back to article Stopping IT price gouging would risk SOCIALIST DYSTOPIA!

In March 2013, Australia conducted a Parliamentary Inquiry into IT Pricing, in part to figure out why kit and content costs more down under than elsewhere. The Inquiry compelled representatives of Apple, Adobe and Microsoft to appear. The latter two squirmed uncomfortably as they articulated arguments that they charge what the …

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  1. Richard Jones 1
    Flame

    Joke of the Year?

    Surely this line is the winner of the joke of the year contest or is it an entrant for the understatement of the year contest?

    "The AIIA's submission will do little to quell those emotions."

    Its more likely to produce a suggestion they should burn in Hades with a nice smoky fire.

  2. Destroy All Monsters Silver badge

    I agree

    Price controls lead to disappearing goods.

    However ... let's talk about the holy "IP" enforcement which lead to dsappearing competition ... why not trash it all. Then we can play.

    1. James Micallef Silver badge

      Re: I agree

      I agree that suppliers should be able to set whatever price they want, and that this price is determined by the market. Any government intervention is over-regulation.

      BUT for the market price to be fair, the markets must be open and non-monopolistic. That means that any company should be allowed to re-sell to a third party any software licenses it owns but does not use, and anyone should be allowed to buy kit abroad at 'foreign' prices and import them wherever they want, subject to paying any local taxes/duties. Abominations like DVD regions should be banned*

      Free market and globalisation cut both ways.

      *Not sure if it's the case in Oz but AFAIK in some countries it's legal to region-unlock DVD players and/or illegal to sell region-locked players

      1. big_D Silver badge

        Re: I agree

        Any price they like?

        I don't see why I should pay more for Adobe products than Americans do. I can accept sales tax as an argument, but when I can fly Business to New York, stay in a 4 star hotel over night, buy a copy of the product and fly back home, all for less than walking around to the corner shop (or buying from Amazon), then there is something seriously wrong...

        1. Anonymous Coward
          WTF?

          Re: I agree

          Are you serious?

          1. big_D Silver badge

            Re: I agree

            yes. When I checked last year, Adobe CS Mater Suite in Germany was 30% more than the UK price and the Brit press were moaning about how expensive it was, compared to the USA. And that was using the local Amazon stores in each case. I think the difference between Germany and the USA was a couple of thousand dollars,

      2. Trevor_Pott Gold badge

        Re: I agree

        "Free market and globalisation cut both ways."

        Since when? Provide there examples of globalisation working out for the little guy*.

        *If you say "American cloud providers", I shall hit you. They are unavailable to a "global "audience, unless you're quite happy with breaking local laws.

        1. James Micallef Silver badge
          Thumb Up

          Re: I agree

          << "Free market and globalisation cut both ways."

          Since when? Provide there examples of globalisation working out for the little guy*. >>

          Thanks to globalisation, the 'little guy' can live an extremely more comfortable life than would have been possible 20 years ago. The price of food is extremely low, a much lower percentage of people's budgets now than 30-50 years ago, the general cost:quality ratio of most things has gone down.

          However my original intent in the statement "Free market and globalisation cut both ways" was to point out that smaller, nimbler companies can (should?) be able to benefit from globalisation at least as much as giant behemoths. For example in the case another commenter mentions above, of some Adobe software being $$$$ more expensive is Europe than US, true globalisation and free market would allow anyone to set up a company to buy licenses in the US and sell them in Europe. For global markets to work properly they need to be properly open, not stitched up by the incumbents.

          1. Trevor_Pott Gold badge

            Re: I agree

            "Thanks to globalisation, the 'little guy' can live an extremely more comfortable life than would have been possible 20 years ago. The price of food is extremely low, a much lower percentage of people's budgets now than 30-50 years ago, the general cost:quality ratio of most things has gone down."

            Bullshit. Life was far more comfortable and stress free 20 years ago. Food is a higher percentage of budgets than 30-50 years ago, and most of the creature comforts that first worlders enjoy have been bought with massive amounts of personal and governmental debt. Globalization hasn't provided the few benefits we do enjoy and it has driven up the cost of everything else.

