Australian Government Committee Suggests Circumventing Geo-blocking To Combat High Software Prices

from the a-premium-on-ones-and-zeroes dept

Living in Australia means paying more for many things, most specifically software and digital goods. It's common enough that it's known colloquially as the "Australian Tax," an informal system where one country's citizens are asked to pay more -- around 50% more for software from companies like Microsoft and Adobe. This pricing disparity extends to purely digital products, like iTunes downloads and ebooks as well.

In order to prevent Australians from bypassing the high prices by purchasing from another country, software companies have implemented geo-blocking. The normal justifications are in place for utilizing these restrictions in order to maintain the higher prices.

Among the reasons given by company managers to the inquiry to explain price differences were: relative market size, exchange rates, wages, freight charges, local sales taxes, levies, import duties and the need to maintain separate websites and servers for Australian customers.

They also said they were charged higher costs by the entertainment industry for content destined for the Australian market.
While these may all factor into the pricing, Australians have had their doubts for years as to whether these justify such extreme price hikes. And if all of this supports price bumps that double the price of software, you'd think Microsoft, Apple and Adobe would have made more of an effort to attend the parliamentary inquiry into their prices. But this wasn't the case.
Just getting three of the tech industry's heavyweights to the parliamentary inquiry was a feat in itself. Adobe, Apple and Microsoft were all invited to attend the inquiry's earlier public hearings voluntarily. In the end it took a summons to compel the companies to appear. Each had a different reason to explain the pricing disparities.

Adobe said it offered a specialised "bespoke" experience for Australian customers.

Apple blamed local copyright holders for higher prices on its local iTunes store.

Microsoft said its prices were set and customers could vote with their wallets.

Except customers couldn't exactly do that because of geo-blocking.
So, even the companies who feel the price hikes are justified can't agree on their justifications. With nothing further to go on, there's a strong feeling that these companies are happy with the larger profit margin and uninterested in seeing that diminished. Normally, this would have left Australians at an impasse, but this time a government committee took a decidedly pro-consumer stance with its recommendations (following closely with consumer advocate recommendations on IP spoofing from late last year).
"Particularly when it comes to digitally delivered content, the committee concluded that many IT products are more expensive in Australia because of regional pricing strategies implemented by major vendors and copyright holders," said the report by committee chair and Labor MP for Wakefield, Nick Champion.

"While the committee acknowledges that in some cases, geo-blocking is a necessary business practice, it also notes that many IT vendors appear to use geo-blocking as a means to raise prices by restricting consumers' ability to access the global marketplace," the report said.

"The committee considers this form of geo-blocking to be a significant constraint on consumer choice.

The report advised that the Australian government amend the Copyright Act's anti-circumvention provisions to "clarify and secure consumers' rights to circumvent technological protection measures that control geographic market segmentation".
The report also suggests that the government should begin looking at options to educate its citizens on circumventing geoblocking and inform them on how "their rights under Australian Consumer Law may be affected by such actions." Another proposal suggested voiding contracts or terms of service that include geoblocking.

Actually implementing these suggestions would require a rewrite of some areas of Australian copyright laws, which would be no small feat. This may also encourage the affected companies to take more drastic actions to preserve their pricing structures, including the possibility of refusing to provide support to the Australian market. Whether these recommendations will ever go into effect is still doubtful, but at minimum, it forces the issue. Microsoft suggested Australians could vote with their wallets and now it appears the government is moving towards granting permission to its citizens to do exactly that. We'll have to see how these "justified" prices fluctuate in response to Australians "exiting" the market by routing around geo-blocking.

[H/T to velox, who was the first of many to send this news in.]

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Filed Under: australia, copyright, digital goods, geo blocking, price discrimination, region locking, software prices

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  1. identicon
    Lonyo, 31 Jul 2013 @ 3:54am


    I think they mean with regards to the requirements of third parties they license content from.
    e.g. iTunes has to geo-block because they license the copyright from a third party, who may only own/have rights to that copyright in some locations.
    If they didn't block it, then the copyright holder/licensee elsewhere would not be happy.

    The iTunes resale model isn't the same as people like Adobe or MS who sell their own products directly to resellers/consumers, so while for some it's necessary as they don't own the rights, for the underlying rights holders it's not. Except to protect margins/profits.

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