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The EC claims iTunes treats customers unfairly and that record labels are to blame

After a long series of investigations, the European Commission (EC) today decided to formally object to Apple and its iTunes business in European countries on anticompetitive practices. According to the EC, it has sent a Statement of Objections to Apple, indicating that the way Apple does business with its iTunes online store is in violations of EC treaty rules.  Additional complaints were sent to major record labels operating in the European Union.

The problem lies in the way that major record labels deal with the iTunes online store, allowing only limited access based on the location of the customer. Prices vary across locations and across borders, and customers in one zone may not be allowed to purchase music that's available in another zone. Worse yet, some customers end up paying higher prices simply because of their geographical location.

European Commission spokesman Jonathan Todd publically stated that the EC sees the agreement between record labels and Apple as a violation of trade treaties. "Our current view is that this is an arrangement which is imposed on Apple by the major record companies and we do not see a justification for it." An official statement from the EC indicated that customers were having their credit cards scanned for location information and if for example the customer was located in Belgium, they could only purchase songs designated to Belgium.

The report states, "Apple and major record companies contain territorial sales restrictions which violate Article 81 of the EC Treaty. iTunes verifies consumers' country of residence through their credit card details. For example, in order to buy a music download from the iTunes Belgian on-line store a consumer must use a credit card issued by a bank with an address in Belgium."

An important note in the EC's statement said that while this charge is an indication of treaty violations, it is not a charge of monopolistic practices.

"The Statement of Objections does not allege that Apple is in a dominant market position and is not about Apple's use of its proprietary Digital Rights Management (DRM) to control usage rights for downloads from the iTunes on-line store," concludes the report.

Before the EC sent its formal charge to Apple, the life-style computer company already faced a number of allegations about the iTunes store. Earlier this year, a number of agencies in several European countries joined forces to threaten legal action towards Apple if it didn't change the way the iTunes store operated. Groups in Denmark, Germany, France, Norway and Sweden complained that Apple's DRM format is too restrictive and did not allow users to play music on players of their choice.

In February of this year, Apple CEO Steve Jobs said that despite the restrictions placed on songs downloaded from the iTunes store, he would rather see Digital Rights Management (DRM) completely abolished. "Through the end of 2006, customers purchased a total of 90 million iPods and 2 billion songs from the iTunes store. On average, that’s 22 songs purchased from the iTunes store for each iPod ever sold,” Jobs said. While it's difficult to ignore that iTunes does effect sales of iPods, consumers have been against DRM-enabled music from the get-go. Even Microsoft chairman Bill Gates took a stab at DRM late last year.

With the EC's latest charge on Apple, it will be interesting to see how things shape up between Apple and major record labels. While the RIAA is still going after college students and other end users, the Digital Millennium Copyright Act (DMCA) may be going through some changes thanks to updated a new FAIR USE act, which calls for reduced restrictions for both consumers and hardware developers. The dynamics between Apple, record labels and government agencies is no doubt a complex one. Despite Apple's troubles, the iTunes business is still a roaring success.


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Typos and comments...
By HaZaRd2K6 on 4/3/2007 4:53:15 PM , Rating: 2
quote:
Worst yet, some customers end up paying higher prices simply because of their geological location.


Should be "Worse" and "geographical".

quote:
Groups in Denmark, Germany, France, Norway and Sweden complained that Apple's MP3 file were too restrictive and did not allow users to play them on MP3 players of their choice.


You sure that's MP3s? I've bought songs from the iTunes store and they're in a protected ".m4p" format.

On another note, I don't see why the EC is going after Apple all by its very lonesome on this. They even admit that Apple had the current format of files "imposed" on it by major record labels. It would make more sense to go after them instead of going after just Apple.




RE: Typos and comments...
By Justin Case on 4/3/2007 5:01:37 PM , Rating: 1
The store is run by Apple. If Apple accepted illegal terms from its suppliers, that's their problem. If I decide to charge black people 50% extra at my shop, I'm objectively breaking the law. If my supplier tries to impose that condition on me, I can pick a different supplier or file a complaint (or both). If I do neither, and simply accept, that doesn't exempt me from responsibility, and doesn't mean I can continue to break the law.

I guess the EC wasn't too impressed by Jobs's hypocritical "open letter against DRM"...


RE: Typos and comments...
By Ringold on 4/3/07, Rating: -1
RE: Typos and comments...
By Phynaz on 4/3/2007 5:30:56 PM , Rating: 2
The EU is all about central planning.

If you EVER thought the EU wasn't 100% Socialist, well now you're getting the idea.


RE: Typos and comments...
By Ringold on 4/3/2007 5:40:13 PM , Rating: 3
My very last edit before posting was removing the word "communist" before "central planning". The Czech Prime Minister has apparently grumbled about aspects of the EU being too similar to communist central planning for his taste, but I try not to oughtright say it any more, merely heavily imply it. Actually saying it is a one way ticket to -1 moderation.

So.. yes, I'm right there with ya phynaz, heh.


RE: Typos and comments...
By Ringold on 4/3/2007 5:32:57 PM , Rating: 1
woops

quote:
I don't see why ..decision making.. should nt be left with the private owners of the company in question.


Left off the 'nt'. It ought to be their choice to accept or refuse customers business.

I guess maybe in the EU's 300+ page constitution, they perhaps forgot to include the same protections for property rights and free will than we enshrined in our mere 20 pages? ;)


RE: Typos and comments...
By Justin Case on 4/3/2007 11:41:05 PM , Rating: 5
It has to do with this little thing called "law".

Just as you can't discriminate between black people, white people, and so on, you cannot discriminate between different countries in the EU when you don't actually have different distribution costs. If there's shipping involved, or local representatives with their own costs, etc., that's fine. But Apple's online store is exactly the same for every country. Selling the same thing at different prices based on the client's nationality is discrimination, and against the law.

Judging from your posts in this and other threads, you seem to suffer from extreme ignorance about european law (and US law too, if you think US commercial law fits in 20 pages...), as well as a serious inferiority complex.

You don't have to agree with EU law, but I really don't think it's that hard to understand it.