            1. James Micallef Silver badge

              Re: I agree

              @Trevor_Pott:

              "Life was far more comfortable and stress free 20 years ago"

              For me it certainly was, since I was still a teenager back then :) The thing is, "comfortable" is something subjective, not quantifiable. It's true that in real terms, median incomes in developed countries are static or even less than 20 years ago. But 20 years ago it cost €1000 just to fly across Europe, now it's possible for €100 or less. All sorts of electronic devices either didn't exist 20 years ago or else you can get much better now for much cheaper. I'm not saying that this is all due to globalisation, but it partly is. And I'm not saying that everyone is better off due to globalisation, there are surely many people who lost out. But equally there are many people who are better off.

              "Food is a higher percentage of budgets than 30-50 years ago"

              Can you substantiate that claim? The graph below says otherwise.

              http://mjperry.blogspot.ch/2009/07/spending-on-food-at-all-time-historical.html

              "most of the creature comforts that first worlders enjoy have been bought with massive amounts of personal and governmental debt"

              Unfortunately true, but more to do with greed and consumer culture than globalisation

              "Globalization hasn't provided the few benefits we do enjoy and it has driven up the cost of everything else."

              Globalisation in itself lowers costs, sourcing materials and services at the cheapest possible point is exactly the point of it. The costs aren't raised by globalisation itself, only by cack-handed implementations of it being pushed by big global companies, who effectively want to be able to buy cheap stuff abroad themselves, while putting barriers for consumers to go buy cheap stuff abroad directly themselves. Which is what the article is highlighting.

              1. Trevor_Pott Gold badge

                Re: I agree

                "The costs aren't raised by globalisation itself, only by cack-handed implementations of it being pushed by big global companies, who effectively want to be able to buy cheap stuff abroad themselves, while putting barriers for consumers to go buy cheap stuff abroad directly themselves. "

                Which is my point. You're saying "rah rah globalisation" based on nothing more than idealism and ideology. I'm saying "in the real world, we didn't get ours." No amount of Tea Party doctrine will change that.

                I was going to link to you a bunch of statistics that disprove the tripe you're spewing, especially in Canada, but I am just to exhausted to bother. Your comment has you praising globalization for the things you feel are good and finding any excuse on the planet to pawn off the negative effects.

                I've done my pissing into the wind for this week. I'm not going to bay at the moon of a free market evangelist.

    2. Fluffy Bunny
      Facepalm

      Re: I agree

      The problem isn't really that we need price controls. It is that we don't have real competition. If I want to buy a piece of software x, I go to my local computer store and get told it costs the RRP. If I go to their competion next door, I am given the same price. Why? Because the Australian distributor tells them the RRP.

      There is no incentive to discount on the RRP because everybody charges it. Also, sometimes they can't because they are acting as agents instead of retailers.

      However if parallel importing was allowed, I could go to the Internet and look up the price in other countries and choose the cheapest. Let's face it, world-wide shipping costs are a small fraction of what they used to be. That would create real competition that would force the Australian retailers to start to compete. It would also put back-pressure on the Australian distributor to reduce the wholesale price (and hence the RRP).

      But it will never happen because parallel importing is banned by the copyright act, specifically to prevent this from happening.

  3. codejunky Silver badge

    Willing to pay

    It is a valid argument that if the gov is too bone idle to look for options and pick the best solution then they will pay more because they are paying for the convenience. On the other hand they could look to other vendors which removes the complacency and suddenly (in this free market world of ours) causes better deals to become available.

    Why do you think people can get money off their car insurance? Because others are too lazy to shop around and buy the best deal. Laziness is a service worth catering for, at a price.

  4. Matt Bryant Silver badge
    Boffin

    Market prices.

    This sounds like the typical politician's rant of "I want my IT cake and not only do I want to eat it, it better be cheap". If the vendors say it is the market price then that can be adjusted without breaking anything.

    Firstly, introduce more competition amongst the resellers selling the vendors' products by opening bidding processes up and breaking large IT projects into many smaller projects which can be bid on individually. At the moment it seems far too many projects are rolled up into monstrosities where the few integrators of choice can charge a ridiculous rate for both the clever stuff (such as SAP implementation) and the same ridiculous rate for the simple stuff (such as a Windows desktop rollout) because the simple and clever bits are all being done as one project at the high rate charged for the clever stuff. Breaking it into several projects and letting the smaller resellers bid for the simple bits will force the big boys to drop their prices if only for the small parts of the projects.

