Apple's European iPhone sales contracts under antitrust scrutiny by EU
A report on Thursday revealed that European Union regulators are examining how Apple creates deals with cell carriers in the region following complaints alleged the strategy is anticompetitive.
Citing a person familiar with the matter, The New York Times reports that the European Commission, is looking into documents submitted by a group of European telecoms regarding their current deals to sell Apple's iPhone. No formal complaints have been submitted and the telecoms have not been named, but the source claims the Commission is focusing on Apple's contracts with French carriers.
The European Commission's headquarters at the Berlaymont in Brussels, Belgium.
The Commission did confirm that the examination, but said no formal antitrust investigation has been initiated. As noted by The Times, the EU's antitrust enforcement body does not need to take action until a formal complaint is filed.
?We have been contacted by industry participants and we are monitoring the situation, but no antitrust case has been opened,? said Antoine Colombani, a spokesman for Vice-President of the Commission and Commissioner responsible for Competition Joaqu?n Almunia.
According to people with knowledge of Apple's relationships with European carriers, the iPhone deals are "unusually strict" and dampen attempts from competing manufacturers to gain a foothold in the market. The situation in the U.S. is somewhat different, with one executive at an unnamed telecom saying the terms were aggressive but not unreasonable. It is unclear whether the deals themselves differ, or if the issue stems from a divergence in perception between European and U.S. companies regarding Apple's assertive strategies.
People briefed on the carriers? relationships with Apple, who declined to be named because Apple does not permit them to speak publicly about the contracts, said the terms that some European carriers must accept to sell iPhones are unusually strict, making it difficult for other handset makers to compete.
While Apple does not force carriers to sell the iPhone, the sheer popularity of the device puts the company in a favorable position to seek strict requirements for telecoms wanting to sell the handset. For example, the Cupertino company sets certain sales quotas that, if not met, see the partner carrier having to pay for the unsold units.
For its part, an Apple spokesman said, "Our contracts fully comply with local laws wherever we do business, including the E.U.?
It is unknown what the Commission plans to do next, but the body has the power to levy fines up to 10 percent of a company's most recent global annual sales if the firm is found to be participating in anticompetitive behavior.
Citing a person familiar with the matter, The New York Times reports that the European Commission, is looking into documents submitted by a group of European telecoms regarding their current deals to sell Apple's iPhone. No formal complaints have been submitted and the telecoms have not been named, but the source claims the Commission is focusing on Apple's contracts with French carriers.
The European Commission's headquarters at the Berlaymont in Brussels, Belgium.
The Commission did confirm that the examination, but said no formal antitrust investigation has been initiated. As noted by The Times, the EU's antitrust enforcement body does not need to take action until a formal complaint is filed.
?We have been contacted by industry participants and we are monitoring the situation, but no antitrust case has been opened,? said Antoine Colombani, a spokesman for Vice-President of the Commission and Commissioner responsible for Competition Joaqu?n Almunia.
According to people with knowledge of Apple's relationships with European carriers, the iPhone deals are "unusually strict" and dampen attempts from competing manufacturers to gain a foothold in the market. The situation in the U.S. is somewhat different, with one executive at an unnamed telecom saying the terms were aggressive but not unreasonable. It is unclear whether the deals themselves differ, or if the issue stems from a divergence in perception between European and U.S. companies regarding Apple's assertive strategies.
People briefed on the carriers? relationships with Apple, who declined to be named because Apple does not permit them to speak publicly about the contracts, said the terms that some European carriers must accept to sell iPhones are unusually strict, making it difficult for other handset makers to compete.
While Apple does not force carriers to sell the iPhone, the sheer popularity of the device puts the company in a favorable position to seek strict requirements for telecoms wanting to sell the handset. For example, the Cupertino company sets certain sales quotas that, if not met, see the partner carrier having to pay for the unsold units.
For its part, an Apple spokesman said, "Our contracts fully comply with local laws wherever we do business, including the E.U.?
It is unknown what the Commission plans to do next, but the body has the power to levy fines up to 10 percent of a company's most recent global annual sales if the firm is found to be participating in anticompetitive behavior.
Comments
ie. Samsung
So Apple is "stifling" competition in the EU?
Does that mean all the Android sales figures showing they are growing enough marketshare to overtake Apple (Not that Apple has ever been number one in the first place.) are bullshit, seeing as how Apple is not letting them compete?
