Friday 22 March 2013

EU looking into possible anticompetitive case against Apple's iPhone dealings?

   The European Union regulators are currently considering contracts which Apple has with European mobile networks about possible antitrust violations after a set of these networks suggested to the commission that these contracts throttle competition.

   An 'unidentified' source speaking to the New York Times outlined how certain French carriers had issues with Apple’s contracts, but there might be wider implications here too. When asked from comment the European Commission there was a confirmation that there is an examination of Apple's deals, but at the moment there's no formal investigation and there's no reason for a formal investigation to start until there's a formal anticompetitive complaint lodged. Antoine Colombani, a spokesman for Joaquín Almunia, added:
“We have been contacted by industry participants and we are monitoring the situation, but no antitrust case has been opened.” 
Naturally Apple issued a statement too, which read:
“Our contracts fully comply with local laws wherever we do business, including the E.U.”
   The New York Times seemingly did some investigation and they said that, "it appears that Apple’s contracts with some smaller European carriers were stricter than those with larger companies." Obviously this would make it hard for some people, but apparently these problems are worse in Europe than in the United States where one exec said that the "terms of its contract with Apple were aggressive but not unreasonable."

   One thing to point out here is that at no point does Apple force carriers to offer its devices. This is always a free choice and carriers choose to stick with the devices, but to say that might miss the point here somewhat.

   So what do Apple's contracts typically involve which networks could be unhappy with? Well according to the New York Times every contract is different, but typically Apple sets a quote for the amount of iPhones which carriers need to sell over a set period of time. If these quotas are missed then networks are asked to pay for unsold devices and if networks refuse the quotas then the device is simply not offered to them at all.

Apple’s contract differs with every carrier that sells the iPhone. Such sales accounted for 56 percent of Apple’s $55 billion in revenue last quarter. In most cases, Apple sets a quota for how many iPhones the carrier needs to sell over a set period of time, usually three years. If it does not agree to the quotas, it does not receive the iPhone. That makes this interesting because this in effect secures the iPhones dominant position and it's actually very clever of Apple to think of doing it that way.

   At the moment noone's really sure whether this will go any further, but expect there to be a lot going on behind the scenes before we hear anything else publicly!
New York Times Via CNet.


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