Apple could be hit by Korean FTC for shifting iPhone burdens to local carriers

AppleInsider

The secretariat of South Korea's Fair Trade Commission has allegedly agreed to penalize Apple for foisting much of the burden of advertising and repairing iPhones to local carriers, according to a report.

The KFTC will only confirm any penalties -- and their extent -- within a few days of hearing from Apple, sources told The Korea Herald. As an example, the publication noted that carriers SKT, KT, and LG Uplus ran TV commercials for the iPhone 8 and X in November at the request of Apple, but at their own cost.

"When you see iPhone's TV commercials here, everything is the same except for a telecom operator's logo at the end of the commercials. Still, telecom firms should bear all the costs standing at billions of won," an anonymous carrier executive said.

The KFTC's investigation dates back to 2016. Apple's offices have been raided twice in the matter, once in June 2016 and again in November 2017, just ahead of the local launch of the iPhone X.

Apple is known to sometimes impose tough terms on carriers as a condition of selling iPhones, given that few are in a position to skip such popular products. In the case of South Korea, the KFTC has complained not just about marketing and repair costs but minimum purchase quotas, and even a moratorium against repair firms suing Apple Korea for a year after any dispute.

The company has apparently continued such practices despite blowback in other countries. Taiwan fined Apple $670,000 in 2013, and in 2016 France's competition agency launched a case that eventually hit Apple for over $55 million.

Last year the Russian government found Apple guilty of ordering price fixing by local retailers. Vendors that stepped out of line with Apple were threatened with losing their sales agreements.

Apple has had mixed luck with the KFTC. While the company's cooperation recently resulted in a ruling against Qualcomm, in 2014 the KFTC rejected an Apple complaint that Samsung was allegedly abusing a portfolio of standards-essential wireless patents in legal battles with rivals.

The Commission argued that Apple wasn't being sincere in negotiating a settlement with Samsung. It also noted that the iPhone maker was the first to file a patent suit.

lkrupp

Anyone else noticing a trend lately in the use of pejorative adjectives against Apple by AI writers? “Foisting” implies bad acting on Apple’s part. Later on in the article it’s described as “tough terms on carriers” because Apple’s products are desirable, must haves for  carriers. And why shouldn’t Apple try to get the best terms possible when the carriers have the choice, especially in Korea, to just not sell Apple products? I smell collusion between Samsung and the KFTC. 

jbdragon

If these carriers don't like Apple's terms, there's a simple answer to that. DON'T SELL THE IPHONE!!!!! Problem solved!!! Go sell the Samesung Phones. Why is this so hard. Everyone refuse to play around with Apple, Apple would in the end have to change their ways. My guess is Apple is finally taking a big enough chunk from Samesung to have a big enough effect to take notice.

MacPro

jbdragon said:

If these carriers don't like Apple's terms, there's a simple answer to that. DON'T SELL THE IPHONE!!!!! Problem solved!!! Go sell the Samesung Phones. Why is this so hard. Everyone refuse to play around with Apple, Apple would in the end have to change their ways. My guess is Apple is finally taking a big enough chunk from Samesung to have a big enough effect to take notice.

I's suspect you hit the nail on the head.

joogabah

MacPro said:

jbdragon said:

If these carriers don't like Apple's terms, there's a simple answer to that. DON'T SELL THE IPHONE!!!!! Problem solved!!! Go sell the Samesung Phones. Why is this so hard. Everyone refuse to play around with Apple, Apple would in the end have to change their ways. My guess is Apple is finally taking a big enough chunk from Samesung to have a big enough effect to take notice.

I's suspect you hit the nail on the head.

How is that even remotely realistic?  Unless they collude, the first carrier to refuse to carry the iPhone would be marginalized and massively hemorrhage customers and revenue.  That is precisely why Apple is able to get these terms, and why government regulation is the only means to keep dominant parties from exploiting those who are compelled to do their bidding by market forces.  The proposed solution jbdragon described above could never happen, and is just political rhetoric for market fundies, and I sense this is understood even by the poster.  It's like saying "nobody's forcing you to keep that crappy job" when circumstances don't permit any other work.