RE: Typos and comments...
By Ringold on 4/4/2007 1:29:22 AM , Rating: 1
I said the constitution of America is 20 pages, not commercial law, and I never said that any of that wasnt the law, so perhaps the one with a trouble with powers of perception is you, not me.

Law doesn't mean that a given subject is right or wrong, or efficient or inefficient, it merely means that it is what was decided upon by officials elected by apathetic voters of which half or less typically bother to even vote in any given election, laws that these politicians know the masses will never pay much attention to, but their contributors will. That's what a law is, and I'm under no disillusion of that at all.

Really, all I was stating was disagreement and why, such as efficiency issues and liberty issues. Things that here in the US we consider inalienable rights, given by god, according to our founding fathers.

And for the record, as I stated, companies CAN and DO price discriminate amongst population groups and geographical locations (that have nothing to do with distribution costs)-- even within countries. Check your local movie theatre for senior citizen price discrimination, and check gas stations near an airport or theme park and then just a couple miles down the road where the locals get their gas. Illegal? Not here. Efficient? Absolutely. At least, here in the US. If thats legal or not in the EU I don't know but if the EC gets its way here then there is no reason why it wouldn't be in the EU.


RE: Typos and comments...
By Justin Case on 4/4/2007 1:37:41 PM , Rating: 3
Of course different shops (or gas stations, etc.) have different prices. It's called competition. [sarcasm] Naturally, you living in a communist federation wouldn't understand that... [/scarcasm]

But shop "A" cannot forbid certain customers from buying there, and force them to go to shop "B" instead ("sorry but you're [black / female / texan], we refuse to serve you, go to a different shop we prepared just for your kind").

That's what's at stake here. Apple is banning all greek customers from accessing their irish shop, all their spanish customers from accessing the german shop, and so on. That is illegal. You cannot run a shop inside the EU and discriminate against people based on their nationality. To make matters worse, Apple's "shops" actually run the same software, on the same servers, so they can't even claim that their running costs are different, or that shipping costs are different (not that they even tried that; they just say "the evil record labels made us do it").

Apple is free to have a "greek" shop and a "german" shop and so on, but all EU citizens must be allowed access to any of them.

And guess what, discrimination by age is perfectly legal. People under 18 aren't allowed into some movie theatres, can't get a driver's licence, etc.. People under 5 get free entry anywhere as long as they're with an adult. And people over 65 get some discounts in museums and public transportation and so on.

The question here isn't if you or I agree with that, it's simply a matter of law. I find it hard to buy that you "disagree with the EU law" when you don't even seem to understand the issue (repeatedly giving nonsensical "examples"), let alone know the laws in question.

It's extremely unlikely that Apple's legal department (or Microsoft's, or Merck's, or that of any other company that been in trouble with the EC before) doesn't know the law that applies to them, in the markets where they choose to operate.

Ignorance might excuse some silly internet posts, but I don't think it works very well in trade court.


RE: Typos and comments...
By Ringold on 4/4/2007 2:46:53 PM , Rating: 1
quote:
It's called competition.


It's called price discrimination across regional markets. Unless, of course, you consider one store owned by the same firm/franchisee to actually be in competition with sister locations.

The concept can further be illustrated (the exclusion part) with gas stations like this. One station has diesel, the other doesn't. One's located near an area full of truck-loving cowboys, and has it, while the same firm decided it's not worth it in the inner city, full of Prius-driving, regular-unleaded swilling girly men. Greece's argument here would be that it's market is unfairly not being served because there happens to be some potential customers there. The gas station would say "Not enough to make it worth it to me". The EU would apparently say "Too bad". In the case of Apple, service can't be quite as easy as driving a short distance to a location to make the purchase due to the law, which you love to refer to as gospel so much. A company either has to be prepared to fully engage in business in a market or not at all; being in each additional national market has extra costs, and if they don't think the revenue is worth it, service must be denied entirely. The concept remains the same, and I still assert business should be able to choose when and where it wants to do business as a matter of the inalienable god-given right of liberty and free choice, not what some EU lawyer says. (Yes, I invoked the vague concept of god -- can't win now! :P)

Plus, the fact Apple sells data and not shoes shouldn't matter; if some firms price discriminate, why can't they all? But of course, the liberal answer to all problems is micromanagement from the government level, so lets just write some laws just for Apple.

Though, to address the "law", I'll admit that if Apple broke it, knowingly or not, then they ought to pay the fine. But the EU ought to be aware that a) It's a socialist policy that b) makes EU less attractive to do business in, which is important because c) the EU is already economically in crisis ("crisis" being European leaders words describing themselves, not me), and shouldn't be surprised if d) some companies choose not to engage the EU market because the risk of government implementing controls over how they operate is above their tolerance (similar to Venezeula). All those points are documented and not just my speculation, too, but the actual state of affairs, which can be found in countless studies as well as current statistics, and this merely adds to the problem.


RE: Typos and comments...
By Justin Case on 4/4/2007 8:49:36 PM , Rating: 2
> It's called price discrimination across regional markets.

No, it's called competition. Do you think that if a given shop had no competition in its area, it would lower its prices? A Repsol gas station in Barcelona is obviously not competing with Repsol gas stations in Paris; it's competing with all the other gas stations in Barcelona. That is why gas is cheaper in some places than others. Because there is competition. If there was only one gas station in Barcelona, or if all the gas stations in Barcelona were owned by Repsol, do you think they'd "discriminate price across that regional market"...?

Your "theories" about european economy and law (in this and pretty much any other discussion where the word "Europe" is mentioned) make it pretty clear that you don't have a clue what you're talking about. Maybe you'll sound like an expert to other ignorant xeonophobes with an inferiority complex, eager to pounce on anything "foreign" and unknown, but to anyone with an actual law or economy degree (or a bit of common sense), you sound like a 14 year old who has never been out of his basement, let alone his country.

I for one am through feeding the troll.


RE: Typos and comments...
By Ringold on 4/4/2007 10:36:16 PM , Rating: 2
To anyone with an economics degree (like me), I'd sound like someone trying to make a constructive argument against government regulating a companies capacity to make decisions for itself. You'd sound like the troll, with your picking and choosing parts of which arguments you want to take on and stacking the rest of your posts full of filthy personal attacks.

