Australia to grill Apple, others on pricing
By Rob Taylor | February 11, 2013 5:28 PM EST
Apple Inc has been ordered to appear before Australia's parliament with fellow technology giants Microsoft Inc and Adobe Systems Inc to explain why local consumers pay so much for their products, despite the strong Aussie dollar.
Broadening a row between the world's most valuable company and Australian lawmakers over corporate taxes paid on Apple's operations, Apple executives were formally summonsed on Monday to front a parliamentary committee in Canberra on March 22.
"In what's probably the first time anywhere in the world, these IT firms are now being summoned by the Australian parliament to explain why they price their products so much higher in Australia compared to the United States," said ruling Labor government MP Ed Husic, who helped set up the committee.
High local prices and soaring cost-of-living bills for basic services are hurting the popularity of the minority Labor government ahead of a September 14 election it is widely tipped to lose, giving political momentum to the inquiry.
All three companies have so far declined to appear before the special committee set up in May last year to investigate possible price gouging on Australian hardware and software buyers, despite the Australian dollar hovering near record highs above the U.S. currency around A$1.03.
A 16GB WiFi iPad produced by Apple with Retina display sells in Australia for A$539, $40 above the price in the U.S., despite the stronger local currency. Microsoft's latest versions of office 365 home premium cost A$119 in Australia versus $99.99 in the United States.
IT firms and other multinationals have blamed high operating costs in Australia including high local wages and conditions, as well as import costs and the relatively small size of the retail market in the $1.5 trillion economy.
Failure to appear before the committee as ordered could leave all three firms open to contempt of parliament charges, fines or even jail terms.
"For some time consumers and businesses have been trying to work out why they are paying so much more, particularly for software, where if it's downloaded there is no shipping or handling, or much of a labor cost," Husic told Reuters.
Adobe and Microsoft have previously provided separate written statements and submissions to the inquiry. But executives have been reluctant to explain their pricing before a public inquiry.
Apple executives in Australia declined to comment when contacted by Reuters.
"The companies have blamed each other for not appearing. One will say 'we're not going to appear if the other is not going to appear'. So we've cut straight to the chase and said we'll just summons you," Husic said.
Price gouging in IT for hardware and software, Husic said, could be costing Australia's more than 2 million small and medium businesses as much as $10 billion extra.
Husic took aim at Apple last week over local taxes paid by the company, telling parliament that Apple generated A$6 billion in revenue in Australia in 2011, but paid only A$40 million in tax - less than one percent of turnover.
"While they generated A$6 billion in revenue, they apparently racked up from what I understand A$5.5 billion in costs. How?" Husic said. "They do not manufacture here. They have no factories here."
He accused Apple executives of maintaining a "cloak of invisibility", while dodging scrutiny of operations. Apple has been criticized elsewhere for its zealous secrecy.
"Ask anyone who has sought answers from them about their Australian operations and you will hear a common theme. They will not talk," he said.
(Editing by Shri Navaratnam)
Most Popular Slideshows
- Kate Middleton Suffocated in Kensington Palace, Queen Elizabeth Reported War With The Duchess [PHOTOS]
- Chris Martin Dating Reports: Jennifer Lawrence Vs Gwyneth Paltrow [PHOTOS]
- 2014 MTV Video Music Awards: Everything To Know [PHOTOS]
- British Style Icon Kate Middleton Fashion Talk With Camilla Parker-Bowles Daughter-In-Law [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- 4.7-Inch, 5.5-Inch iPhone 6 Models Confirmed with Similar Build, Cam Features & 300+ Screen Pixels on Release Date
- Apple iPhone 6 Release Date, iPhone 6C or 6L Anticipation: Three Things Should Matter To New Phone Shoppers
- Xiaomi Mi4 vs iPhone 6: Why Forecasts Favor Mi4 as The Next Best Phone Against iPhone 6
- James Foley: More Chilling Information Revealed By Escaped Journalists
- James Foley Beheading Video Has Play-Acting Portions – Video Experts Say
- Samsung Galaxy Note 3 LTE Android 4.4.2, Android 4.4.4Guide: Installation and When to Hit Your Region
- Companies Push Back IPO Plans Due to Mega Alibaba Share Launch