Committee Reports on its IT Pricing Reference

The House of Representatives Standing Committee on Infrastructure and Communications has reported on its reference into IT Pricing. Its report was released on Tuesday (30 July 2013) and amongst other matters, confirmed that in product areas like the hardware and software Australians on average paid 50 to 100 percent more than consumers in the USA and recommended changes to copyright and consumer law to ensure this situation changes in future.

The Committee's Reference
The Committee was required to inquire:

• Whether a difference in prices exist between IT hardware and software products, including computer games and consoles, e-books and music and videos sold in Australia over the internet or in retail outlets as compared to markets in the US, UK and economies in the Asia-Pacific;


• Establish what these differences are;


• Determine why these differences exist;


• Establish what the impacts of these differences might be on Australian businesses, governments and households; and


• Determine what actions might be taken to help address any differences that operate to the disadvantage of Australian consumers.

The Committee's Findings
After a 12 month investigation the Committee found in the evidence presented to it that the inquiry was . . . "left [in] little doubt about the extent and depth of concern about IT pricing in Australia. Consumers are clearly perplexed, frustrated and angered by the experience of paying higher prices for IT products than consumers in comparable countries."

From the evidence received the Committee concluded that in many cases, the price differences for IT products could not be explained by the cost of doing business in Australia. This it found was particularly so when it came to digitally delivered content and the Committee concluded "that many IT products were more expensive in Australia because of regional pricing strategies implemented by major vendors and copyright holders"

In its report the Committe returned 10 recommendations, of particular interest are recommendations four to nine which deal with proposed changes to consumer and copyright law especially the control if not removal of techniques like "geoblocking" designed to lock content and/or software products to a geographical area of use.

Recommendations 
The recommendations are as follows:

With respect to price discrimination and its impact on consumer

1. That the ABS develop a comprehensive program to monitor and report expenditure on IT products, hardware and software, both domestically and overseas, as well as the size and volume of the online retail market.

2. Considering the importance of IT products to education, and in the interests of greater transparency in this area, the Committee recommends that the Australian Government, in consultation with Universities Australia and CAUDIT, conduct a comprehensive study of the future IT needs of and costs faced by Australian Universities, in order to provide clearer financial parameters for negotiations.

3. That the Australian Government consider a whole-of-government accessible IT procurement policy, to be developed by relevant agencies including AGIMO, and in consultation with relevant stakeholder groups including ACCAN.

With respect  Copyright, circumvention, competition, and remedies

4. That the parallel importation restrictions still found in the Copyright Act 1968 (Cth) be lifted, and that the parallel importation defence in the Trade Marks Act 1995 (Cth) be reviewed and broadened to ensure it is effective in allowing the importation of genuine goods.

5. That the Australian Government amend the Copyright Act’s section 10(1) anti-circumvention provisions to clarify and secure consumers’ rights to circumvent technological protection measures that control geographic market segmentation.

6. That the Australian Government investigate options to educate Australian consumers and businesses as to:

• the extent to which they may circumvent geoblocking mechanisms in order to access cheaper legitimate goods;


• the tools and techniques which they may use to do so; and


• the way in which their rights under the Australian Consumer Law (ACL) may be affected should they choose to do so.

7. That the Australian Government, in conjunction with relevant agencies, consider the creation of a ‘right of resale’ in relation to digitally distributed content, and clarification of ‘fair use’ rights for consumers, businesses, and educational institutions, including restrictions on vendors’ ability to ‘lock’ digital content into a particular ecosystem.

8. The repeal of section 51(3) of the Competition and Consumer Act 2010.

9. That the Australian Government consider enacting a ban on geoblocking as an option of last resort, should persistent market failure exist in spite of the changes to the Competition and Consumer Act and the Copyright Act recommended in this report.

10. That the Australian Government investigate the feasibility of amending the Competition and Consumer Act so that contracts or terms of service which seek to enforce geoblocking are considered void.

Sources:

• House of Representatives Standing Committee on Infrastructure and Communications inquire into IT Pricing


• Calls to cull internet geoblocks ‘naive’: Foxtel (Finacial Review)


• Australians pay 50 per cent more for tech goods, says IT pricing inquiry (The Australian)

Google's High Price of Success

Sometimes it is possible to be too successful? So much so that it actually makes you a target for legal proceedings. Google in recent times appears to have been a major bulls-eye for lawyers and their clients.