For reference, when I say "Europe" I refer broadly the Eurozone, those states under control of the European Central Bank, but "Europe"'s shorter and everybody knows what I'm talking about. Is that good enough for you, ass?

Anyway, if you ever climb/fall off your high horse, try and crack open an economics text not written for children. You'll see there are several reasons for discriminating across regions and that discrimination is more efficient in that it can minimize the deadweight loss, and that your examples are just skirting the issue.

With the insults being stacked about 10:1 against me here, I'm the one done feeding the troll.


Before you all start..
By Merry on 4/3/2007 7:59:29 PM , Rating: 4
A few things need to be cleared up here.

1)The EU operates a free market between its member states, thus businesses must, by law, adhere to this. Apple are not doing by implementing different price structures in different countries within the EU (i.e price difference between the UK and the continent, after exchange rates have been taken into account). This is nothing to do with taxes either.

2)As the article states this is not a monopoly issue. I'm pretty sure some of you, once again, will take issue to the fact the EU is challenging an American company. My answer to you is simple. They want to operate here, they operate under our law whether they, or indeed you, like it. I happen to believe, in this case, that the issue is well founded and more has to be done with regard price discrimination between member states. I'm not too sure about content, however, as I'm well aware of the licensing issues involved.

So, to sum up, this is not another anti American socialist conspiracy, that members such as 'ringold' insist on making it out to be. It is just a case of the EU doing what it is there for.




RE: Before you all start..
By Ringold on 4/3/2007 10:24:45 PM , Rating: 1
I never said anti-American, because in this case, the EC didn't make it one. It did, however, make it a socialist one.

Socialist because it's just a push for central planning; the EC doesn't like the fact that Apple has the capacity to price discriminate across markets (believe it or not, different laws in different countries really could amount to different cost structures for anticipated legal fees or taxes, etc) or pick and choose it's customers based on if they want to bother serving a certain group of customers or not. If the EC had it's way, the customers would take that business decision and make it their own and anyone that's bothered to stay awake through a principles of micro or macroeconomics class knows that's a great way to run a lousy company.

I'm not about to apply this logic here and demand that, uh, Cinemark opens a movie theatre closer to me because they serve the city and not the suburbs. I'm not about to then sue them because senior citizens benefit from price discrimination. I'm not about to complain that when I drive anywhere near an airport or a theme park the price of gasoline suddenly soars. But then again, I'm not a European and understand what a "free market", as you called it, really is. It's free. Companies and individuals free to engage in business with other agents within an economy at will without being coerced, as equals, with the gaurentee of property rights to make sure that transactions are safe and assets secure, thereby making the whole process worth it.

But since the EU is having a miserable time trying to agree on a budget lately, don't worry, they'll find something else to nail Microsoft with soon enough. :D


RE: Before you all start..
By Merry on 4/4/2007 6:13:28 AM , Rating: 3
Look, I'm never going to change your opinion on the EU, but I feel you should, before completely writing it off as some exercise in 'Socialist central planning', go and actually do a little bit of research into what the EU is and what it does. You also overestimate the EUs power as a central governing body. As I have said before,I actually study the EU as part of my course and you'd be surprised as to what it actually achieves. You may also be surprised as to how the US actually shaped the EEC too.

Also, your example of price discrimination with cinemas misses the point and is entirely different to Apples case. Your point regarding the EU budget is also a case of stating the obvious. There are clear tensions in the EU regarding the budget, mainly due to the 2004 enlargement.


RE: Before you all start..
By Ringold on 4/4/2007 3:13:42 PM , Rating: 2
I don't what part of which it is you study, but I study it's economy as well. I'm sure the EU does nice cute things in various realms of human life, ie, good diplomacy (it sure got angry with Iran this past week!) and peacekeeping (A+ performance in Darfur, and those Belgian troops in Kosovo were real heros, eh?). But economic success it absolutely is not.

The single market *does* exert a good amount of control over it's participants economies. Switzerland, for example, has had to adopt almost the full set of rules as a full EU state member (and even has to contribute to the budget) in order to participate in the single market. Additionally, with the unified currency, the monetary policy applies to them all whether they like it or not.

The term socialism I use, I think, correctly, as the government in the EU treats business in general as a second-class citizen. It regulates it, it tells it how to operate, what it can and can not do in a wide variety of instances, it taxes them heavily when it befits them and willingly disregards its property rights when voters decide they don't like something. Thats just the business operation side; on the employee side, they regulate hours worked and implement much more restrictive (on business) labor laws that effective legislate away the concept of "right to work". I don't know how many businessmen from France have complained that the very popular culture there looks upon successful businessmen as criminals, and with the work-police gustappo going around checking to make sure nobody worked 1 minute past their 35hr cap, the system treats management in the same way as car thiefs and other felons.

Again, that IS socialism, that IS central planning; the government in Europe (not just the EU itself but individual states as well) controls every detail it can manage to, likely with the belief that more government is preferable to less.

The alternative would be free markets operating without government intervention except in cases of market failures (which almost never happen) and to correct externalities (through licenses or limited, specific taxation to correct for infringed property rights or the damage to the public property). Europe comes no where close; most recent example is the light bulb. The communist/fascist approach is to ban socially unacceptable things, like dancing in Taliban-controlled Afghanistan. The free-market approach is to devise a carbon tax so that people pay to use inefficient technology. You see which route the EU took.

Some places, like the UK with light labor laws or Germany that has kept its unit labor costs down, manage to avoid some economic problems. Most of Europe, unfortunately, has no saving grace to make up for its problems like Germany and the UK have, and that's reflected in precisely what economic theory predicts for socialist economies; high unemployment, low growth.

As an aside, I don't write off the EU; men like Sarkozy understand the problems, and hope to fix it (if he is elected). In fact, most politicians know precisely what they need to do, they just don't know how to get re-elected again if they were to do it.

I've been stating facts and events right out of the news, so I'd like to see how you could see the EU in a radically different light other than failure with only somewhat bright hopes for a better future (but still a current-day failure).


