April 20, 2024

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[THE INVESTOR] Korea’s corporate watchdog claimed that US tech giant Apple’s practice of shifting the cost of advertisements to mobile carriers can be deemed an abuse of power, a document released on Jan. 21 showed.

The Fair Trade Commission has been investigating Apple’s suspected abuse of its leverage over the country‘s three mobile carriers -- SK Telecom, KT and LG Uplus -- by burdening them with advertisements for iPhones, along with warranty costs.

During the second round of deliberation, held last week, Apple claimed that its actions were justifiable, claiming the company does have an advantage over local mobile carriers in terms of negotiation, and that it does not have any real power it can exert.

Apple said that advertisements benefit both the company and Korean mobile carriers, and that the action was fully justifiable.

The FTC, however, claimed Apple, in reality holds a clear advantage over local mobile carriers, and that shifting the cost of advertisements is only another means to squeeze the profits of the carriers.

Accordingly, the watchdog said such practices cannot be considered a marketing strategy. The FTC’s economic analysis division delivered a similar claim.

A third deliberation is scheduled to be held on Feb. 20, where the detailed actions carried out by Apple are to be discussed.

Apple can be slapped with fines of up to 2 percent of related revenues. The company can also face similar probes in other countries if it is found guilty in Korea, industry watchers said.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)