AT&T CEO's on CNBC complaining about subsidies and how they would loved to get rid of them, mainly because of Apple way of doing business with them.  If you are wondering why the carriers stores push anything but the iphone to the customers, its because they hate Apple.


     


    Elsewhere in the world, lost of carriers are not offering the iphone because of unacceptable Apple terms. To a lot of internationnal carriers, Apple tiny market share in there countries make it difficult for Apple to strike deals because the carriers dont care if they dont offer the iphone.  So on top of not having there products being distributed, Apple is getting an anti-trust lawsuit. If there is one country where an anti-trust lawsuit should be made, its the US.


     


    This is one the reasons Apple absolutly must deliver a sub $300, so it can be sold unlock by lots of internationnal carriers. I hope Apple gets to his sense and stop bullying the  people that sell there products.

  • Reply 6 of 74
    jragostajragosta Posts: 10,473member
    Previous European Union investigations of Apple have taken a closer look at the company's <a href="http://appleinsider.com/articles/10/09/25/european_union_ends_antitrust_investigations_of_apple">warranty practices</a> and the iPad maker's <a href="http://appleinsider.com/articles/11/12/06/eu_investigating_apple_for_anticompetitive_e_book_pricing">e-book deals</a> with publishers. But those inquiries <a href="http://appleinsider.com/articles/12/12/13/eu-ends-antitrust-probe-after-apple-publishers-agree-to-let-retailers-set-e-book-prices">have not led</a> to formal antitrust lawsuits.

    'Nuff said.

    Apple is a big target and gets investigated all the time. Big deal.
  • Reply 7 of 74
    herbapouherbapou Posts: 2,208member

    Quote:

    Originally Posted by jragosta View Post





    'Nuff said.



    Apple is a big target and gets investigated all the time. Big deal.


     


    Actually, the warranty problem did trigger a lot of lawsuits in EU. The only reason those lawsuit were drop is because Apple made modifications to there warranties. They extended them to 2 years and made it clear AppleCare was only for the third year.

  • Reply 8 of 74
    anantksundaramanantksundaram Posts: 18,691member
    herbapou wrote: »
    Indeed. Apple way of dealing with the carriers is rotten to the bone. All the concerns in the investigation are valid.

    LOL. Another moronic post from our resident option-expert-turned-EU-commercial-law-expert.
  • Reply 9 of 74
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by joshuarayer View Post

    Apple pretty much sets the contract from my understanding and if the carrier doesnt like it, they dont get the iPhone. 


     


    Right, and there is absolutely nothing wrong with that under any valid system of belief.





    Originally Posted by herbapou View Post

    Apple way of dealing with the carriers is rotten to the bone. All the concerns in the investigation are valid. Bullying the carriers is a double edge sword, especially when youre products are on the decline.


     


    Oh, SHUT UP. Tell me, what magical "right" do the carriers have to the iPhone? Huh? Why do they "deserve" it? Why should Apple bow to the wishes of those who WILL give their users a worse experience than Apple wants?

  • Reply 10 of 74
    gatorguygatorguy Posts: 19,276member
    Does anyone know exactly what contract terms got the EU's attention and in what way those terms might be illegal??
  • Reply 11 of 74
    hill60hill60 Posts: 6,989member

    Quote:

    Originally Posted by herbapou View Post


     


    Indeed. Apple way of dealing with the carriers is rotten to the bone. All the concerns in the investigation are valid. Bullying the carriers is a double edge sword, especially when youre products are on the decline.



     


    Are these the same carriers who rip off European consumers with excessive roaming rates when travelling a few hundred kilometres takes you across a border?

  • Reply 12 of 74
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by Gatorguy View Post

    Does anyone know exactly what contract terms got the EU's attention and in what way those terms might be illegal??


     


    This is what we've been overlooking so far, I think. I'm sure that it's not a problem with the overarching way in which Apple sets its terms, but rather with a single subclause somewhere that the EU believes is monopolistic. 

  • Reply 13 of 74
    crowleycrowley Posts: 5,540member

    Quote:

    Originally Posted by Tallest Skil View Post


    Oh, SHUT UP. Tell me, what magical "right" do the carriers have to the iPhone? Huh? Why do they "deserve" it? Why should Apple bow to the wishes of those who WILL give their users a worse experience than Apple wants?



     


    Pretty hard to answer a question after you're shut up, so I'll take a crack at it.


     


    EU law often takes the presupposition that all business dealings should be fair and reasonable, and non-exclusionist.  Basically FRAND, as far as it can go.  Big companies doing business in ways that aren't seen as fair, reasonable, or balanced, draw attention. THhe EU don't like bullies, basically.


     


    If Apple is demanding pre-purchases of iPhones in the many millions of units, then that is discriminatory against smaller carriers.  And if they are making unreasonable demands on less directly related parts of the business, e.g. marketing, then that might also be interpreted as an unfair stipulation that aims to restricts the partners business.


     


    So you may ask what the right is, why they deserve it, and why Apple should acquiesce, but the simple answer is that if the EU decide they should, then they'll have to (within the EU, of course).  You can console yourself with the knowledge that the EU moves at a glacial pace, so it'll likely take years for anything to come of this.


     


     


    PS.  I don't necessarily agree with what the EU are doing, I don't think there's enough detail out there to call it either way.  I think it's probably worth them investigating if they've received complaints.

  • Reply 14 of 74
    kdarlingkdarling Posts: 1,640member

    Quote:

    Originally Posted by Gatorguy View Post



    Does anyone know exactly what contract terms got the EU's attention and in what way those terms might be illegal??


     


    According to Electronista, the questionnaire asks about what Apple requires of carriers, such as:


     



    • Minimum purchase requirement


    • Restrictions on marketing


    • Subsidy requirements


    • Technical restrictions


     


    The questionnaire reportedly comments that, "If the existence of such behavior were to be confirmed, it might constitute an infringement of [antitrust law]".


     


    Hmm.  Where have we heard this statement before?  Right... from the same European Commission when talking about Samsung and their possible infringement of antitrust law for their FRAND patents.  


     


    Seems that the Commission is on a roll, trying to spread its influence.

     

  • Reply 15 of 74
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by Crowley View Post

    EU law often takes the presupposition that all business dealings should be fair and reasonable, and non-exclusionist.  Basically FRAND, as far as it can go.


     


    TOO BAD. There's no right to have a phone of any sort. If you can't afford it, you don't have it.





    …if the EU decide they should, then they'll have to (within the EU, of course).



     


    HA! Not likely.

  • Reply 16 of 74
    crowleycrowley Posts: 5,540member

    Quote:

    Originally Posted by Tallest Skil View Post


    HA! Not likely.



     


    You think the EU won't decide that?  Or you think Apple would withdraw from the EU if they did?


     


    No idea about the former, depends what they find of course, but the chances of the latter are pretty close to zero.

  • Reply 17 of 74
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by Crowley View Post

    Or you think Apple would withdraw from the EU if they did?


     


    They dropped the Mac Pro.


     


    "That's differ…" NO, IT REALLY ISN'T. It proves they're willing to actually drop products, not just threaten it.


     


    And since the iPhone makes up most of the profit for European carriers, I'm pretty sure the EU will be just fine letting Apple do their own thing.

  • Reply 18 of 74
    crowleycrowley Posts: 5,540member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    They dropped the Mac Pro.


     


    "That's differ…" NO, IT REALLY ISN'T. It proves they're willing to actually drop products, not just threaten it.



     


    It's very different.  It's a low revenue turner, it would require redesigning the product outside of regular lifecycle.  The iPhone is a massive revenue turner, and we're talking about criteria for partnerships, not the product itself.


     


    Quote:

    Originally Posted by Tallest Skil View Post


    And since the iPhone makes up most of the profit for European carriers, I'm pretty sure the EU will be just fine letting Apple do their own thing.



     


     


    You don't know the EU very well.  The iPhone sells contracts.  WIthout the iPhone, people will still need and want phones and contracts.  The EU likely won't pay any mind to that.


     


    Apple have more to lose than the EU.

  • Reply 19 of 74
    Some interesting stuff.

    One question appears to ask whether some Iphones get more crippled than other iPhones.
    That would mean one network iPhone 5 is not the same as another networks iPhone 5.

    All fine and well but does the customer know?
  • Reply 20 of 74
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by Crowley View Post

    It's very different.  It's a low revenue turner, it would require redesigning the product outside of regular lifecycle.  The iPhone is a massive revenue turner, and we're talking about criteria for partnerships, not the product itself.


     


    Thanks for not paying attention.





    The EU likely won't pay any mind to that.



     


    Must be nice to live somewhere that lets its companies lose millions thanks to petty nonsense.

Sign In or Register to comment.