Yes, we are all "free" to commit suicide.  It's some kind of denial or perhaps a bit of schadenfreude? 

MacPro

joogabah said:

MacPro said:

jbdragon said:

If these carriers don't like Apple's terms, there's a simple answer to that. DON'T SELL THE IPHONE!!!!! Problem solved!!! Go sell the Samesung Phones. Why is this so hard. Everyone refuse to play around with Apple, Apple would in the end have to change their ways. My guess is Apple is finally taking a big enough chunk from Samesung to have a big enough effect to take notice.

I's suspect you hit the nail on the head.

How is that even remotely realistic?  Unless they collude, the first carrier to refuse to carry the iPhone would be marginalized and massively hemorrhage customers and revenue.  That is precisely why Apple is able to get these terms, and why government regulation is the only means to keep dominant parties from exploiting those who are compelled to do their bidding by market forces.  The proposed solution jbdragon described above could never happen, and is just political rhetoric for market fundies, and I sense this is understood even by the poster.  It's like saying "nobody's forcing you to keep that crappy job" when circumstances don't permit any other work.

Yes, we are all "free" to commit suicide.  It's some kind of denial or perhaps a bit of schadenfreude? 

You are being far more specific in your view than I was and I am not disagreeing with you.  I am simply saying 'what ever' the reasons in any one situation Apple is now under so much more scrutiny, or more like fishing expeditions, world wide simply because they are making so much money.

macxpress

jbdragon said:

If these carriers don't like Apple's terms, there's a simple answer to that. DON'T SELL THE IPHONE!!!!! Problem solved!!! Go sell the Samesung Phones. Why is this so hard. Everyone refuse to play around with Apple, Apple would in the end have to change their ways. My guess is Apple is finally taking a big enough chunk from Samesung to have a big enough effect to take notice.

Now stop it! That would just make too much sense!!! If it were Samsung then this wouldn't even be a story and not because nobody cares about Samsung either. Apple is simply kicking their ass in their own country so lets try and make up a story to limit Apple's continued success. 

ireland

joogabah said:

MacPro said:

jbdragon said:

If these carriers don't like Apple's terms, there's a simple answer to that. DON'T SELL THE IPHONE!!!!! Problem solved!!! Go sell the Samesung Phones. Why is this so hard. Everyone refuse to play around with Apple, Apple would in the end have to change their ways. My guess is Apple is finally taking a big enough chunk from Samesung to have a big enough effect to take notice.

I's suspect you hit the nail on the head.

How is that even remotely realistic?  Unless they collude, the first carrier to refuse to carry the iPhone would be marginalized and massively hemorrhage customers and revenue.  That is precisely why Apple is able to get these terms, and why government regulation is the only means to keep dominant parties from exploiting those who are compelled to do their bidding by market forces.  The proposed solution jbdragon described above could never happen, and is just political rhetoric for market fundies, and I sense this is understood even by the poster.  It's like saying "nobody's forcing you to keep that crappy job" when circumstances don't permit any other work.

Yes, we are all "free" to commit suicide.  It's some kind of denial or perhaps a bit of schadenfreude? 

Mostly agree. The free market isn’t perfect. Unfortunately our species isn’t high enough evolved to not require some regulation. Cook said it best himself, the best regulation is self-regulation, but sometimes things go to far and you need some well written regulation. Facebook for example lack a internal moral compass to know what if too far. They are so insular they see only their warped version of reality. 

foggyhill

Korea licks Samsung ass 100%, everything you see there can be judged through that lens.

foggyhill

MacPro said:

joogabah said:

MacPro said:

jbdragon said:

If these carriers don't like Apple's terms, there's a simple answer to that. DON'T SELL THE IPHONE!!!!! Problem solved!!! Go sell the Samesung Phones. Why is this so hard. Everyone refuse to play around with Apple, Apple would in the end have to change their ways. My guess is Apple is finally taking a big enough chunk from Samesung to have a big enough effect to take notice.

