Legal Opinion: Can the Australia Tax be stopped?

Geoblocking

By on August 8, 2013 at 5:10 pm

The other week the Australian Law Reform Commission released their report on IT price fixing. “At what cost? IT pricing and the Australia tax” examines, among other things, why so many games are more expensive in Australia despite being delivered across the same Steam or Origin server. It’s a bloody outage.

The main cause for this shoddy practice is geoblocking. The store detects your location through comparing your IP address and credit card, and if you’re an Australian, another $40 is added to the price.

The Commission’s report found the practice unjustified, and made a number of recommendations to fix. Today we’ll be looking at these.

Geoblocking justifications

Publishers and distributors believe geoblocking is necessary. But reading the Commission’s report, it becomes obvious just how disconnected from reality the justifications are

Geoblocking is used on just about all major online games stores to charge higher prices for Australians. The terms of service for the store will then threaten banning if you try and fool the system. Steam, for example, says:

“You agree that you will not use IP proxying or other methods to disguise the place of your residence, whether to circumvent geographical restrictions on game content, to purchase at pricing not applicable to your geography, or for any other purpose. If you do this, we may terminate your access to your Account.”

Publishers and distributors believe geoblocking is necessary. But reading the Commission’s report, it becomes obvious just how disconnected from reality the justifications are. Here are the top three.

First is that geoblocking is needed to meet local laws, such as different ratings board classifications. This would only apply to a few games, however, and does not explain the higher prices.

Second is that publishers want to deliver specific local deals, or community benefits. Well I’m not paying $40 for access to the Steam Workshop, and the Commission was similarly sceptical.

Third is that local retailers need to set higher prices due to costs of doing retail, and the online stores need to match these so as to not put Harvey Norman out of business. This one has some truth, as we all know retailers do have it tough. However, as a gamer and a consumer, I’m not particularly interested in paying $40 more for games just to prop up an aging industry. For the most part, retailers need to get with the times, or sell something more suitable to retail — like quarries.

We can conclude, then, that geoblocking is not justified, and this was the Commission’s opinion too. Geoblocking must be stopped, and there are three potential fixes.

Fix one: Education

Unless the geoblocking is entwined with the store’s copyright protection mechanisms, circumventing it is not against Australian law. More education on this point would show people that circumventing geoblocking is not piracy, leading to more people looking to get around geoblocking, instead of just accepting this is the way it has to be.

This can easily be seen by comparing geoblocking to parallel importing.

In 2003, the restriction of parallel imports of physical game products was lifted. It is no longer illegal for JB Hi Fi, for example, to import boxed games from overseas and sell them at a discount. You can also import a game from Ozgameshop.com in Britain yourself, for cheaper than you’ll pay in Australia. However, you’re not allowed to buy a digital game from a British server.

This difference only exists because while we have laws governing physical products, publishers set the rules for digital games to their advantage. As such, most geoblocking does not have the backing of law, because the law doesn’t even exist on this point. It deserves to be questioned.

Unfortunately, education alone won’t solve the problem, for the Steam user agreement still says you can be banned if you try to say you’re American. Because of this, we need an actual governmental challenge to geoblocking.

Fix two: Banning

Geoblocking could be banned in Australia, by making geoblocking terms in online agreements that exist for price discrimination void. This would allow Australians to simply set their residence to America, much like GOG famously did for The Witcher 2. If laws were enacted which defined geoblocking to be anticompetitive, then the ACCC could possibly intervene, as they said in a submission to the report:

“If there is any anticompetitive purpose associated with the policies that the companies are applying then there is something that can be done, from our point of view. And that is the case whether the supplier is in Barton or in Botswana. From our point of view, if the supplier is engaging in business in Australia, supplying services to Australians, and it is doing things to stop people from getting access to lower priced goods and it is doing it for an anticompetitive purpose, then action can be taken against them.”

Concern was raised by other government departments, like Treasury, that being overly interventionist could have counterproductive results, like publishers simply refusing to sell games to Australia. However, I doubt that EA will simply leave the country entirely.

Fix three: Yarrr

Amusingly, the Commission stopped only just short of outright endorsing piracy. We’ll end with a direct quote.

“Mr Marcus Bezzi from the ACCC argued that Australian consumers’ efforts to circumvent geoblocking – including through illegal downloads – would tend to undermine geoblocking over time, and that this might make a legislative response unnecessary:

‘From our point of view as a competition regulator, these things—and I should say the illegal downloading capacity, which is well known to many Australians, including probably the majority of teenagers—operate to put some competitive tension into the market. If the methods start to become a big enough way in which consumers are circumventing the limitations that are imposed by the companies on consumers, those methods can start to have an impact on sales, and we are aware that that can have an impact in the market.’”

So how about you? How is geoblocking best attacked? Education, legislation, piracy, or some unholy combination of the three?

27 comments (Leave your own)

“Education, legislation, piracy, or some unholy combination of the three?”

what about option 4: DON’T BUY THINGS FROM PEOPLE WHO ARE TRYING TO RIP YOU OFF!

