An Apple antitrust case in South Korea has finally been settled, almost five years after the company was first accused of abusing its dominant position in the marketplace. Following an investigation, Apple was found guilty of anti-competitive practices in 2018.
Apple proposed to settle the matter by agreeing to cease the practices that led to the ruling, and by offering to take steps to benefit both businesses and consumers …
We previously outlined the history of the case.
Apple was accused in 2016 of anti-competitive practices in South Korea. Because the popularity of iPhones meant carriers had to sell them, Apple was able to dictate terms. In particular, it was accused of imposing three onerous conditions on local carriers:
- Carriers had to buy minimum quantities of each model, dictated by Apple
- Carriers had to share the cost of warranty repairs or replacements
- Carriers had to pay to run Apple’s own TV ads for the iPhone
Budget-focused carriers might, for example, want to buy only older and cheaper models, as that’s what their customers want, but Apple would force them to buy flagship models too. And if a phone proved faulty, Apple wouldn’t just replace it but would oblige carriers to meet some of the costs.
Finally, although carriers had to pay the full cost of running iPhone ads on TV, they were only allowed to use Apple’s own ads, and the only thing they were permitted to change was adding their own logo to the final frame.
The FTC argued this was unfair on competing smartphone companies, who did not have the same leverage. Carriers would also have to find ways to recoup the costs imposed by Apple.
South Korea’s antitrust regulator made an initial finding against Apple last year, which was expected to result in the iPhone maker being fined. However, the FTC said that it would allow Apple to respond before making its final determination.
Apple responded earlier this year, accepting that it was in a powerful position, but denying that the arrangement was unfair.
The government stuck to its ruling, but did allow Apple to propose what effectively amounts to an out-of-court settlement, which the company did in 2019.
Apple antitrust case settled
The Korea Herald reports that the government has now finally agreed to Apple’s proposal.
Apple’s years-long antitrust dispute in South Korea seemed to settle as the nation’s watchdog accepted the US tech giant’s redeeming plan to spend some 100 billion won ($89.73 million) in supporting consumers and small-sized businesses.
Apple Korea is to spend 40 billion won in building a research and development center for local small-sized businesses in the mobile phone manufacturing sector and 25 billion won in offering consumers 10 percent discounts in iPhone repairs and warranties.
Another 25 billion won will be allocated to establishing an education center to train ICT developers, while the remaining 10 billion won will be used to support digital education in schools and public facilities.
Apple said it was pleased to see the matter reach a conclusion, while the government warned that it would be conducting audits every six months for the next three years to ensure that the iPhone maker kept its promises.
Apple still faces a flurry of other antitrust investigations and lawsuits all around the world, with the latest complaint filed just last week.
Photo of Seoul by Minkus on Unsplash
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