RE: Before you all start..
By Merry on 4/5/2007 8:07:41 AM , Rating: 2
Without wanting this to sound like a personal attack, be honest. You don't have an economics degree, judging by nearly all of your posts I've seen on here. You don't even understand the concept of socialism and you sure as hell don't understand the economy of the EU. (incidentally I do also do economics as part of my course, at a fairly basic level, mind)

I've read your post and, unfortunately it is factually incorrect in the main and has nothing to do with the subject in hand, for that reason I'm not going to bother addressing the points you made, as, in your own words I'd be 'feeding the troll'.


RE: Before you all start..
By geddarkstorm on 4/6/2007 5:53:05 PM , Rating: 2
Actually, he hasn't shown much of a lack of understanding in socialism or economics as far as I've seen, and yes, I've taken courses in economics, and especially in microeconomics (meaning the economy within a country or given region).

Let us remember, the EU is not a country but a union of countries. Each individual nation has it's own laws, constitution equivilant, and leadership. The EU attempts to bridge all the different laws, currancies, and practices to make it a more uniform and compatible whole (i.e. you can use the Euro anywhere in any EU nation and don't have to bother with constantly exchanging your currancy).

With that said, for the EU to demand of a company that it cannot engage in different business practices with different, soveriegn, independent nations, is a bit socialistic in nature. Each country has its own business laws, irregardless of the EU!, and it's own taxes, so demanding absolutely identical business practices by any company in all EU members is rather ludicris.

Of course, I have not studied how the different companies based in say France as treated by the EU on their pricing of products that they sell in France verses those they sell in Norway (subtracting out distribution costs and such), but I doubt the EU demands such fidelity elsewhere. That does not mean what it's doing is anti-American! But, it seems a reflection of a "this is the internet, no countries or regions exist on it, the internet is it's own self contained location" mentality, and a case of the EU trying to overstep its bounds of power.

In summery, each country must be tailored to price wise by a company for effective business (likewise a company tailors its practices differently in every state in the United States due to different State based laws and taxes!), so it seems the EU is very wrong in this matter from a rational and economic standpoint (unless it is true that the internet modifies these facts and negates them, then the EU is right and Apple is entirely wrong for discrimination).


RE: Before you all start..
By Justin Case on 4/3/2007 11:52:16 PM , Rating: 2
Ringold was probably hit on the head by a map of Europe when he was a child and he still has deep psychological scars.


RE: Before you all start..
By Ringold on 4/4/2007 1:37:40 AM , Rating: 2
Close!

I was hit on the head with Europe's unemployment figures, like 25 years of unemployment above 8% in France, double-digits amongst the young and nearly 50% in the ghettos, and I've been wary of socialism ever since. :P

But nice try at intelligent debate over real issues. Much easier to make personal attacks than try to debate philosophical issues of free will or the almost impossible task to usurp decades of economic consensus on the effectiveness of central planning,etc., so I understand.


This isn't about DRM
By Houdani on 4/3/2007 5:06:43 PM , Rating: 5
quote:
" The Statement of Objections does not allege that Apple is in a dominant market position and is not about Apple's use of its proprietary Digital Rights Management (DRM) to control usage rights for downloads from the iTunes on-line store," concludes the report.
So why is the title of this piece called ... European Commission Objects to Apple iTunes DRM?




RE: This isn't about DRM
By lewisc on 4/3/2007 5:16:57 PM , Rating: 3
You're right, the probe is not looking into the use of DRM by Apple. Here is a link to a BBC article, which explains in more detail with what the investigation is concerned. http://news.bbc.co.uk/1/hi/business/6520677.stm.

From what I understand after briefly catching part on the news, it is surrounding alleged price fixing, forcing consumers in a single market (such as the EU) to pay different prices for the same product. For example, in the UK an iTunes single is currently £0.79 compared with the same track costing £0.66 in France, Belgium or Germany.


RE: This isn't about DRM
By lewisc on 4/3/2007 5:18:49 PM , Rating: 2
Sorry, I put an extra full stop at the end of the link by accident! Correct link is http://news.bbc.co.uk/1/hi/business/6520677.stm


By KristopherKubicki (blog) on 4/3/2007 5:28:04 PM , Rating: 2
Title got cut off - sorry about that. Fixed.


What Is The EU Trying To Do
By JustJoinedToday on 4/3/2007 6:52:58 PM , Rating: 1
It just seems like the EU is trying to determine business practices for the United States.

Next they'll be trying to decide who should wind the format war between Blu-Ray and HD DVD.

Not to sound like a religious nut, but i bet you $5 bucks that the anti-christ is on the EU Commission, or at least his daddy (okay does sound like a religious nut).




RE: What Is The EU Trying To Do
By Justin Case on 4/3/2007 11:54:38 PM , Rating: 2
It just seems like the EU is trying to determine business practices for the United States.

Huh? Did you even bother to read the article? What does this have to to with the USA? And don't worry, you don't sound particularly religious.


RE: What Is The EU Trying To Do
By Visual on 4/4/2007 6:04:06 AM , Rating: 2
can't say the same about the nut part though...


RE: What Is The EU Trying To Do
By geddarkstorm on 4/6/2007 5:58:46 PM , Rating: 2
It has to do with US based companies doing business in foreign countries; so his comment is fully revelent (though, every country does have a right to determine how foreign contries opperate in its boarders).


By Justin Case on 4/8/2007 2:59:22 PM , Rating: 2
I wasn't aware that Apple is a "country".

Besides, last time I checked, if I set up a business in, say, Canada, I have to comply with canadian trade law. Doesn't really matter what my nationality is.

If you think Apple is "US-based" think again. It may have started there, but these days they do 99% of their manufacturing outside the USA (mostly in Asia), and they have local branches in virtually every european country, as well as most of Asia and America (as do Microsoft, IBM, etc.).


i live in US
By theteamaqua on 4/3/2007 4:52:51 PM , Rating: 4
and itune's authorization has been nothing but annoyance... i gotta authorize, deauthorize when i reinstall windows ... so annoying.




RE: i live in US
By Phynaz on 4/3/2007 5:28:55 PM , Rating: 2
Yep, those three clicks when your going through the effort of reinstalling an entire operating system is such a pita.


