Geo-IP Blocking Should Be Banned, CHOICE Says

Following concerns surrounding price hikes for Australians shopping online, peak consumer group CHOICE has recommended the federal government further investigate whether region-coding – which results in higher product prices based on Internet IP addresses – should be banned.

A public campaign aimed at raising awareness on the issue was initiated by Labor MP Ed Husic in May. In response, the House of Representatives Standing Committee on Infrastructure and Communications called for submissions on the topic, with the resulting terms of reference causing a sizeable amount of public concern amongst consumers. The investigation found an average price hike of 50 per cent for technology goods sold online in Australia.

Online stores including Apple’s iTunes, Valve’s Steam, Microsoft’s Xbox Live, Sony’s PlayStation Network, Amazon’s Kindle store and Adobe’s software store came under fire.

“CHOICE recommends that the Federal Government investigate whether technological measures that allow suppliers to discriminate against Australian consumers such as region-coding or the identifying of IP addresses should continue to be allowed,” the report said. “CHOICE considers these measures to be anti-competitive when they result in significant price differentials for Australian consumers.”

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Microsoft fired back, saying the charges are based on the increased cost of doing business in Australia. “The People’s Watchdog” found little justification for the rise in prices, questioning the legality of geo-IP blocking.

“These restrictions keep prices in national markets artificially high to benefit international copyright holders,” CHOICE added. ” … Given the rapid growth of online retailing and the increasingly global market for IT hardware and software, Australian consumers should not be disadvantaged through restrictive, anti-competitive practices that sustain international price discrimination.”

In sum, “CHOICE believes the Federal Government should play a greater role in educating consumers on the protections and rights they have when shopping online. This includes their right to return products that do not comply with the Australian Consumer Law, their right to access legitimate parallel imports from foreign markets, and their rights to privacy and security. This is justified given the significant increase in online retailing, and the clear benefits to consumers from participating in the digital economy. Importantly, increasing the level of confidence that consumers have in the online marketplace will also help increase competitive pressure on those businesses that engage in international price discrimination.”