updated 12:13 pm EDT, Fri March 22, 2013
Early probing underway
European Union regulators are examining whether or not the deals Apple signs with cellphone carriers might violate antitrust laws, the New York Times reports. Several carriers are said to have complained that Apple's arrangements hurt competition; a source for the Times adds that while no formal complaints have been filed, a group of carriers recently submitted information about their contracts with Apple to the European Commission. The Commission has confirmed that it is looking at the deals, but that it hasn't started an official investigation.
"We have been contacted by industry participants and we are monitoring the situation, but no antitrust case has been opened," says Antoine Colombani, a spokesman for Joaquín Almunia, the EU's competition commissioner. Colombani repeated that position today at a news conference in Brussels. An Apple spokeswoman, Natalie Kerris, insists that the company's contracts "fully comply with local laws wherever we do business, including the EU."
The Times alleges, though, that based on interviews with people briefed on iPhone contracts, it looks as if deals with smaller European carriers may be stricter than those with larger providers. The people add that Apple's terms can make it hard for other phone makers to compete; in particular the company is said to demand that carriers accept a quota for iPhone sales, typically over a three-year period. Without a quota these carriers can't sell the device, but agreeing to one means paying Apple for any unsold hardware, according to a source who negotiated with Apple while working for a European carrier. An executive at an Apple rival claims that this pressures carriers into using much of their marketing budgets on the iPhone, naturally hurting other phone makers. Another executive remarks that most phone makers actually ship less units to a carrier than they think the firm can sell, precisely for the sake of minimizing excess stock.
Apple's terms are reportedly less onerous from an American perspective, but still tough. An executive at an American carrier says that while Apple has kept the consumer prices of iPhones fixed, starting at $199 on contract, the cost to carriers in the form of subsidies has been steadily rising.
The concerns that sparked the European Commission's attention are said to revolve around the French cellular industry, but other countries may be involved as well. France was the first country to see an unlocked iPhone, mostly due to the enforcement of local laws, sparked by carrier complaints.