Apple 'Likely' to Face Sanctions in South Korea Over Unfair Carrier Contracts

[MacRumors]

Apple will likely face sanctions from the Korean Fair Trade Commission for unfair iPhone contracts that require local carriers to pay advertising and repair costs, reports The Korea Herald, citing industry sources.

Apple's Korean division has been criticized for asking carriers to foot the bill for advertising costs, launch events, and iPhone repairs, leading to an investigation from the Fair Trade Commission. The Korean FTC recently agreed to impose penalties on Apple Korea and has contacted the company for an explanation before making a final decision on whether or not to impose sanctions.

According to The Korea Herald, three Korean carriers, SKT, KT, and LG Uplus, were directed by Apple to air TV commercials promoting the iPhone 8 and the iPhone X, but were reportedly required to pay for the commercials.

"When you see iPhone's TV commercials here, everything is the same except for a telecom operator's logo at the end of the commercials. Still, telecom firms should bear all the costs standing at billions of won," said an executive of one of the three firms on the condition of anonymity.

Apple Korea has been under investigation in Korea since 2016, with the Korean Federal Trade Commission conducting raids in June 2016 and November 2017. It's not clear what kind of fines the company could be facing in the country should the FTC move forward with sanctions.

Article Link: Apple 'Likely' to Face Sanctions in South Korea Over Unfair Carrier Contracts

 

[Ramchi]

Eat only the profit, rest is footed by everyone in the earth! Nice business model

 

[alphaod]

So if you want to advertise your local franchise, the franchisee pays for their own advertising? That's pretty standard.

Or will car dealers start asking the manufacturer to pay for their advertising too?

 

[wesk702]

Eat only the profit, rest is footed by everyone in the earth! Nice business model

1 Trillion, here we come.

 

[macfacts]

So if you want to advertise your local franchise, the franchisee pays for their own advertising? That's pretty standard.

Or will car dealers start asking the manufacturer to pay for their advertising too?

Those local carriers want to advertise their services and phones they offer. Apple's contracts force them to make (edit: not make, show) "iPhone only commercials" and cover the cost.

What bizaroo world do you live in where that sounds reasonable.

 

[genovelle]

Those local carriers want to advertise their services and phones they offer. Apple's contracts force them to make "iPhone only commercials" and cover the cost.

What bizaroo world do you live in where that sounds reasonable.

Actually in car adds here the dealerships pay a regional ad fee to be included in manufacturer created regional ads. Nothing is stopping them from doing thier own productions but if the want to look like they are inline with the company, they pay

 

[deanthedev]

Those local carriers want to advertise their services and phones they offer. Apple's contracts force them to make "iPhone only commercials" and cover the cost.

What bizaroo world do you live in where that sounds reasonable.

Your username doesn’t align with your posts.

Carriers are free to advertise all the phones and services they sell in any manner they like. Only when they advertise iPhones do they need to stick to approved Apple ads (with carrier branding at the end).

They aren’t making commercials. They’re using pre-canned Apple spots. This is why the ads look similar, except for carrier branding. So their only costs are the airtime for the commercials.

The wording of your post is very deceiving.

 

[mookc1]

So if you want to advertise your local franchise, the franchisee pays for their own advertising? That's pretty standard.

Or will car dealers start asking the manufacturer to pay for their advertising too?

Car Manufacturers already do that. Isn't that part of the 'hold back' number?

 

[rafark]

Those local carriers want to advertise their services and phones they offer. Apple's contracts force them to make "iPhone only commercials" and cover the cost.

What bizaroo world do you live in where that sounds reasonable.

In the west. It's called brand guidelines. Every company should have the right to decide how their brand is portrayed.

 

[0924487]

The the gist of this is that everyone in the loop think Apple is taking too much of the pie for what they contribute.

 

[spyguy10709]

Those local carriers want to advertise their services and phones they offer. Apple's contracts force them to make "iPhone only commercials" and cover the cost.

What bizaroo world do you live in where that sounds reasonable.

In a world where a carrier can choose to carry the iPhone, or not. Sounds like a mandatory minimum ad spend. Standard practice globally.

Apple is positioning a premium product, and as a carrier you can be a partner with Apple in carrying and promoting the product, and reap the benefits -- or not. Apple isn't blocking BYOD devices from any networks globally - they're stating if you want to partner with Apple - you have to partner with Apple.

That option is the same in the US once AT&T lost exclusivity. Verizon joined ranks immediately, but sprint and t-mobile waited - likely because of the significant buy-in (of both inventory and advertising) required. After realizing what offering only BYOD iphone plans means in the US market, the carriers partnered with Apple.

Apple's an abusive player a fair bit - but I'm not sure how they played unfairly here....

 

[Tivoli_]

I don't know what the fuss is about because whether the carrier pays for the ads or Apple does, all costs will be part of the companies doing business, and it will always, at the end, be paid by the consumers.