I guarantee you that if the next Call of Duty game only sold 2 copies @ ~$90 in its first week on the Australian Steam store it would not stay at that price for long…

 
Ralph Wiggum

Legislation, legislation, legislation. It gives people the backing of law which makes it all nice and legal.

 

I think a combination of the first two would work best (particularly making ToS provisions that prohibit circumventing geoblocking null and void).

 

diamondd,

I think you’ll find that the publishers will just complain even more about piracy in Australia and either refuse to sell here (most likely) or slap harsher DRM on AU versions (less likely).

 

diamondd,

Agrees. How about we start a ‘No Cod In Aus Till We Get a Price Drop’ community group on steam, then we can see how many Australians actually payed for it….

 

“More education on this point would show people that circumventing geoblocking is not piracy, leading to more people looking to get around geoblocking, instead of just accepting this is the way it has to be.”

“So how about you? How is geoblocking best attacked? Education, legislation, piracy, or some unholy combination of the three?”

Piracy, if you’re going to try and screw your customer base out of stupid amounts of money why should they support you and your product ?

I haven’t pirated in a long long time usually I just don’t buy the products but the half arsed attitude of just about every corporate representative on this topic makes me want to just out of spite.

Most saying “we do it because we can get away with it” with a thinly veiled “O we have to for local retailers load of BS” why is it i can import games cheaper than local retailers can get them in, companies that purchase these games in bulk ?

Having had access to Woolworths invoicing I know often a new release video game would cost the suppliers $70-90 per copy and often Big W made $1-2 profit or nothing at all using games like they do dog food and coke(both these products are sold at a loss) just to get people into the store.

Seriously if a publisher tries to slug you with the Australia tax especially in digital distribution don’t feel bad about pirating their product, if you want it and they’re not prepared to offer you a fair service pirate away.

 

diamondd,

PalZer0,

do either of you really think we’re enough of blizz-tivision’s market for them to notice ? Here’s what would happen… Nothing, nothing at all because teenagers parents will still go buy it on 360/xbone/ps3/ps4.

I doubt blizz-tivision even care about the Australian market much less the Australian steam market as a % of people that buy their products we have to be pretty low.

jagji,

Gamers have shown time and again they are to weak willed to boy cot a product.

 

Simple… Make DRM illegal here and make Piracy Legal… it would force prices down and people that would normaly be willing to pay will most probably continue to do so.

 

Combination of Piracy and voting with your wallet?

We’ve seen how low the prices in Russia are due to piracy (which in turn is brought on by their lower wages I suppose…I’m sure its more complicated)
Though on the argument of piracy… keep in mind that it’s these greedy Publishers setting the prices, I tend to feel bad about robbing the developers of a game I might have immensely enjoyed due to the abhorrent actions of the middleman between their work and my leisure.

Educating the masses is also up there, I’m absolutely flabbergasted by the amount of Aussies in the steam forums/discussions/real life who go on and on and bitch about being forced to pay $80+ for a game… I thought alternate digital stores and key sites were almost common knowledge amongst us gaming demographic. Chalk that one up to ignorance on my behalf.

Sites I use:
Nuuvem (Site uses Brazilian Reals, roughly half it for AUD conversion cheapness ;))
Ozgameshop (Digital key Store and the Import shop)
Getgamesgo
Gamersgate
Gamersgate.co.uk (manually navigating here in the browser to pay in pounds and bypass the aussie gouge alot of the time)
Amazon Digital Store (set up a fake US address – These guys absolutely Thrash steam during Sale Periods)
GreenManGaming
CJS Keys
GameLane
PlayAsia (For Physical Console Titles)
WOWHD (For Physical Console Titles)

Look into Bookmarking sites like isthereanydeal.com and Cheapshark.com, join the Steam Community Groups ‘Hookups’ and ‘Traders Guild’, and check steamprices.com to see if you aren’t getting rorted. Making some American friends to gift games is always also an option.

I try to do my part by creating threads in the steam forums directing to better non price gouged deals on other sites.

Since we’re open and talking about it now, yeah I’ve used a Vpn on some of the afforementioned places to get regionally restricted/cheaper content (Not Steam, wont be risking that account..)
Screw ‘em, The internet has no oceans.

 

I notice the Netflix image in the article, and there’s an important distinction to be made between price gouging based on geography, and distribution licensing agreements. Whilst I think that geographical distribution is ludicrous for digital content, you most definitely cannot blame a company like Netflix for being unable to provide the content they license outside the geographical regions they’ve licensed it for.

There are some more layers, like prices being higher from resellers, which again are likely just passing on the higher prices included in their distribution agreements with rightsholders, which is tough, because you don’t want to penalise the resellers, but it’s difficult to influence upstream contractual agreements.

Companies selling their own IP directly to consumers (or to distributors) though, have absolutely zero excuse.

ralphwiggum:
Legislation, legislation, legislation. It gives people the backing of law which makes it all nice and legal.

Except that legislation in this area has massive implications, and may actually be infeasible thanks to existing treaties.

lexxbomb:
Simple… Make DRM illegal here and make Piracy Legal… it would force prices down and people that would normaly be willing to pay will most probably continue to do so.