I's suspect you hit the nail on the head.

How is that even remotely realistic?  Unless they collude, the first carrier to refuse to carry the iPhone would be marginalized and massively hemorrhage customers and revenue.  That is precisely why Apple is able to get these terms, and why government regulation is the only means to keep dominant parties from exploiting those who are compelled to do their bidding by market forces.  The proposed solution jbdragon described above could never happen, and is just political rhetoric for market fundies, and I sense this is understood even by the poster.  It's like saying "nobody's forcing you to keep that crappy job" when circumstances don't permit any other work.

Yes, we are all "free" to commit suicide.  It's some kind of denial or perhaps a bit of schadenfreude? 

You are being far more specific in your view than I was and I am not disagreeing with you.  I am simply saying 'what ever' the reasons in any one situation Apple is now under so much more scrutiny, or more like fishing expeditions, world wide simply because they are making so much money.

So much money like Samsung who basically runs the Korean government? That's all you really need to know in this case.

mknelson

I'm baffled by this - it seems like pretty typical industry practice (although in some industries there is marketing co-op dollars available).

Apple has produced the ads at no cost to the carrier. It's simply up to the carriers to add their logos and pay for air time?

maestro64

First, you can not price fix your own product, Telling your customer what they are allow to sell your product for is not new, this is a stand practice. No if Apple sold into distribution then Apple is not allow to dictate price. This is why Apple will not sell their production through Distribution. Apple negotiate deals with each reseller, as such they agree to the terms or not sell the product. Price fixing is when multiply companies get together behind close doors and agree to not to sell below a specific price. Pricing fixing requires more than one company selling similar product like gas or sugar, i.e, they can exchange for one another with not impact the consumer. 

Also, do you think Apple lets Korean carries fix their phones, also, how much advertising does Apple actually do, and do you think Apple is forking over money to over carries to advertise for them. 

gatorguy

maestro64 said:

First, you can not price fix your own product, Telling your customer what they are allow to sell your product for is not new, this is a stand practice. 

Three different countries, Taiwan, Russia and France so far, would disagree with you. Perhaps you're only considering US law? 

Rayz2016

If you follow the money on this, it probably leads to a rather plush South Korean prison cell somewhere. 

plovell

The real question is not "who pays for what" but "how is the profit divided up". It's perfectly reasonable for carriers to pay for advertising IF Apple's price to them recognizes that. If Apple pays for advertising then probably their price to carriers is higher. The real issue is who gets how much profit - pure and simple. The "how" is merely a distraction.

22july2013

plovell said:

The real question is not "who pays for what" but "how is the profit divided up". It's perfectly reasonable for carriers to pay for advertising IF Apple's price to them recognizes that. If Apple pays for advertising then probably their price to carriers is higher. The real issue is who gets how much profit - pure and simple. The "how" is merely a distraction.

You must have met the wizard, because you clearly have a brain. Most likely the numbers are confidential and that's why AI can't specifically report on them, but they should have mentioned this possibility.

Remember how Steve Jobs wouldn't let the first telecom carriers in the US physically put their own labels on the first iPhones? (Even though they tried very hard.) So why is Apple now allowing carriers to put their own labels on the iPhone's commercials? That seems out of character for Apple. Can anyone provide counter-examples where vendors put their names in Apple commercials?

SpamSandwich

Just another bunch of losers blackmailing Apple because Apple is on top of the world.

igorsky

This has absolutely nothing to do with the South Korean government protecting Samsung from competition.  Absolutely nothing 

gatorguy

igorsky said:

This has absolutely nothing to do with the South Korean government protecting Samsung from competition.  Absolutely nothing 

In France one of the carrier contract terms that got Apple fined was a requirement that carriers contribute to a fund for iPhone advertising. That sounds like at least one of the same issues in Korea. In Taiwan and Russia Apple was found to illegally dictate selling prices (price-fixing) which may be another of the issues in the Korean investigation.