    Secondly, if the vendors can keep the market price up then introduce more competitors. It's not like Oz is short of either tech or entrepreneural skills, as shown by Kogan Tech, and FOSS is just as free in Oz as elsewhere. A bit of funding to local companies to develop FOSS alternatives - even if just for public offices - will make even Microsoft drop their pants. I'm sure a company like Kogan could make some white-label kit to match COTS desktops, x64 servers, storage and even networking kit with a little encouragement, so getting as many projects off proprietary kit (such as IBM mainframes) and onto something like x64 not only means more vendors can bid but also local industries can enter the race.

    1. Anonymous Coward
      Anonymous Coward

      Re: Market prices.

      "and FOSS is just as free in Oz as elsewhere"

      Yes. But the Australian public sector doesn't have a good track record on procuring even simple software like payroll, does it? And having made a billion dollar pigs ear of the Queensland health payroll system, all concerned were rewarded, instead of being imprisoned forever:

      http://www.itnews.com.au/News/353040,the-architects-of-qld-healths-payroll-disaster.aspx

      With IT talent like this, imagine the mess the Aussies could make of FOSS.

      1. theblackhand

        Re: Market prices.

        "With IT talent like this, imagine the mess the Aussies could make of FOSS."

        I'm sure a kind consultancy could make a FOSS solution reassuringly expensive so that politicians would feel they weren't buying a cheap solution....

      2. Matt Bryant Silver badge
        Happy

        Re: Ledswinger Re: Market prices.

        ".....With IT talent like this, imagine the mess the Aussies could make of FOSS." Well, it has been suggested all the great Aussie brains are serving behind bars in London.....

  5. dan1980
    Megaphone

    Dell: build in China, support from India, charge for Australia

    MS: create in US, support from Indonesia, repatriate profits through Ireland, Holland and Bermuda, charge for Australia.

    Etc...

    I especially love when these companies talk about local costs like warranties and staff costs and rents - as if they somehow don't incur these costs in the US.

    Accepting, however, that AU costs are more than US costs, the problem is that the maths just doesn't add up. If providing support for a $200 USD copy of software (e.g. 'Office') costs $20 in the US and support rates for Australia are 30% higher, that's a whopping $20 x 30% = $6 extra dollars, NOT $200 x 30% = $60, and yet that is how it is treated - costs in Australia are 50% higher so that requires the product to be sold 50% dearer.

    I can appreciate some kind of talk of economies of scale in HW, where a company provides a full range of hardware to a small region but the problem there is that they simply don't provide a full range to Australia. Go to Dell or Lenovo or HP's US sites and spec up something nice. Then go to the AU site and chances are you won't have as many configuration options - that's if the same model is even available here. Of course, it'll be at least 50% more expensive anyway even if you can get it . . .

    With software it is just a joke and is a big middle-finger to Australians. I did some sums the last time I foamed about this and at that time Office 2010 Pro was available in Singapore for ~$400 AUD. On the Australian site, it was ~$500AUD.

    Great except there is NO difference. The software, in both instances, was downloaded from server in Singapore (there was not AU data centre then) and supported from the Manila. The only difference was a localised website to purchase it from.

    And they starting wringing their hands when people 'pirate' their software.

    Don't get me started on Adobe . . .

    Strangely, Apple are actually not too bad in this respect - perhaps because they're expensive everywhere.

    1. P. Lee

      It's been a while since A-Level Economics, but it could be that the price gouging is what is driving the high local wage costs.

      If the profit wasn't there, wages wouldn't rise. My guess is that Oz is in for a bout of inflation. It isn't just tech. Food is horrendously expensive here.

      1. borkbork

        Inflation is here, just not counted in the ABS numbers. It's in the house/land prices. For example, the reason a cup of coffee here costs $5 instead of $2 any more is because the person serving you has a $300k mortgage. Of course talking about it is off limits when the treasurer is the owner of about seven investment properties.

  6. Will Godfrey Silver badge
    Unhappy

    Same old

    Fox says it knows best how to look after the hen house. Besides, eating chickens is good for them.

  7. WatAWorld

    Same thing in Canada -- hidden monopolies and anticompetitive agreements

    If they were selling in a free market then there would be no urge by Australian consumers to import directly -- and there would be no foreign commercial contracts bar against foreign retailers selling to Australian consumers by mail order.

    We have the same problem in Canada -- hidden monopolies and anti-competitive agreements.

    Here it doesn't affect computer gear or video disks, but it affects almost all other consumer electronics, automobiles, cosmetics, household chemicals, etc.