Not only is that absolutely impossible due to existing treaties, it’s also almost infinitely unlikely since we’re currently in the process of formulating a hugely more draconian intellectual property treaty with the United States, in the form of the TPP. And Australia’s representative in those talks, by all accounts, was actively promoting the US pro-rightsholder agenda, as (or more) vocally as the US delegate. Which illustrates how in thrall to US policy we are on this topic, and is really quite disgusting.

 

As the Federal Government has already pointed out in regard to Refugees… existing treaties don’t matter – The federal Government can totally disregard those treaties… if enough people at this election put in writing on their ballot papers that they wanted the removal of IP laws the Federal Governmewnt would do it…

 

lexxbomb:
if enough people at this election put in writing on their ballot papers that they wanted the removal of IP laws the Federal Governmewnt would do it…

I’ll do that. And also vote in Roman Numerals.

 
monotonehell

lexxbomb,

What makes you think that anything you write on your election ballot would be reported to those in power? All you get to do in the election is number candidates in order of your preference.

 

monotonehell,

wow im showing my age I guess…
protests about the Franklin Dam in Tasmania included masss writings on ballot papers… back then doing that made your vote not count… but because of the mass protest the laws regarding that were changed…
https://en.wikipedia.org/wiki/Franklin_Dam_controversy
oh and there is a call to use this same strategy for this election regarding Immigration
http://australianconservative.com/2013/08/write-on-ballot-paper-campaign-targets-high-immigration/

So yes It does count and yes if enough people do it it DOES get noticed…
As a teacher I am shocked that people don’t seem to know Australian political history.

 

LOL people still vote? I’d love it if Aussies actually boycotted voting at the next election, the bureaucracy would have a hernia with all the fines they’d have to send out and still have nothing in return as the voting needs to have a certain percentage of people to be valid. Though leaving labour in is a bad idea, I don’t think the other party have much to offer either.

Politics aside, this whole price gouging issue is just the cherry on top of the iceberg. Dig deep enough and the gaping holes in the current legislative processes, ownership of certain corporate entities and so on will start to make the normal people think a little harder about who’s screwing who and just how hard…

 

I’ve been mostly alright when it comes to games, because there are enough companies out there who will in some form or another overlook that I’m an Aussie (or perhaps try to get my money because I am an Aussie) and let me buy the game at a non-inflated price. I prefer digital keys, but as a last resort I occasionally go the shipping method, and so far I’ve been able to get pretty much everything I wanted.

The other option I’ve found is that if a game gets price-jacked before I can get a copy, I’m quite happy to wait for it to have a 75% off day on Steam, which usually happens months after the original release date, and hence they miss out on a full-priced sale where they would have had one before. And this, I think, is what more people need to do. They can inflate the price of games here because people are willing to pay.

So in answer to the trilemma posed – education might be good enough to get people to know how to acquire the products legally elsewhere. Legislation needs to go with that for consumer protection. Piracy doesn’t serve the game industry any good, and in the end it’s the game industry we want to support. (Also, supporting companies that don’t price-jack, companies that use alternate funding and consumption methods, seems to me a good way to break the current model.)

 

RSOblivion,

either political party having power will only server to further damage the country… Just ride the chaos.

 

Any election that requires you to vote in lead pencil I just don’t trust anymore. Every other official document in this country requires a pen, but we must use pencil? I don’t like that. Stupidity aside, I somehow managed to drop off the electoral role, don’t think I’ll rush out o re-join. Either party has too many cons and very few pros, It honestly feels like a no-win situation.

 

PalZer0:
diamondd,

I think you’ll find that the publishers will just complain even more about piracy in Australia and either refuse to sell here (most likely) or slap harsher DRM on AU versions (less likely).

who cares? They still don’t deserve our business.

jagji:
diamondd,

Agrees. How about we start a ‘No Cod In Aus Till We Get a Price Drop’ community group on steam, then we can see how many Australians actually payed for it….

well I get the feeling you’re taking the piss in light of things like this (http://kotaku.com/5403286/what-modern-warfare-2-boycotters-are-playing) happening in the past, but that only proves my point.

people whinge constantly about the prices of games being unfair and then they turn around and buy them anyway… wow, you must feel really passionate about that issue!

same thing happened with BF3, the uproar around here when its “Origin only” status was announced was immense and yet I’d put my house on the fact that 90% of those people owned it inside a month from release. Grow a spine people, you’re only validating the publishers predictions that they can get away with this shit.

spooler:
diamondd,

PalZer0,

do either of you really think we’re enough of blizz-tivision’s market for them to notice ? Here’s what would happen… Nothing, nothing at all because teenagers parents will still go buy it on 360/xbone/ps3/ps4.

I doubt blizz-tivision even care about the Australian market much less the Australian steam market as a % of people that buy their products we have to be pretty low.

jagji,

Gamers have shown time and again they are to weak willed to boy cot a product.

I think you’re underestimating how much blizz-tivision care about money.

 

Legislation is the only valid answer, really. It is good our government is manning up and asking these companies why they think they can get away with the BS they have been pulling (if 10-15 years too late) but if they don’t have the spine to follow through on it, it won’t mean a damn thing.

Until then, I suggest folks make some international friends to help get around the issue. Works for me.

 
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