Apple Inc. is no stranger to controversy. The company currently faces a number of legal challenges from both the private sector and governments, including a lawsuit regarding its mobile patents from prominent competitors and a tax investigation in the United States.
As well as its technology lawsuits and tax disputes, the company now faces a serious investigation by the European Union into its marketing agreements. Despite its huge commercial success, Apple is ‘silently despised’ by many retailers in the technology industry, primarily for its somewhat draconian and controlling marketing terms.
Apple’s specific marketing requirements to businesses include rules for ‘exclusion zones’ in retail settings, requiring businesses to avoid placing other products within a certain distance of Apple’s exhibit. Many retailers that distribute Apple products are required to pay a licensing fee in order to advertise the company’s products.
Far from being frustrated by the investigation and its potential consequences, many of the mobile industry’s largest retailers are silently pleased. Apple’s retailer supply chain, which operated on a week-by-week schedule with no room for discount bulk buying,’ has long irritated retailers that thrive on wholesale product pricing.
The investigation, which has been launched by the EU’s competition regulators, will look at Apple’s supply and marketing requirements, and whether they could have a negative effect on its competitors. Based on the outcome of the investigation, Apple may have to make significant changes to its distribution system throughout Europe.
Both Apple and its major distributors face an interesting situation. While changes to the company’s supply chain will undoubtedly be beneficial to retailers in the coming weeks and months, the company’s strict control over its marketing materials is one of its biggest advantages. Apple’s brand is considered a ‘top ten’ international brand.
The Cupertino-based technology company has claimed that it complies with all EU trade laws and will defend its supply guidelines. For retailers and Apple itself, this case will likely have a major role in future pricing and supply decisions.