RE: i live in US
By theteamaqua on 4/4/2007 3:59:22 AM , Rating: 2
yeah, umm not sure about u but when i change motherboard .. thats another POC under ui account ... i changed mobo about 5 times since conroe is out . luckily i did deauthorize all, now i only have 1 under my account, but only once deauthorize all can be done a year. and no its not 3 clicks ...


Calm down
By Yaponvezos on 4/3/2007 8:37:31 PM , Rating: 2
The way this issue has turned into politics is beyond this world.

The issue is simple. Every European citizen has the right to buy goods from any european outlet, be it physical or virtual. But, just because I live in Greece I can't log on to another european iTunes Store and buy music or what have you. I only have the choice to use the greek iTunes Store.

Why on earth would anyone think that, by this whole objection thing, that it has anything to do with foreign policy or the right of any European to buy or not from a local store?




RE: Calm down
By Ringold on 4/3/2007 10:44:26 PM , Rating: 2
I find it dangerous due to precedent.

Let's say this time the EU gets its way. Okay, now like a US Supreme Court decision, it becomes legal precedent, making all future issues open-and-closed cases.

In this case it's probably not a big problem for it to be offered in all of the EU states, and that's precisely why the EC probably chose to pick a bone with this particular case. It's not a huge demand so they'll likely get their way.

Fast forward to a future online bank that offers great rates to Eastern Europeans. Now Western Europe wants in on the action, but the bank has no internal experience with western finance laws. Or an insurance company that wants to serve some parts of a market, like auto insurance, but not homeowners, because it doesn't want to or can't afford the extra risk. Or a telecom that wants to serve the inner city because it's profitable, but not the outskirts because it's be financially ruinous. (And trust me, government doesn't care if it's ruinous, Florida is proving that every day these days)

Beyond large efficiency problems, it infringes on property rights; why run a business if the government is going to tell you increasingly how to operate it? Why not let the government run them? That final question is the end-game goal of socialism anyway -- why not indeed?

Perhaps people in Europe don't get it that way due to cultural differences; as an American, I view the property rights of an individuals material assets just as strongly as their biological ones. Therefore, this argument from the EC, "If you offer mp3's to France, why not Greece?" easily can be translated to talking to a hot babe, "If you have sex with Antonio, why not with all of us, or at least me?" Why not? Because she/Apple doesn't want to. That should be the end of it. I'd like to legislate my way in to her pants, too, but that'd be rather socialist of me.

Something to ponder:

When will the world learn that a million men are of no importance compared with one man? [Henry David Thoreau]


Hmm
By Spivonious on 4/4/2007 11:59:25 AM , Rating: 2
I don't see what's so bad about restricting what various countries have access to. Does iTunes offer Mexican music if I have a US account? Is that illegal?




Their what location?
By Justin Case on 4/3/07, Rating: -1
RE: Their what location?
By ted61 on 4/3/2007 6:08:28 PM , Rating: 2
LOL
Standing on those igenous rocks makes me wonder how difficult it is to have a typo. It must be the temperature.

He who lives in a glass house, should not throw stones!


RE: Their what location?
By Justin Case on 4/3/2007 11:45:02 PM , Rating: 2
How exactly does writing "geological" instead if "geographical" qualify as a "typo"? If it was, say, "geographcial" or something like that, sure, any fast typist will swap the order of letters now and then. That is a typo. "Geological location" is not.


RE: Their what location?
By Ringold on 4/4/2007 1:33:44 AM , Rating: 2
Geological: –adjective of, pertaining to, or based on geology.

Geology: The scientific study of the origin, history, and structure of the earth.
The structure of a specific region of the earth's crust.

Geographical: –adjective 1. of or pertaining to geography.
2. of or pertaining to the natural features, population, industries, etc., of a region or regions.

It seems pretty clear to me... It's an honest typo, but quite obviously a typo nevertheless. The two words carry two entirely different meanings; one is concerning the content of the planet and its internal processes, and the other locations and topology. Not even close.


RE: Their what location?
By Justin Case on 4/4/2007 1:42:09 PM , Rating: 2
A "typo" is a typing error. As in hitting one key (or a couple of keys) by mistake or in the wrong order.

Writing a word that means one thing when you mean something else isn't a "typo", it's an error.


RE: Their what location?
By Oregonian2 on 4/3/2007 7:05:46 PM , Rating: 1
Is it legal to sell items in the EU through stores that one walks into? Seems like the issue with Apple would suggest that walk-in stores aren't something allowable. Walk-in stores restrict purchasing to only people who are in the store's country. Which seems to be an illegal thing to do in the EU. So... how do people in the EU buy anything, even groceries? ONLY on the internet where physical country of the buyer isn't being restricted?


RE: Their what location?
By Justin Case on 4/3/2007 11:47:39 PM , Rating: 2
The EU is a very weird place inhabited by evil demon-folk, don't'cha know?

Clearly if you can't understand it, it must be wrong. Sigh...


RE: Their what location?
By Ringold on 4/4/2007 1:44:24 AM , Rating: 1
Or perhaps you didn't understand that oreganian was trying to bring up the economic concept of excludability and apply the EC's twisted logic to it? Which would be, more elaborately put, because record labels excluding countries from their "store" is illegal, then walk-in stores must be illegal because all of the population they serve can't possibly get service from that one location, and god only knows how the EC would like to treat various types of social clubs that have various types of discrimination that provide products/services to only its membership.

A stretch, but a valid point. Where would the EC like to draw the line on excludability? They provide no clarity on that.


RE: Their what location?
By Grast on 4/4/2007 11:07:37 AM , Rating: 2
Ringold,

I find all of your comments very well thought out and backed up with examples. I also admire your ability to write extremely well.

Thank-you for putting forth logical, well thought out, and respectful commentary on this topic.

Additionally, I agree with your stance. I hold my physical property to the same degree as the importance of my personal rights. I do not need the government telling me what, where and who to sell goods too.

Later..


