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Watchdog probes Apple for shifting advertisement costs to mobile carriers

2017/11/14 09:19

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SEOUL, Nov. 14 (Yonhap) -- South Korea's corporate watchdog is probing U.S. tech giant Apple Inc.'s practice of shifting the cost of advertisements to local mobile carriers, industry sources said Tuesday.

South Korea's three mobile carriers started television advertisements for the iPhone 8 earlier this month. According to the sources, local mobile carriers currently bear the full cost of Apple's commercials, which could be considered an unfair business practice.

"Whenever there's a new product, mobile carriers air the same advertisements decided by Apple," an official from a local mobile carrier said. "As no action has been taken by the FTC, mobile carriers have no choice but to follow Apple's guidelines to grab consumers' attention for a few seconds." FTC stands for Fair Trade Commission.

Apple's South Korean office declined to comment on the investigation, which has been ongoing since last year.

Industry watchers said Apple also abuses its superior position by getting mobile carriers to host release ceremonies for new products. This compares to other rivals, such as Samsung Electronics Co., which hold their own launch events.

Sources said that while Apple does not share the burden, it still orders mobile carriers to follow its own guidelines in displaying products and designing advertisements.

"While mobile carriers fully bear the price, there's almost no leeway for the companies," another official from a local mobile carrier said.

Other unfair practices include obligating mobile carriers to order a certain amount of products to sell in the country, industry watchers added.

Sources said the FTC is also carrying out investigations on this issue.

In 2013, Taiwan slapped fines on Apple worth around 700 million won (US$625,200) for controlling the price of iPhones. In April last year, France imposed a 64 billion-won fine on the U.S. giant for having mobile carriers pay for advertisements.

A model poses with Apple Inc.'s iPhone 8 during a release ceremony hosted by South Korea's No. 1 mobile carrier, SK Telecom Co., in this photo released by the company Nov. 3, 2017. (Yonhap) A model poses with Apple Inc.'s iPhone 8 during a release ceremony hosted by South Korea's No. 1 mobile carrier, SK Telecom Co., in this photo released by the company Nov. 3, 2017. (Yonhap)

colin@yna.co.kr

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