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Thursday, March 21, 2013, 11:19 pm PT (02:19 am ET)

Apple responds to Australian 'price gouging' allegations, blames markup on content owners

In a hearing with Australia's Standing Committee on Infrastructure and Communications on Friday, Apple attempted to reconcile the huge price gap between digital goods sold in the country and those sold in the U.S., saying that the blame ultimately falls on content owners.

The Australian Parliamentary inquiry, which included executives from Microsoft and Adobe, was called to address alleged "price gouging" practices by the three companies. As noted by The Sydney Morning Herald, Aussie customers see software and digital content costs sometimes inflated by over 70 percent compared to U.S. pricing.

Tony King

Apple Vice President for Australia, New Zealand and South Asia Tony King. | Source: The Sydney Morning Herald


While targeting Microsoft and Adobe for the companies' software offerings, Apple was singled out for "gouging" the public with marked up movies and music. In response, Apple's Vice President for Australia, New Zealand and South Asia Tony King said content owners demand higher prices in Australia than in other countries like the U.S.

"The pricing of this digital content is based on the wholesale prices which are set through negotiated contracts with the record labels, movie studios and TV networks," King said. "The content industry still runs with perhaps old-fashioned notions of country borders or territories or markets."

He went on to say that Apple's prices as seen in iTunes are comparable to other Australian outlets, suggesting the company wasn't taking advantage of its customers. King noted that Apple has been pushing to lower costs for consumers as it "creates confusion for customers."

As for Microsoft, Australian managing director Pip Marlow said "customers will vote with their wallets," indicating that if the company sets too high a price, sales will suffer. Adobe's Paul Robson was also brought to task over the nearly 75 percent markup for the Adobe CS6 Design and Web Premium Suite, which costs AU$3,175 compared to $1,899 in America.