Tech giants summonsed

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Tech giants Apple, Microsoft and Adobe have been summonsed by the government to explain why Australian consumers are forced to pay higher prices for hardware and software.

The House of Representatives committee on infrastructure and communications has issued a summons to all three companies, requiring them to appear before a public hearing on March 22 in Canberra. The committee was established in May last year to investigate the discrepancies between prices for the same products sold to local users, compared to other countries.

Labor backbencher Ed Husic has accused some information technology companies of ripping off Australian consumers and conducted a long campaign to get clarity on why prices differ so much. Many of the public submissions to the inquiry have focused on Apple’s pricing policy, with some products costing hundreds of dollars more locally than they do in the US.

Apple may also need to explain why it charges almost double for thousands of songs on iTunes in Australia, compared to other countries.

Both Apple and Microsoft have said that there are a range of regional factors that impact pricing in the Australian market, including product cost, GST, shipping and freight, local sales taxes, levies, import duties, marketing costs and currency exchange rates. Still, the Australian dollar has traded higher than the US dollar for almost two years, apart from some brief dips below parity, so it may be hard to use that as an excuse. In theory, a higher Australian dollar should mean lower prices for US products.

The higher relative local prices has earned the ire of our retailers, including JB Hi-Fi Limited (JBH.AX), Harvey Norman Holdings (HVN.AX), David Jones Limited (DJS.AX) and Myer Holdings Limited (MYR.AX), who have been pushing offshore suppliers to offer similar prices for Australian retailers as they do for other countries. Being unable to effectively compete with offshore online retailers, has seen our retailers’ revenues hammered.

Foolish takeaway

The tech giants have been accused of stone-walling the government for months, and it appears the government has finally lost patience. That could put further pressure on Apple, Microsoft and Adobe to reduce their prices, which would be excellent news for Australian consumers and retailers alike.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in JB Hi-Fi and David Jones.

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