 

[Mousse]

I see nothing wrong with having the carrier pay for advertising and events, but making them pay for phone repair?

 

[theheadguy]

So if you want to advertise your local franchise, the franchisee pays for their own advertising? That's pretty standard. Or will car dealers start asking the manufacturer to pay for their advertising too?

You think they run a franchise or are you purposefully using a poor example?

 

[gnasher729]

I see nothing wrong with having the carrier pay for advertising and events, but making them pay for phone repair?

When you sell an iPhone, you pay money to Apple for the phone, you pay whatever cost is part of contract, and you get the money the consumer pays. The difference is your profit. How the money is distributed between the cost of the phone and other costs is up to negotiations.
[doublepost=1523308735][/doublepost]

The the gist of this is that everyone in the loop think Apple is taking too much of the pie for what they contribute.

Well, what do they really contribute other than the iPhone? Sellers are free to sell iPhones or to not sell them. As long as Apple finds sellers willing to sell under the current terms, the sellers will have to accept those terms. If not, Apple has to offer better terms, or sell the phones themselves.

 

[Brandhouse]

I don't see the fuss over the advertising and asking carriers to pay for the TVC spots. Paying the repairs is a different thing.

 

[TheColtr]

South Korea? The home of Samsung? The country with the corrupt government? The country that is run by Samsung?

Who woulda thunk it?

 

[kdarling]

South Korea? The home of Samsung? The country with the corrupt government? The country that is run by Samsung?

Who woulda thunk it?

Says a guy with California in his signature, home of the few court wins Apple managed to get with patents that were quickly invalidated in other countries.

Accusations of hometown prejudice can be made all over the world.

 

[Solomani]

South Korea? The home of Samsung? The country with the corrupt government? The country that is run by Samsung?

Who woulda thunk it?

I'm surprised Samsung hasn't already run Apple out of town. It's like Samsung is already the local sheriff, judge, and jury. So many of SK's Parliament members are under Samsung pay, no secret there. Much in the same way that American Senators have been "bought out" by powerful American lobbies.

 

[gnasher729]

I'm surprised Samsung hasn't already run Apple out of town. It's like Samsung is already the local sheriff, judge, and jury. So many of SK's Parliament members are under Samsung pay, no secret there. Much in the same way that American Senators have been "bought out" by powerful American lobbies.

Well, from time to time the government there sticks some Samsung executives in jail, so that probably slows them down.

 

[deanthedev]

Says a guy with California in his signature, home of the few court wins Apple managed to get with patents that were quickly invalidated in other countries.

Accusations of hometown prejudice can be made all over the world.

Please. What he said is true. Samsung has had not one, but two CEOs sentenced to prison. Along with dozens of other executives over the years. Can you name any Apple CEOs or executives that have gone to prison (and then released much earlier than they should have)?

Whether the poster lives in California is irrelevant, so why did you bother to bring it up?

 

[justperry]

Please. What he said is true. Samsung has had not one, but two CEOs sentenced to prison. Along with dozens of other executives over the years. Can you name any Apple CEOs or executives that have gone to prison (and then released much earlier than they should have)?

Whether the poster lives in California is irrelevant, so why did you bother to bring it up?

You missed the smiley, @kdarling is correct, as in, what does @TheColtr actually bring up, it has nothing to do with the issue at hand, so he did the same.

 

[deanthedev]

You missed the smiley, @kdarling is correct, as in, what does @TheColtr actually bring up, it has nothing to do with the issue at hand, so he did the same.

South Korea being protectionist isn’t relevant to a foreign company possibly getting sanctions?

 

[kdarling]

Please. What he said is true. Samsung has had not one, but two CEOs sentenced to prison. Along with dozens of other executives over the years.

That's a good thing, as it shows that South Korea is going through a dismantling of old ways. Paying a friend of a friend to help you with government red tape is common all over the planet. In the US we still do it, but semi-hide it by hiring people into civilian lucrative jobs afterwards.

In any case, it has zero to do with Apple and its carrier contracts.

Can you name any Apple CEOs or executives that have gone to prison (and then released much earlier than they should have)?

That might just show that the US still protects Apple execs even more than Korea used to protect Samsung execs.

Some think Jobs should've gotten jail time for his stock scandal, same as other less fortunate execs of smaller companies. Others think he should've gone to trial for his secretive anti-poaching and other anti-trust plots.

But, just like used to happen with Samsung execs, Jobs was deemed too valuable to charge with anything. There's very little difference in the types of influence going on in both cases. Well, except Samsung actually is critical to South Korea's economy and defense, unlike Apple.

 

[justperry]

South Korea being protectionist isn’t relevant to a foreign company possibly getting sanctions?

The topic/issue is carrier contract, it has nothing to do with what you said/say.