How viable are the government's solutions to dealing with the problem of Australian price-jacking?
By Patrick Vuleta 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 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?