In the case of Milorad Trkulja, Google was forced to cough up more than $200,000 in damages to an Australian man who brought his search results to court. Trkulja a Melbourne resident was at a restaurant with his mother in the summer of 2004 when he got shot in the back by an unidentified hitman. The 62-year old music promoter Trkulja survived the attack but a Google search now showed his online reputation didn’t have the same luck. A search for his name on "Google Images" bought up a Who’s Who of Melbourne’s Most Wanted. Results including alleged murderers, drug traffickers and even mob bosses. Even though the only link Trkulja actually had to Melbourne’s underworld was being a victim of an unsolved crime. As a result of Google's search logic (the algorithm that drives its search engine) he was showing up in the same results as were the less than savoury characters accused of shooting him.

Arguing this to be an assault on his reputation and determined to see it end Trkulja launched
his action in the Victorian Courts and succeed in getting damages.

A similar case has arisen where a Port Macquarie surgeon is now suing Google in the USA (in he California District Court) for defamation over an auto-complete search suggestion that he and his lawyers argue has cost him clients. It is claimed that when Google is searched for the surgeon’s name the search also displays the word “bankrupt” and that this association of words is affecting his reputation as a surgeon.

The expected response from Google as it has been in the past when such cases arise is that auto-complete is "a reflection of the search activity of all web users and the content of web pages indexed by Google", essentially arguing that the processes is automated and is not controlled by Google.

Similar cases appear to be arising around the world, for example, the “French court [who] fined Google $65,000 because the search engine's auto-complete function prompted the French word for "crook" when users typed the name of an insurance company”. In another Australian case, the ACCC has taken action in the High Court of Australia where it is claiming that Google should be held responsible for its AdWords rankings and placements. A decision in that case is expected soon.

It will be interesting to see how the standard Google defence that it is just using automatic algorithms and is not acting like a newspaper publishing a story holds up. Certainly as indicated in the press the courts are and will be looking at Google more closely in the future as will many eager legal advisers sensing the opportunity to take big sums in damages from one of the worlds leading technology companies. Sounds like the high price of success?

The 'Daily' Tablet Newspaper to Stop: Murdoch Pulls Plug

In a year that can not be called a winner for the Murdoch brand (don't mention the phone tapping) the Murdoch empire has announced that it will shut down its purpose built tablet app "The Daily". The reason being given is a lack of readers. ABC reports that "Murdoch's News Corporation has announced it will cease publication of its iPad app, The Daily, from December 15, due to a lack of readers." - the virtual newspaper was launched in February 2011.

On its launch The Daily was described by Murdoch as "exclusively designed for touchscreen tablets and costing 99 cents a week or $39.99 a year - a bold experiment.

On its demise Murdoch is quoted "Unfortunately, our experience was that we could not find a large enough audience quickly enough to convince us the business model was sustainable in the long term."

At its peak The Daily was believed to have reached 100,000 paying subscribers contrasting with Murdoch's reported expectation when launching the digital paper that it would need to recruit 500,000 readers a week to break even. In July, he announced it would cut 29 per cent of its staff, or 50 employees.

One identified failing was that The Daily was initially designed to work on Apple's iPad tablet, and only later made available for some Android devices and smartphones. Many said that relying on the Apple platform turned out to be a mistake, limiting its appeal and market.

Another failing is to quote reports - "Research has since shown that tablet owners are 'digital omnivores' who consume media seamlessly across tablets, smartphones, PCs and print publications. To serve them news on only one platform is not satisfying."

Indeed it would seem to any observer that Murdoch has tried to meet the shifting tastes for news provided by the ability to obtain it from many sources with an old world model based on the print newspaper enhanced by technology and flashing lights. To this observer it seems little wonder that The Daily has failed.

Another issue is that we now live in an age of aggregation and "freemium" news and information which is quick and easy to obtain in many ways - for example, Google and in particular Google News, Twitter where I can follow like minded people who point and lead me to the stuff I want to read or even directly from the source of the news as in a government sites, associations site etc. It would seem the greatest threat to print media lies in the adherence to old business models and a failure to realize that people no longer pay in the traditional way (subscription for example) and further, even if there is a bill at the end, they want to get quite a good deal for free - at least enough to get so hooked that they will happily pay a small amount in ever increasing quantity to keep the supply (one reason Apps have become such a pervasive way of delivering software, ads and information).

It will be interesting to see what Murdoch does next with respect to print media but whatever it is it will require more innovation and entirely different business model.