RE: Their what location?
By Visual on 4/4/2007 6:11:15 AM , Rating: 2
Why are you trolling with clearly irrelevant comparisons? The local grocery doesn't mind if I pay with a foreign credit card. They don't ask me where I am from in order to decide whether to service me.
Also I suspect they won't mind if I call from abroad and order a pickle sent to me, as long as I pay the postage and compensate them for the additional hassle.


RE: Their what location?
By Oregonian2 on 4/4/2007 6:00:36 PM , Rating: 2
Point is that based on the Apple allegations, is it true that all local walk-in stores are REQUIRED to accept foreign orders in the EU, not will one "typically" do so as in your pickle example (and sell it for the same price as a local sale). This is being required of Apple.

Has nothing to do with a credit card, the allegations against Apple has to do with the physical location of the buyer vs the location of the store (requiring each Apple store to sell internationally within the EU). So my question is whether ALL stores of all kinds are legally required to sell internationally (within the EU)? In other words must ALL stores in the EU that sells pickles sell their pickles to anyone within the EU that wants to buy it (and by implication with the Apple allegations, for the same price as sold "locally"). I don't think Apple would get away charging a "foreign export fee" for international sales, so prices need to be the same as local same-country over the counter prices.

If the answer is "yes" that ALL sellers of everything MUST sell internationally within the EU, and that the international buyer must be charged the same price as a local buyer, then I've no point and I've wasted everybody's time. If this is not true, then the allegation against Apple is a <deleted>.


RE: Their what location?
By Yaponvezos on 4/4/2007 9:22:41 PM , Rating: 2
Indeed the answer to all of the above is yes. Trading of goods within the EU is open and free in the sense that every European can buy anything, from any EU territory at the price set in that particular territory/store etc.

The way things are now is like having a separate online store for each of the american states while the customer can only buy from the store that is the state his credit card was issued. It's simply ridiculous as the Union's main function has always been the formation of a broader common european market.


RE: Their what location?
By Ringold on 4/4/2007 10:46:56 PM , Rating: 2
I think people need to step back and realize the record labels wouldn't turn away markets for no reason; they exist to make money, and if they think that selling their tunes to Greece would be profitable, then there is no reason why they'd arbitrarily ask Apple not to offer them there.

Given that, they ought to be given a chance to say what it is. For their sake, I hope they do, just to make the efficiency point known. If I see the EC require them to make the sales, and I happen to remember, I'll try to check the quarterly report of one of the labels that are publically traded and see if they lose money/take a hit with margin compression.


RE: Their what location?
By Yaponvezos on 4/4/2007 11:04:08 PM , Rating: 2
You won't have too. These regulations have been in place for years now and any company entering the european market knows it. The record labels have no objection when it comes to sales through physical retail stores so why would they when it comes to online stores? After all, online sales account for only a fraction of total sales so if there was an impact that would have anyone concerned it would have already been obvious through the physical retail channels.

Either way, wholesale prices don't differ much from country to country since international trade is organized in a way so that anyone can buy from anywhere within the EU. Even big chains do it, legally too. So Fnac stores in Spain have the right to buy a certain product that they want to offer through any wholesaler across Europe, going of course for the one with the lowest price.

This system has more or less nullified significant wholesale price fluctuations as everyone wants to be competitive not only within a country but withing the Union. Assuming of course that we are referring to products that interest international customers.

One more clarification. We are talking about established EU law, law concerning trade policy that had to be unanimously accepted by member state governments. So there is no legal precedent to be made. And the European Commission is in no way analogous to the Supreme Court as it has absolutely no judiciary functions/responsibilities.


RE: Their what location?
By geddarkstorm on 4/6/2007 6:13:02 PM , Rating: 2
Ah, then that's the answer to that then. If every single store is required to sell to anyone anywhere in the Union (not just those who actually walk into the store but those that call it up) at their list price, regardless of taxes in other countries or such rules (as the EU superceeds them or has consolidated them?) then Apple is clearly in the wrong. Sounds like a strange practice though. Inbetween states in the US, things that aren't internet priced (which is differently priced from instore prices for the same company!) aren't going to be sold to someone out of state who calls them up from that out of state location and isn't going to come in state, physically to the store, to pick up the item. They'd either charge alot of shipping ontop of their price (a cute way to charge more money that is totally unregulated and doesn't have to be "honest") or just flat out deny it. Not to mention, different state laws on sales taxes would really really be a pain in the butt (it is enough already for internet sales).


RE: Their what location?
By Oregonian2 on 4/5/2007 5:46:45 PM , Rating: 2
quote:
The way things are now is like having a separate online store for each of the american states while the customer can only buy from the store that is the state his credit card was issued. It's simply ridiculous as the Union's main function has always been the formation of a broader common european market.


This would be allowed in the U.S., might be stupid, but it'd be allowed. Not only that, but if one has a single web store, you can be charged a different amount of money depending upon where the buyer is (not even accounting for shipping), despite the webstore being a single one (different taxes).

There is another difference too. The US's states are more like regions within a single EU country. My impression of the EU isn't that it's a single country (single representative in the U.N.) with one all-powerful central government that controls everything politically and economically and routinely overturns individual state laws as a regular day to day thing.

Also there is this thing about Credit card issuing, why does that keep coming up? The "topic" is where the buyer is located physically, it has nothing to do with where the credit card came from, where it was issued, what country issued it, what brand of card it is, or what language the writing of the card is. Or even if the buyer has one.

But thanks for your answer that ALL stores no matter how small or big or how it's structured, MUST sell internationally in the EU.

In the U.S. the vast vast majority of retail stores ONLY sell locally, which is to say they ONLY sell to customers who are physically in the same state they are (except for the possible very few restaurants that are located right on top of a state border and different sections are in different states, etc).


RE: Their what location?
By Justin Case on 4/5/2007 12:24:36 AM , Rating: 3
quote:
If the answer is "yes" that ALL sellers of everything MUST sell internationally within the EU, and that the international buyer must be charged the same price as a local buyer, then I've no point and I've wasted everybody's time.


You have wasted everybody's time.

Shops aren't required to ship goods internationally (or even nationally), of course. But every shop in the EU is required to sell to any EU citizen, under the same terms, with no discrimination based on nationality.

