Apple Inc (AAPL), Adobe Systems Inc. (ADBE), Microsoft Corporation (MSFT): Aussie Price Gouging Charges

Australian officials are not happy. They haven’t been happy since a 2011 study revealed that Aussies were paying more for digital content (e-books, movies, music, software) than many developed countries – including the U.S., even though the Australian dollar is now worth more than the U.S. dollar. Officials asked representatives from major digital-content companies like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) and Adobe Systems Inc. (NASDAQ:ADBE) to speak to a parliamentary committee about charges of price-gouging, and Friday was the day that these companies arrived to provide testimony to the committee investigating the charges.

This is a followup to the article we had Thursday, where Aussies were asking for representatives from several major companies – including Apple and Microsoft Corporation to explain why digital content is priced so much higher than Australia than in other counties – including the U.S. Although the Aussie dollar was weak against the U.S. dollar four years ago, it has rallied nearly 50 percent since to now be worth about US$1.05 – yet prices for digital content in Australia was still as much as 50 percent more expensive than in the U.S.

Earlier today, we brought you the response to the claims from Tony King, the vice president of Apple Inc. in Australia, New Zealand and South Asia, and his defense  was … well … how to put it … “it’s not us.” King claimed that the prices of digital content on Apple iTunes or App Store platforms are based on wholesale prices established between content providers and movie studios, TV networks and publishers. He said Apple was just serving as an intermediary to the marketplace.

So what about Adobe Systems Inc. and Microsoft Corporation? How did they answer the question about their higher prices Down Under?

Paul Robson, head of Australia and New Zealand operations for Adobe Systems Inc. at least didn’t blame others directly, but said that being local affects prices. He said that the prices are due to “the cost of doing business” in the area, as the company has to pay for local salaries, operations and investing in sales channels – suggesting that Australia may not be so business-friendly. However, he also admitted that when Aussie customers try to buy products on the Adobe U.S. site to save money, they are redirected to the Australian version of the site. Robson claimed this was to enable the company to track sales from various regions of the world and to offer a “personalized experience” for customers.

Microsoft Corporation seemed the least prepared to have an explanation for the prices. Pip Marlow, who heads Auastralia operations for Microsoft, was accused by a member of the Labor Party for hiking prices because the company could – there was no reasonable alternative available in the market. To that charge, Marlow came back with a powerful, “If we price our products too high our customers will vote with their wallets and we will see our sales decline.”

Wow. Take that. Yikes.

What do you think about this? Are these companies willfully gouging Australians for accessing digital content, or is there a perfectly rational explanation? Let us know your thoughts about Apple Inc., Adobe Systems Inc. and Microsoft Corporation in the comments section below.

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