According to a report from BFM.TV (via iPhon.fr), France’s Directorate General for Competition, Consumer Affairs and Fraud Control (DGCCRF) has launched a case before a court in Paris claiming Apple owes 48.5 million euros. The complaint points to clauses in contracts Apple has with mobile operators in the country that the DGCCRF, a governing body under the Ministry of Finance, claims are illegal and essentially provide Apple with too much power over the carriers.
The DGCCRF outlined 10 clauses in Apple’s contracts specifically that it wants the company to remove. The clauses relate to stipulations Apple enforces including the amount of product carriers must order, advertising requirements, mobile plans and other guidelines the carriers must follow in order to sell iPhones. Other clauses relate to Apple’s permission to use patents held by carriers, requirements for carriers covering costs of iPhone repairs and in-store displays, and the fact that Apple doesn’t have to adhere to similar guidelines within the contracts. We’ve translated them from French below:
- 1- Carriers need to order a minimum number of units over 3 years
- 2- Carriers can’t established their own phone contract plans/payments
- 3- Carriers need to contribute to a fund for advertising managed by Apple
- 4 – Carriers have to finance the iPhone’s in-store display
- 5 – Apple can use the carrier’s brands as they see fit, but not the other way around.
- 6 – Carriers have to follow strict conditions on their orders, but Apple doesn’t have to commit to respect the same orders.
- 7 – Carriers have to contribute to iPhone reparation cost.
- 8 – Apple can void the contract with a carrier without prior notice
- 9 – Apple can use patents held by the carriers
- 10 – Apple gets conditions at least as beneficial – or even more beneficial – as other competitors for the price without contract, quality of service, commissions to salespeople, loaner cost, and limitations on customer service.
The 48.5 million euros the DGCCRF wants Apple to pay includes €14 million for SFR, €11.6 million for Orange, €6.7 million for Bouygues Telecom and $8.2 million for Free Mobile. There are also an additional €8 million fines to bring up the total to 48.5 million euros.
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It is absolutely disgusting how Apple has been behaving with carriers since they launched iPhone. I remember in Belgium there was a whole issue about a carrier (Mobistar, now becoming Orange). Apple asked Mobistar to pay an exuberant amount of money for them to allow visual voicemail on iPhones using Mobistar. Mobistar ended up paying that fee because they wanted to create a premium position for iPhone buyers in the future. Up until iPhone 4S, all iPhones sold in Belgium could only be bought through Mobistar.
Up until today, no other carrier in Belgium supports Visual Voicemail, HD calling and other cellular features. They refuse to pay those exuberant amounts of money to Apple, and they are right. I believe the customer has already paid for those features when they bought the phone.
I think you should get Apple where it will hurt them – do not buy an iPhone. Problem solved.
(PS you should look up business model. Hint – it is about profit not charity.)
Charging 2x for the same thing is theft. If you pay 750€ for an iPhone, I think you’ve paid enough to have those features included. I mean it’s like a carrier charging you more money for data used to stream Netflix than data which is used for watching youtube videos.
This Apple Support doc suggests all carriers in Belgium support visual voicemail. https://support.apple.com/en-us/HT204040
Here in the US Carriers used to charge customers for visual voicemail. Anyone who bought an iPhone got that feature for free. Perhaps Apple just asked carriers to forgo the revenue associated with nickel and diming customers for visual voicemail and just made it a standard feature? And the carriers just framed it as “Apple’s fee.”
I’d be very interested in any articles written at the time (I’ll use Google translate) explaining this situation, but this feels false to me. I haven’t been able to find any searching myself.
It is absolutely disgusting how Apple forced the carriers to sign those contracts against their will! Oh, wait…
Not all the points are even relevant; such as
2: carriers can’t establish their own plans. This is not true. For example salt and Swisscom and migros budget in Switzerland as well as hoi and migros budget and telecom in Liechtenstein all have plans which are entirely different.
