Apple is exploiting local telecom companies for profit by unfairly collecting advertising funds, economists representing South Korea’s antitrust watchdog said last week during a second hearing on the matter.
“Apple’s (superior) position in business dealing with local telecom firms is recognized based on economic analysis. (Apple) collecting advertising funds are merely additional ways of exploiting telecom carriers’ communications service profits,” FTC investigators were quoted as having testified Wednesday during the closed-door hearing in an FTC statement released Monday.
“Apple’s involvement in advertising activities cannot be justified as its branding strategies,” the quoted testimony continued.
The FTC brought the case against Apple Korea because it believes the tech company has unfairly passed on the costs of iPhone sales to local mobile carriers. These include the costs of advertising, launch events and repairs. The Wednesday hearing was Apple’s chance to defend itself.
During the hearing, FTC Chairman Kim Sang-jo reviewed the issue from an economic perspective. Both the FTC and Apple brought in economists to testify for their respective sides. Their identities and the exact number of expert witnesses remain undisclosed.
Apple’s witnesses, who are economists and business academics, were quoted in the same statement as denying the FTC’s claims, saying Apple has no more bargaining power than local telecom companies based on an economic analysis.
“When advertising funds are formed, it benefits both Apple and the mobile carriers. Apple’s involvement in the advertising activities is justified as it maintains Apple’s brand (reputation),” Apple’s witnesses were quoted as saying.
The third and probably final hearing will take place Feb. 20 and is expected to result in a determination. During the third hearing, the two sides will present more details about the case and deliver more detailed arguments.
If Apple is convicted, it could face a fine of up to 2 percent of related sales.
By Shin Ji-hye (email@example.com)