Microsoft, Apple summonsed to explain high prices

Technology giants Microsoft and Apple have been summonsed to appear before a federal parliamentary committee to explain why Australians are forced to pay more for some of their products compared with other countries.

The committee has also issued a summons to Adobe, with all three companies to appear before a public hearing on March 22.

If they fail to turn up they could be held in contempt of Parliament, which carries a range of possible penalties including fines or jail time.

The companies have provided written submissions to the committee but have declined several requests for them to appear in person.

The investigation was set up after a long campaign by Labor backbencher Ed Husic, who has accused some information technology companies of "ripping off" Australian consumers.

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Many of the public submissions have focused on Apple's pricing policy, with some computer products costing hundreds of dollars more in Australia than they do in the United States.

In July, Apple's director of government affairs, Ann Rollins, made a confidential submission to the inquiry which was recently made public by the committee.

She said Apple tried to set "equivalent pricing" around the world when a new product was introduced, but argued that a number of factors affected the final cost to consumers.

"When setting pricing on the Apple Online Store and at Apple Retail Stores, Apple considers differences among regions in product cost, freight, local sales taxes, levies, import duties, competitive price points and local laws regarding advertised prices," Ms Rollins wrote.

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"Foreign currency is an important variable in how product prices are compared between countries.

"It is not uncommon for macroeconomic factors to cause foreign currencies to fluctuate dramatically during a product's life cycle.

"Over the period of time a particular Apple product is in the market, it may appear to be either priced higher or lower in a local market when compared to the price in the US or elsewhere."

'Package of offerings'

Microsoft, which employs about 800 people in Australia, says attempts to compare absolute prices across different counties is of limited use because there are a range of regional factors that need to be taken into account.

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"Products are often sold as a package of offerings, with additional support and extended warranties included in the price," the company said in a submission to the inquiry.

"In Australia, it is common practice to include the GST in the quoted price whereas in the US, sales tax is not typically quoted in the price.

"Microsoft's global policy is to provide consistent and predictable local pricing while maintaining reasonable alignment of local currencies relative to the US dollar."

The company says it provides recommended retail prices for its products that take into account various market forces, such as the size of the market.

"There are a range of additional factors that impact pricing in the Australian market, including the relatively high cost of labour and rent; the impact of Australian specific regulations; the higher costs of marketing, training and advertising; supply chain costs, including transport and distribution and exchange rates."

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9327-0.0005-0.05%
    AUDUSD=X
    0.5555-0.0003-0.05%
    AUDGBP=X
    0.6753-0.0003-0.05%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg