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Australia’s Parliament Is Asking The Wrong Questions On Price Gouging

by Brian Prentice  |  May 1, 2012  |  1 Comment

I guess I should be delighted to hear that the Australian Parliament is going to start examining the reasons why Australian businesses and consumers are paying huge mark ups on on technology products compared to US customers. But I’m not.

See, I don’t really care whether my apps, my songs, my video games, and my ebooks carry a steep premium here in Australia. Apple, Microsoft and all the others can charge whatever they want.

What I care about is why I’m prohibited from shopping outside Australia to get a better price. Shopping for digital products is like being asked for your ID before you enter a department store and if you don’t live in the right location you’re barred entry. Or, they’ll let you in to browse all the great prices but your credit card will be declined at checkout.

If there’s a reason to uplift pricing in Australia then I’m fine with that happening. But it should be the right of the consumer to determine whether those prices warrant the added value, if such value actually exists. If not, they should be allowed to take their business where they please. See, what I want to do to Apple, Microsoft, Adobe is the same thing I’m doing to local retailers. If it costs $110 for a pair of Levi’s 501 jeans at major departments stores in Sydney (yes, that’s the actual price), then consumer should be welcome to take their business to Macy’s online and get them for roughly half the price.

The problem is not high prices. And I believe the Government is wasting all our time exploring that topic. The problem is restraint of trade. And we all know the tricks of the trade that are used to achieve those aims. Things like funnelling non-US customers into local app stores. Disallowing the use of credit cards with non-US mailing addresses. And let’s not forget about the ever-popular region coding system (no, it’s not just a system to control piracy). All, I’m assuming, perfectly legal – a fascinating situation which should again give us pause to think about what we signed up for with the US-Australia free trade agreement.

While the terms of reference for this investigation are yet to be decided, I’m betting that the issue of restricted trade won’t be up for discussion. Why? First, I think it’s impossible to examine this issue without going well beyond the scope of the IT industry. Second, and more important, I don’t think the government seriously wants to wade into the fetid cesspool of inefficient and exclusive distribution agreements, corporate taxation policy, and political influence peddling that makes restraining the free flow of goods such an attractive option for businesses across the Australian economy. Additionally, the Government will find themselves uncomfortably having to consider some of it’s own decisions and political relationships:

  • The Australian Government fluffed the opportunity to allow the parallel importation of books, as advised by the Productivity Commission. The higher local prices surely must impact eBook pricing, particularly with Apple’s iBooks, where the publishers set the list price.
  • If the Australian Government can demonstrated a willingness to take on multinational tobacco companies and their claims of of IP rights by enforcing plain packaging, why haven’t we seen similar action taken inĀ tackling region coding – a practice that the Australian Competition and Consumer Commission has long identified as a system of biased distribution.
  • A big component of this problem is content related. That means taking on the powerful and politically-connected movie, music and publishing industries.

If the Australian government really wants to put some pressure on the high prices we pay for technology products and digital content then Parliament is not the place to do it. Instead, let the Australian public do it through unrestricted markets.

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Brian Prentice
Research VP
9 years at Gartner
26 years IT industry

Brian Prentice is a research vice president and focuses on emerging technologies and trends with an emphasis on those that impact an organization's software and application strategy... Read Full Bio

Thoughts on Australia’s Parliament Is Asking The Wrong Questions On Price Gouging

  1. jaminJay says:

    This is starting the conversation, which is exactly the right thing to do. Without the conversation, we will continue along with our head in the clouds where we’re wanted. My issue is that the investigation is far too narrow, but this is a good start.

    Folks are voting with their wallets, but they know not what they’re voting for or that there are even other options.

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