    And WE CAN EASILY TELL WHEN THESE THINGS ARE IN EFFECT. All I have to is go to Amazon's US site and try to have the thing shipped to Canada. If neither Amazon no any retailer will be ship it here, then there must be an export prohibition.

    And since Canada and the US have NAFTA, that export prohibition is not some law, it is a commercial agreement. A manufacturer has told a US retailer he cannot sell to Canadians -- thus ENDING THE FREE MARKET.

    1. Lack of competition because of big retail chains.

    2. Commercial agreements giving exclusive import rights to one or two companies.

    3. Retailers and importers coordinating prices.

    4. Manufacturers preventing wholesalers and retailers selling to Canadians.

    "The latter two squirmed uncomfortably as they articulated arguments that they charge what the market will bear, as is their right even if it means local punters inexplicably pay twice as much as customers in comparably-wealthy nations."

    1. John Tserkezis

      Re: Same thing in Canada -- hidden monopolies and anticompetitive agreements

      "If neither Amazon no any retailer will be ship it here, then there must be an export prohibition."

      There must be more to it than this. Certain DVDs, either season boxes alone, or packaged multiple season box sets, will outright refuse to ship to Australia.

      Pick another DVD, and you can happily have it with "one click". And it's not just the vendor, (Amazon operates as a host to other suppliers too) One vendor will ship a particular product, but not another. And it's not tied to that product either. I've ordered tapes that some refuse to ship, but others happily ship here.

      There's some silly buggers going on here.

      1. Anonymous Coward
        Anonymous Coward

        Re: Same thing in Canada -- hidden monopolies and anticompetitive agreements

        Were both DVDs by the same studio?

  8. Anonymous Coward
    Anonymous Coward

    Easy solution for Aus.

    From Aus Gov.

    To Price Gougers

    Fix the price or we will remove all legal IP protections on your products. You have been warned.

    1. ruscook

      That works for me :-)

  9. ruscook

    Don't we have a free trade agreement with the US, wouldn't that require them to sell at competitive prices for product (or services) bought from the US?

    1. Don Jefe

      No. You have a free trade agreement with the US that cuts out tariffs on a bunch of stuff and sets the ceiling on government subsidies for certain products. The price a private foreign company charges for something is outside the purview of most trade agreements.

      If the Oz pricing really is an issue that needs to be sorted, a trade agreement isn't the way to do it. That route sees your government subsidizing the the discrepancies in prices and as we all know, government doesn't get its money from outstanding commercial performance. Unless the volume of something is truly enormous it's almost always a bad idea, for taxpayers, to resolve issues with trade agreements.

      1. Anonymous Coward
        Anonymous Coward

        > If the Oz pricing really is an issue that needs to be sorted, a trade agreement isn't the way to do it.

        Quite right. As a number of posters above have said, the answer is to deal with the legal restrictions in import/export by third parties, e.g. grey goods. The problem is the lack of a free market in many cases, not the desire to get the best price in a geographic region which I would expect all businesses to do. You need a free market opposing force to drive the price to a sustainable level.

    2. Fluffy Bunny
      Facepalm

      "wouldn't that require them to sell at competitive prices for product (or services) bought from the US"

      No, the free trade agreement is about us buying US products instead of anybody elses. At the inflated price the US wants to charge.

  10. Missing Semicolon Silver badge

    No price control needed

    All they have to do is to allow parallel importing, by forcing the suppliers to recognise foreign-bought licences as legitimate.

    1. Anonymous Coward
      Anonymous Coward

      Re: No price control needed

      Yes - its about the market access not public procurment as some seem to think,

      A) Explicitly legalize gray/parallel imports

      B) Ban territory specific reseller agreements as monopolistic

      C) Watch what happens.

      Whilst I don't recommend doing anything on IP in the way some describe there is one WIPO legitimate-ish method which is for the public sector to adopt competing open source and make it known that if any suppliers are threatened with infringement cases they should come forward and ask for compulsory licencing on public interest grounds. ( A defense used by RIM in the US interestingly but without the force majeure option of actual mandatory licencing).

      1. Brad Ackerman
        Pirate

        Re: No price control needed

        a) is the main solution; specifically, fixing §123 of the Trade Marks Act 1995 (Cth).

        b) would only affect agreements made in Australia; the US/UK vendors that Australians buy from wouldn't be affected.

