Taiwan Fines Apple for Controlling iPhone Prices

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The Taiwan Fair Trade Commission has slapped Apple with a NT$20 million (about US$670,000) fine for telling cell service carriers what prices to charge for the iPhone. As part of the TFTC ruling, Apple was also told carriers are free to set their own prices, and that failure to comply could lead to a NT$50 million fine.

Taiwan to Apple: You can't set iPhone pricesTaiwan to Apple: You can't set iPhone prices

The commission said Chunghwa Telecom, Far Eastone Telecommunication, and Taiwan Mobile were all submitting iPhone price plans to Apple for approval, according to the Wall Street Journal. Based on Taiwan trade laws, carriers are free to set their own pricing since they paid Apple for the rights to sell the iPhone.

Apple's practice doesn't come as a surprise considering how tightly the company controls its product pricing around the world. The iPhone and iPad maker has set retail prices for all of its products for years and given retailers very little control over how much they charge customers.

Taiwan's FTC discovered what Apple was doing through a chain of emails between Apple and the area's three major cell service providers. The companies had all submitted their pricing plans to Apple for approval before product launches, and in some cases, the company asked for changes before the official product rollouts happened.

With the TFTC's ruling in place, Apple has apparently lost iPhone pricing control in Taiwain, although there isn't any indication yet that the carriers are ready to start a price war. If the carriers decide to take advantage of their newfound control over iPhone prices, we could see sharply discounted deals as part of promotions, and maybe even overall lower up front costs for customers.

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Apple likes to control its product pricing with an iron fist, but it looks like that isn't an option any more in Taiwan. If other countries decide to follow suit and tell Apple carriers get the final say in pricing we may start to see more variation in consumer costs -- at least for the iPhone.

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Jeff, I presume that Apple can make sure the price it sells iPhones to the Telcos is high enough that the Telcos won’t have much scope for dropping the price of the iPhone without losing money ?

Or were the Telcos trying to “discount” the price of the handset but recoup their money (and more) through call rates & charges ?

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