Korean Mobile Carriers Pay Apple's Ad Expenses
The Korean Fair Trade Commission (FTC) is continuing a hot legal debate to determine whether Apple Korea committed unfair practices in distributing its products in the Korean market. The commission is expected to come up with the final judgment in April at the earliest.
The FTC held a third round of deliberation on the matter on March 27, focusing on whether Apple’s practice of having Korean mobile carriers pay its advertising expenses constitute an abuse of power.
The FTC began its deliberation in December 2018. "There is a possibility that the FTC will have a fourth deliberation after reviews by the chairman, the vice chairman, and standing members," an FTC official said.
Although the details of the third round of deliberations were not released on this day, it is said that Apple Korea has taken the action of passing over advertising costs in detail. Apple is currently being investigated on the allegations that it has unfairly transferred advertising costs and repair costs to domestic mobile operators using the transaction status from the FTC.
An investigation of Apple Korea launched in June 2016 has been ongoing for two and a half years. The third deliberation, the final stage before the final verdict, is expected to greatly affect not only the handset industry but also the telecom industry.
Since launching the iPhone in 2008, Apple Korea has been accused of passing on the burden of advertising expenses and other costs to Korea’s three mobile carriers using its superior position. "Advertising fees have been an additional means of exploiting the mobile carriers to take profits from them," the FTC is claiming.
Following the mobile carrier, retailers are pointing to Apple's unfair practices. In January, the Korea Mobile Distributors Association said that it would officially report Apple's alleged unfair practices to the FTC.
Mobile distributors has blasted Apple Korea as the company has been abusing its power over them such as passing on cost to buy demonstration phones to the mobile distributors despite sluggish sales of high priced models such as the iPhone XR, iPhone XS and iPhone XS Max.