Imagine that you were about to walk into a shop in California and they told you "You're from Oregon, so we refuse to let you in. Go to our shop in Oregon instead, and pay 50% extra". Perhaps that's legal in the USA. In the EU it is not.


RE: Their what location?
By Oregonian2 on 4/6/2007 1:49:26 PM , Rating: 2
Might I suggest reading the allegations about the Apple case again? I think you've missed the point entirely.

The point you are making about discrimination is a good one, but is entirely unrelated to the Apple case or my postings (which have to do with Apple's topic).

The allegations about Apple have nothing whatsoever to do with nationalities of the buyer, sex of the buyer, age of the buyer, what credit card the buyer has (or who issued the credit card, etc). It has only to do with WHERE the buyer is PHYSICALLY when the purchase is being made. In other words, the EU wants to force Apple to "ship internationally", exactly what you say isn't required.

Apple has individual web-stores in many EU countries where each is only allowed (due to contracts with record companies) to sell to customers in the same country as the store. In other words, can't "ship internationally". People in those other countries are being forced to buy from "their" Apple web store ("buy local"). A Frenchman who is visiting London and wants to buy a song from Apple is required to buy from the UK store because that's where he is. When he goes back home, he's required to buy from the French store as would a German visiting Paris. If anything, it's anti-discriminatory, and is the same thing required of normal walk-in stores (that I know of) where you need to be IN the shop to buy things (and therefore be in the same country as the shop). Which has been my point.


RE: Their what location?
By Oregonian2 on 4/6/2007 2:05:34 PM , Rating: 2
quote:
Imagine that you were about to walk into a shop in California and they told you "You're from Oregon, so we refuse to let you in. Go to our shop in Oregon instead, and pay 50% extra". Perhaps that's legal in the USA. In the EU it is not.


P.S.- To address your example more directly, what you say above is NOT the case. When I got to the shop in California, they'd happily sell me goods from their shop at their prices. When I complained that prices at their Oregon store are lower, they'd tell me "Go back to Oregon and buy there to get Oregon prices!" rather than giving me Oregon prices while shopping in California. This is perfectly legal here and astounded that it's not in the EU.


RE: Their what location?
By Justin Case on 4/6/2007 8:42:10 PM , Rating: 2
quote:
When I got to the shop in California, they'd happily sell me goods from their shop at their prices.


And that is precisely what Apple is required to do. They are free to have different shops in different languages for different countries, with different prices.

But they cannot forbid an EU citizen whose connection happens to be through an italian ISP from entering the "french" or "german" shop.

Here's an example of a web shop that gets it right:

http://www.nomatica.fr/group.aspx

No matter which country you're in, you can visit any of their shops, compare prices, and buy from the one that you want (the prices are usually very close, but there are differences).

Since these shops sell physical goods, they could say "our UK shop doesn't ship to Portugal", and use that to force different people to pay different prices, but they don't even do that (and in some cases national and international shipping actually costs the same, so it definitely pays to check out multiple shops). But even if shop A didn't ship to country X, it would still need to be accessible by citizens from country X.

Is this really so hard to understand...??


RE: Their what location?
By Oregonian2 on 4/9/2007 6:17:22 PM , Rating: 2
quote:
And that is precisely what Apple is required to do. They are free to have different shops in different languages for different countries, with different prices.


This is EXACTLY what Apple does and is being found unacceptable by the EU.

quote:
But even if shop A didn't ship to country X, it would still need to be accessible by citizens from country X.


And that IS what apple does. Any person whatsoever who is in the UK can buy from their UK store. Any person whatsoever who is in France can buy from their French store. Any person whatsoever who is in Germany can buy from their German store. It matters nothing whatsoever as to what country the buyer is from, they have access and can buy from Apple's shop so long as they are in the shop's country (which is true of most anybody's normal walk-in stores as well).

But the EU says this is NOT acceptable (read the article). They are saying that anyone IN the UK must be able to buy from Apple's France store or Apple's German Store, etc. Yes, it would be better if Apple's suppliers allowed this, but I can't see it unacceptable that they do what they do (see above).

Is this so hard to understand?


RE: Their what location?
By Yaponvezos on 4/9/2007 7:45:18 PM , Rating: 2
What you fail to understand is that this is required by european trade law, regardless of the field it applies to.

You might think it would be better if the companies allow that, but the companies doing business within the EU KNOW IT BEFORE THEY ENTER THE MARKET. Either that or they should know it as this is the way it is.

What you find or not find unacceptable is irrelevant as the law is set. If every other company can comply and not make a fuss about it, so can Apple.


RE: Their what location?
By Justin Case on 4/6/2007 8:20:02 PM , Rating: 2
> the EU wants to force Apple to "ship
> internationally", exactly what you
> say isn't required.

You're right, the EC are a bunch of morons who know nothing about european law. I'll be sure to point them towards your posts, and I'm positive they'll reverse their decision... sigh...

The iTunes shop doesn't sell physical goods. There is no shipping involved (nor is Apple so stupid that it'll try that line of "defence"); sending a file over the internet to a greek IP is exactly the same as sending it to an irish IP, as far as Apple is concerned (the connections over which the data travels aren't even owned by Apple).

They are discriminating based on the country that each user is registered in, and denying users access to the "shops" meant for other countries. That is illegal, plain and simply. Doesn't matter where an EU citizen is (physically) or which country he was born in. He cannot be denied access to shops in other EU countries, period. It's irrelevant if Apple is forbidding entry based on the person's nationality or residence; both are illegal.

Have you stopped to consider the remote possibility that maybe europeans (and the European Commission in particular) might have a slightly better grasp on european trade law than you do...?


RE: Their what location?
By geddarkstorm on 4/6/2007 6:18:40 PM , Rating: 2
So you mean that if I was from France and walked into a Norway backery and told that bakery, "In France, that bagette is only 0.10 euros" that, despite having their bread priced at 0.11 euros, they'd have to sell it to me for 0.10 because that's what it was in Frace? Otherwise, it'd be price discrimination, and the exact same case we have here with Apple!