        Direct regulation of prices would probably end up like a government IT project.

  11. Justin Pasher

    Yea, that's how it works...

    "... new legislation that limits firms’ ability to control prices could also cause foreign suppliers to abandon or decide not to enter the Australian market, resulting in less competition and less choice for consumers in Australia."

    Assuming that the final prices being charged are stilling providing a profit, I'm pretty sure if a company is given the choice of "no profit" (exit the market) versus "some profit" (stay in at a lower margin), they would choose the latter.

  12. Don Jefe

    Why?

    I'm unclear what the problem is here. Why should Australia get preferential pricing on things that aren't Australian? Every single time somebody in Australia buys a product from one of the companies that's weighting their prices that purchase is proof there's no need to lower prices.

    I've been selling stuff for a very long time, and the maxim 'If customers aren't complaining about the price, then you're not charging enough' is still just as true as it has always been. It's my job to get as much money out of each customer as is absolutely possible, not maximize their finances.

    It's not a question of fairness, it's a question of sales and until those sales figures drop there's no way in hell that prices can be justifiably lowered. Come up with a homegrown alternative offering or raise the prices of your goods and services. If your customers won't pay the increased prices you'll have learned a valuable lesson in why you don't start selling your offerings based on price.

    Now, before anybody gets all pissy and thinks I'm a far bigger dick than I really am, let me say that market specific pricing sucks. I've lived and worked in lots of different places and a common theme everywhere is pricing that's cranked up simply because it can be. However, it's the people buying the stuff that are the problem, not the companies selling it.

    If you want it different then the only thing that's going to make that happen is if you stop buying it. No government mandate is going to work. All but the smallest companies involved in international trade have a toolchest of government management tools that not only offset any mandated price controls, but also include punitive mechanisms to remind the government of their poor decision. You've got far too much misplaced belief in the power of your government if you think a private foreign company can't punish a government. Actually, it's the taxpayers who get punished, but that's just the way things are.

    Anything other than not buying the products is just going to result in everybody paying a fine for screwing around with other people's money. I don't mind telling you that, your representatives in government already know it, this is just for show, and even if it wasn't, people almost never band together and stop buying something on principle in large enough numbers to matter. Maybe the Australian people will surprise me, but I haven't made a career out of being surprised.

    1. Anonymous Coward
      Anonymous Coward

      Re: Why?

      > Every single time somebody in Australia buys a product from one of the companies that's weighting their prices that purchase is proof there's no need to lower prices.

      The problem is, there are legal frameworks involved that specifically force Australians/Ukians etc to buy the inflated price such as legally enforceable restrictions on grey imports, that is, legal mechanisms specifically intended to make the market not-free. I would say the exact same thing about import duty.

      Additionally, it is far from clear to me why a country boundary should have any effect on pricing where the difference can't be attributed to differing costs. My only conclusion must be collusion and anti-competitive behaviour between companies and governments.

      These price differentiations could be justified at one time for geographic reasons. For some products, this is clearly still relevant. For software though, and many foreign-owned goods that are manufactured locally for the local market, there is something seriously wrong.

      We have that exact situation here in Canada with cars that are made in Canada for both the US and Canadian market. Those cars are more expensive to ship to the US, but are sold for more in Canada. A quick trip across the border just a few miles and you quickly find that no-one (except Ford apparently) will sell to a non-USian even if you offer cash. They won't willingly tell you why, but those that are pressed will say that they risk losing their dealership over it.

    2. Lars Silver badge
      Happy

      Re: Why?

      OK, Don Jefe, but when you wright "If you want it different then the only thing that's going to make that happen is if you stop buying it", should you not point out that customers should avoid "lock in" and have several vendors to compete against each other.

      My advice to the Australians is to invest in FOSS, you do produce bread and butter too within the country.

  13. Anonymous Coward
    Anonymous Coward

    UK eyes only

    cba to localise this, but in any argument about national boundaries, substitute county for country and see if it still makes sense.

  14. Neoc

    Remember folks...

    These are the same companies that tell you it's OK for them to go shopping around the world for the cheapest labour and biggest tax-breaks, but that it should be illegal for you to buy the same product from a different country.

    Goose, meet Ganda.

  15. treboR

    All this government regulation is stifling competition and driving the price up. The answer is more regulation.

    Drinking raw sewage is ruining my health. The answer is to drink more sewage.

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