From the sublime to the ridiculous, the world marches on.
This is just like NYTimes. They have ongoing fight with Apple. They will look for any and every angle against Apple. They wouldn't even waste time looking and understanding the matter. If it has anything to do with Apple, let's look at the negative angle and print it.
Also, isn't it funny that except the the person at EU, everyone is unnamed. Unnamed person at Apple, Unnamed Carriers, Unnamed executive at a large American Telco.
Yep, this is a real story! NOT!
"the Cupertino company sets certain sales quotas that, if not met, see the partner carrier having to pay for the unsold units" - LIE: iPhones are usually out of stock or backordered
"the sheer popularity of the device puts the company in a favorable position to seek strict requirements for telecoms wanting to sell the handset" - TRUE: if the iPhone wasn't popular, we would have carrier's software all over the iPhone, and software upgrades will be at the mercy of the carriers.
That said, the EU is has a very liberal definition of "anti-competition" and are real keen on leveraging heavy fines against rich corporations. They need the money, badly. This case is basically bull, but I'm sure the EU will reward itself with a nice fine collection, with a very formal mafioso look on its face. CODB.
EU mobile carriers CEOs (from Telefonica, Vodafone, Telecom Italia, France Telecom) seem to have met in October 2010 in Paris to consider what to do with the planned technology evolution by Apple to adopt in all his mobile devices a sim-less solution known to have been developed by the Dutch ICT security firm Gemalto.
This would have meant the end of the direct relationship, and stickiness, between mobile carriers and customers, and a potential "iPlan" offering full freedom for end user to dynamically jump from one low-cost operator to another, depending on the best offer for a local or for an international call available that very minute, and no roaming when traveling but automated switch to local low cost carriers...
The press refers of threats to kick all Apple products out of all EU operators shops, potentially costing Apple a loss of 12% of its iPhone sales at a time when Android was just passing Apple sales... and Apple that aborted that planned evolution.
This seems the perspective of a quite strong potential advantage for consumers stopped by operators, and has a strong smell of "cartel".
More details in Corriere della Sera (in Italian) of 20 Nov 2010:
http://archiviostorico.corriere.it/2010/novembre/20/lega_dei_big_per_fermare_co_8_101120044.shtml
Hey, carriers - it's really quite simple. If you don't like the terms, don't sell iPhones. With all the bragging about how great Android is, why are you worried about competing with Apple. Just go sell your cheap Android phones and be happy.
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Windows had a monopoly. The iPhone is no where near that and will probably never have the majority of the smartphone market.
Quote:
Originally Posted by MacRulez
Very much like Microsoft's relationship with OEMs in the '90s: if you don't like the terms, don't ship with Windows.
This is some serious nonsense. Worse than your usual.
Does Apple have 90+% of the market in smartphones? Are they a 'monopoly'? Are they bundling their own software, and disallowing that of others?
Quote:
Originally Posted by MacRulez
Very much like Microsoft's relationship with OEMs in the '90s: if you don't like the terms, don't ship with Windows.
Not so much. The issue the courts had wasn't that Windows was popular etc. it was that Microsoft tried to use that popularity to force an unrelated product on the OEMs. A web browser, despite MS claims, is not a vital part of an OS such that only one can be used. As yet MS was telling them that they add to out Internet Explorer and only IE on all machines or suffer being ejected out of the OEM licensing program for life. Plus they tried to deny developer needed information about how Windows works to other browser developers and sue them for reverse engineering.
The closest Apple ever came to anything like this was when the iPod skyrocketed and could only be used on a Mac. Had they not released iTunes for Windows they might have gotten in trouble. That is likely a major reason why they did.
Originally Posted by anantksundaram
Does Apple have 90+% of the market in smartphones? Are they a 'monopoly'? Are they bundling their own software, and disallowing that of others?
Great, now he'll just change his argument and claim the article is about the iPad.
Thanks for giving him ideas.
deleted
I don't get the whining here either. And to call Apple anti-competitive is downright stupid. If the competition would create a phone that would be on par, or exceed the iPhone they would be in a similar position, where they can demand things like "For example, the Cupertino company sets certain sales quotas that, if not met, see the partner carrier having to pay for the unsold units."
I think Apple is simply brilliant in this case. They create a desirable product and want to be paid in full for it. That sounds logical, and something any other company would do as well.