RE: Their what location?
By Justin Case on 4/6/2007 8:47:16 PM , Rating: 2
quote:
So you mean that if I was from France and walked into a Norway backery and told that bakery, "In France, that bagette is only 0.10 euros" that, despite having their bread priced at 0.11 euros, they'd have to sell it to me for 0.10 because that's what it was in Frace?


Did anyone say that? If you shop at "Shop A" you pay shop A's prices. Doesn't matter if it's owned by the same person as "Shop B" or by someone else. Every shop is free to set its prices. What it cannot do is say "this shop is only for italians" or "this shop doesn't sell to italians".

The EU is not Royston Vasey.

Apple is free to have 100 different shops with completely different prices. But as long as those shops are doing business in the EU, they cannot discriminate between citizens of different EU countries. In other words, they must allow any EU citizen to visit any of their shops.

Is this so complicated that you really can't understand it...??


RE: Their what location?
By Yaponvezos on 4/7/2007 12:37:57 AM , Rating: 2
Apparently, it is. After all, what would we, Europeans, know about what european trade law actually means? Especially if it's law that's been in force for years, in every field and experienced in full by hundreds of millions of people.

But how would I know?!

Pardon my sarcasm but we keep saying the same simple things and it's like some actually try not to understand.


RE: Their what location?
By Justin Case on 4/8/2007 3:02:35 PM , Rating: 2
To quote Terry Pratchett [ http://en.wikiquote.org/wiki/Terry_Pratchett ]:

quote:

That seems to point up a significant difference between Europeans and Americans:
A European says: I can't understand this, what's wrong with me? An American says: I can't understand this, what's wrong with him?
I make no suggestion that one side or other is right, but observation over many years leads me to believe it is true.


RE: Their what location?
By Oregonian2 on 4/9/2007 6:27:56 PM , Rating: 2
quote:
Apple is free to have 100 different shops with completely different prices. But as long as those shops are doing business in the EU, they cannot discriminate between citizens of different EU countries. In other words, they must allow any EU citizen to visit any of their shops.


Apple absolutely AGREES with you! Apple does exactly what you say they should do. However the EU officials disagree with you! Read what they say in the article!

What's hard to understand is that your posting seems to sound like you disagree with Apple's business practices, but the letter of what you actually say agrees with them completely -- and disagrees with what the EU officials are saying.

Any EU citizen (probably anybody from anywhere in the world too) can buy from the Apple shop associated with the country that they physically are in at the time -- just like any pastry shop where the buyer has to be in the shop (and therefore be in the same country). The person's nationality is completely irrelevant, and in fact may not even be knowable by Apple (probably only know the reverse-DNS lookup of the IP address being used).

Even Apple's restrictions can probably be gotten around by using a proxy in the store's country.


RE: Their what location?
By Yaponvezos on 4/9/2007 7:50:50 PM , Rating: 2
You just don't get it.

It's simple. If I have access to a european store, in any way, physical or electronic and I'm a european citizen or anyone legally staying within the EU no one has the right to tell me I can't buy.

And since I can be in one country and the technology gives me the ability to log on to any of the european stores, no company has the right to tell where I can or I cannot log on and buy whatever I like.

So Apple does not agree with what we are saying. And it has nothing to do with the record labels. If that was the case the labels would try to block international orders of goods that have not officially launched in another european country. But they don't, do they?


RE: Their what location?
By Oregonian2 on 4/10/2007 6:09:24 PM , Rating: 2
quote:
It's simple. If I have access to a european store, in any way, physical or electronic and I'm a european citizen or anyone legally staying within the EU no one has the right to tell me I can't buy.

And since I can be in one country and the technology gives me the ability to log on to any of the european stores, no company has the right to tell where I can or I cannot log on and buy whatever I like.


You seem to say confusing things. You say that Apple MUST sell internationally (even if they get sued by their labels) if one has access to their store in another country. And then you seem to complain that Apple does NOT let one log on to gain access internationally.

So, if they don't give the access that you say requires them to sell internationally by not letting someone outside the country login, I don't see the problem. No access so no sale. Don't you say this is fine?

You seem to say that if one has access then they must sell. If access is denied then selling can be denied. Doesn't Apple follow this or do they allow international buyers to log in and just refuse selling when "checking out" of the shopping cart?

quote:
So Apple does not agree with what we are saying. And it has nothing to do with the record labels. If that was the case the labels would try to block international orders of goods that have not officially launched in another european country. But they don't, do they?


You can choose to not believe the reports that Apple is contractually limited to sell the way they do and that Apple would prefer to have only one store that sells everywhere (which would be a lot more profitable for them, more efficient use of resources) but I've given the reporters the benefit of the doubt and assumed the reports are accurate. If you've better information on their contracts, or just choose to think the reports are wrong, that's your choice.


RE: Their what location?
By Yaponvezos on 4/10/2007 7:36:33 PM , Rating: 2
Here we go again. The labels CAN'T SUE on such a basis because european trade law does not allow them to. That is why I am sure it has nothing to do with contracts. Even if there are such contracts they are illegal according to european trade law, hence invalid. So I am allowed to not care about these contracts.

Let me give you an example. Nortec is a greek company and the exclusive distributor of Nintendo products in Greece, Cyprus and the balkan states. But there are other companies importing Nintendo products from other parts of the EU. Now Nortec's contract of exclusivity with Nintendo, the way you see it, would give Nortec the ability to sue other importers to oblivion but IT DOES NOT. Why? Because international trade withing the EU is free of any such restriction. The only thing that matters is if the goods got in the EU legally. From that point on it's a free for all situation.
Again, you may not like it. But that is the european law. You either realize that or you don't.

Additionally it's only logical to complain for the fact that Apple won't let me use another european store because they are obligated to sell internationally, since the infrastructure for such sales is already there. The company just chose to impose certain restrictions.

It's funny that you say that if there is no access, there can be no sale hence there is no problem. That is the part you don't get. Apple HAS to give me access because it is technically possible with no added cost. All they have to do is accept credit card numbers and IP addresses from different countries withing the EU.

This whole mess stems from the fact that Apple denies me access when they have no right to do so. So you are the confused one. I never said IF one gives me access. I said if access is technically possible.


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