Apple faces Korea fine for abusing telco neediness

Korea’s Fair Trade Commission has said it has launched an investigation into whether Apple is abusing its market position in the market, overcharging customers and exploiting the tired telcos.

According to the Korean Times, the investigation could take up to two months and other local sources has said the fine could exceed 100 trillion won, approximately $93 million. Should Koreans find the iLeader guilty, it could make for worrying precedent for a company which has a strangle hold on its ecosystem and go-to-market strategy.

This is not the first time Apple has been under the microscope in Korea for the way it deals with telcos. The first iPhone was sold in Korea in 2009, and since that point there have been numerous claims of unfair practises, such as shifting advertising costs to the telcos or dictating how the products should be sold.

It should not be viewed as uncommon for a brand to get involved with how a product is displayed in store or through advertising, especially for Apple which is heavily reliant on the brand and consumer loyalty for the incredible sales, however should the Korean FTC unveil any dodgy conditions or criteria, there might be a bit of trouble. One of the areas which will also be included in the investigation is the pricing of the handsets themselves.

Consumers in Korea have been forced to pay 200,000 won (roughly $187) more than those in Japan and the US, which might be an issue if Apple is found to be too heavily involved. Should domestic and local telcos/outlets decide the Koreans should pay more, the FTC could say nothing as this is simply local market forces. If Apple is forcing the price up, this treated as abusing a dominant market position and unfairly exploiting the consumer.

Apple is a company which likes to maintain a level of control over its products. This is part of the reason the brand is so strong and reliable; it has a specific message and image which is communicated very consistently throughout the world. Should Korean authorities look to drive a wedge in-between Apple and the telcos because of unfair practises, the control over how the brand is presented and communicated would loosen. This would certainly be a worrying development for the iChief which has almost cult-like control over its legions of iFollowers; variances in the brand would weaken the marionette strings.

This is of course not the first time Apple has faced criticism over unfair practises. In 2013, Taiwan fined Apple for controlling prices and in 2016 France dished out a €48.5 million fine for forcing telcos to pay for advertising. It did an effective job of damage limitation there, and will be looking to do the same here.