3: carriers have to fund advertising. What is wrong with a brand image wanting to be identical throughout the world to avoid confusion ? Apples marketing strategies have proven successful with increasing year on year profits ever since the iPhone’s launch in 2007. Paying advertisements is just the same as a franchise fee which is basically what networks are when they sell devices – a franchisee for the franchisor (the manufacturer)
4: having to finance the in-store displays. I work for the Swarovski HQ in distribution and they have the same system, as does nespresso and any other company which has a uniformed advertising model throughout the world – because sellers are mostly franchises in the sense that they sell for another company and keep a Percentage of profit while the rest goes to the manufacturer.
5: using the carriers brands – yeah advertising that so and so carrier sells their product is a truly devastating thing to have happen.
7: reparation cost contributions – that is called a sales contract. Every time you buy something that is (in Europe) covered by the seller and not the manufacturer. Any direction to go to the manufacturer for resolutions is false and can actually get the seller into trouble for not fulfilling their side of the sales agreement which across all of Europe has the same stance – an electrical product must last a given time and when it fails the seller is responsible for repairs or replacements. In the event of repairs they are to be the ones to send it to an authorised service centre.
Most of this lawsuit is pure BS in terms of what it means for worldwide franchisees/network operators
Just reading through the requirements – it’ll be interesting to see which points were the most egregious given that (1) is a standard agreement that most suppliers have with retailers (most distributors in New Zealand will have a minimum amount that you need to purchase each month off them to keep being a reseller) where as (9) seem like a major over reach. Then again I’d love to hear the justification from Apple for these stipulations in the contractions and how they interpret them along with whether they’ve actually been enforced to any degree.
Power over the carriers!!!
Like Apple has been caught shooting some doe-eyed Bambi in the virgin forest.
Carriers? Roaming charge scalping, handset manufacturer bullying carriers?
They’re just getting a dose of the medicine they’ve been dishing out for decades on hapless consumers and manufacturers.
Roll on, SIM-less handsets, and release us from their government-sponsored shackles.
I forgot to close with: /Rant Off…
Yep.
they don’t have to carry the iPhone if they don’t want to…
1- Carriers need to order a minimum number of units over 3 years
— might be a reasonable thing to remove since they won’t know what units are available
2- Carriers can’t established their own phone contract plans/payments
— this might be more along the lines of protecting other carriers from the larger groups that could undercut smaller carriers. And would preserve the pricing model of the iPhone (can’t sell the latest phone for $99 + plan)
3- Carriers need to contribute to a fund for advertising managed by Apple
— Apple keeps a tight control over advertising. This is basically the only way Apple would allow the carriers to specifically advertise that they carry iPhones.
4 – Carriers have to finance the iPhone’s in-store display
— again this is due to Apple’s branding and seems reasonable as part of carrying the products.
5 – Apple can use the carrier’s brands as they see fit, but not the other way around.
— probably should be changed to be signed off on by the carriers as well. But as above, this is due to Apple’s tight brand and advertising control.
6 – Carriers have to follow strict conditions on their orders, but Apple doesn’t have to commit to respect the same orders.
— not sure what this means; it’s pretty vague
7 – Carriers have to contribute to iPhone reparation cost.
— this is reasonable, since Apple can only really confirm the condition of the phones they sell directly, and the phones are technically financed through the carriers
8 – Apple can void the contract with a carrier without prior notice
— this is common in pretty much any contract; it’s a stupid argument to try to get rid of it. The carrier could void the contract with Apple as well if they felt like it.
9 – Apple can use patents held by the carriers
— this is for making the phones work with their cell service, and either way would be arranged under a licensing agreement in most cases if it’s not. I really doubt that this would apply to all of the patents the carrier holds. But if it does, then there should maybe be some sort of change for this section.
10 – Apple gets conditions at least as beneficial – or even more beneficial – as other competitors for the price without contract, quality of service, commissions to salespeople, loaner cost, and limitations on customer service.
— again, the carrier doesn’t have to carry iPhones if they don’t want to… and people hate dealing with commission-driven sales and Apple doesn’t want to put customers through that.