Apple's iPhone sales tactics in Europe under antitrust investigation
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.
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.
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.
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.
Comments
Quote:
Originally Posted by digitalclips
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.
Quote:
Originally Posted by digitalclips
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."
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.
Quote:
Originally Posted by joshuarayer
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.
'Nuff said.
Apple is a big target and gets investigated all the time. Big deal.
Quote:
Originally Posted by jragosta
'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.
LOL. Another moronic post from our resident option-expert-turned-EU-commercial-law-expert.
Originally Posted by joshuarayer
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
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?
Quote:
Originally Posted by herbapou
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?
Originally Posted by Gatorguy
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.
Quote:
Originally Posted by Tallest Skil
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.
Quote:
Originally Posted by Gatorguy
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.
Originally Posted by Crowley
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.
Quote:
Originally Posted by Tallest Skil
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.
Originally Posted by Crowley
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.
Quote:
Originally Posted by Tallest Skil
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
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.
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?
Originally Posted by Crowley
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.