Samsung and Apple being investigated by Korean FTC for unfair trading practices?

We already knew that iRiver, Cowon, and other South Korean MP3 player makers were crazy pissed at Samsung for giving Apple such a sweet deal on NAND flash memory modules for the iPod nano, but now it looks like the South Korean Fair Trade Commission might be investigating whether or not the two companies engaged in "unfair trading practices". We're not overly familiar with the ins and outs of Korean trade law (we slept through that class sophomore year of high school) and whether or not Samsung and/or Apple did anything illegal, but we don't doubt that iRiver and the rest of 'em put a ton of pressure on the government to look into this.

[Thanks, Ken C.]

[steve @ Dec 19th 2005 12:20AM]

Wow, an American company beating the pants off asian companies in price...that's just not fair!

Cry me an iRiver

[Jazzay @ Dec 19th 2005 12:20AM]

Wow, this made me smile.

I dont sleep through this class in highschool, and i do think that this may fall under violation of antitrust laws, and/or price gouging on other companies.

Ill ask the professor on tuesday

[TheZodiac @ Dec 19th 2005 12:20AM]

LOL.. good one Steve.. And honestly.. what a bunch of babies. I dont own anything Apple, but this is funny.

MADE IN USA BABY....... (well, at least sorta..)

hahahaha...

[Hassan.L @ Dec 19th 2005 12:20AM]

Well this isn't unfair or illegal. Unlike othe mp3players ipods sell very well and it is not unusuall to get a big rabate if you are going to buy huge quantities of certain goods. THis happens everyway. I'm sure Dell gets a huge rebate from intel for buying huge quantities of their CPUs

[sheik124 @ Dec 19th 2005 12:20AM]

Hassan.L, thats precisely why AMD has filed suit against Intel.

[kay @ Dec 19th 2005 12:20AM]

iRiver,Cowon,iops,Mpio and KPAC(Korea Portable Audio Commission) announced that they will purchase NAND flash memory modules together. They hope to get sweet deals from Samsung as Apple got.

[Rex StJames @ Dec 19th 2005 12:20AM]

sheik124, not quite. AMD's pissed because Dell got huge rebates from Intel for buying ONLY Intel CPUs (excluding AMD entirely). For this to be the same, it would have to be other flash memory manufacturers suing Samsung for giving Apple incentives to by memory only from them. This isn't the case. Other people are pissed that Samsung is giving such a large volume discount. The discount is not contingent upon Apple buying ONLY Samsung memory, it's based on Apple buying lots and lots of Samsung memory.

[anonymous coward @ Dec 19th 2005 12:20AM]

> Hassan.L, thats precisely why AMD has filed
> suit against Intel.

No it isn't. It's because Intel alledgedly gave co-op marketing money and preferential distributions contingent upon the explicit exclusion of the use of AMD chips.

The two are not equivalent.

If getting preferential pricing as a result of being a big consumer was illegal (in the US), Walmart would be out of business.

Dunno about in Korea.

[coolkamio @ Dec 19th 2005 12:20AM]

@kay
"iRiver,Cowon,iops,Mpio and KPAC(Korea Portable Audio Commission) announced that they will purchase NAND flash memory modules together. They hope to get sweet deals from Samsung as Apple got."

Well, they can hope what they want, but they won't get the sweet deal of Apple...
Why? Because even all this companys united sells less than 1/10 of what Apple sells..

[bbob @ Dec 19th 2005 12:20AM]

You can buy a 12 pack of cokes for $2.99 or you can buy one can for.75 cents. Your choice.

[matt @ Dec 19th 2005 12:20AM]

Either way it wont affect apple too much because apple doesnt have such a big marketshare in Korea anyway. There money is in the U.S. where the iPod has became a school fashion trend.

[johnnyprozac @ Dec 19th 2005 12:20AM]

Matt is correct...its not really about market share but rather the preferential pricing...Apple has almost no presence in Korea.

ALthough this may also be a result of illegal campaign donations made by Samsung, illegal crossownership of subsidiaries ( the governement is trying to reduce the power of owner families and increase the power of share holders), AND some accounting irregularities.

heh so really this is just one more salvo.

It probably honestly has nothing to do with Apple...since really Apple is irrelevant in Korea.

[strider_mt2k @ Dec 19th 2005 12:20AM]

I guess Apple got a sweet deal on some discount plastic for the iPod Nano too.

Scratch-off lottery tickets have files suit claiming that the Nano actually gets more scratches than they do.

Latest word is that they will possibly file a class action suit in conjunction with poison ivy and insect bites.

[johnnyprozac @ Dec 19th 2005 12:20AM]

Matt is correct...its not really about market share but rather the preferential pricing...Apple has almost no presence in Korea.

ALthough this may also be a result of illegal campaign donations made by Samsung, illegal crossownership of subsidiaries ( the governement is trying to reduce the power of owner families and increase the power of share holders), AND some accounting irregularities.

heh so really this is just one more salvo.

It probably honestly has nothing to do with Apple...since really Apple is irrelevant in Korea.

[Number 5 @ Dec 19th 2005 12:20AM]

Hassan.L -> exactly how do you know its not unfair or illegal? You don't know. I understand you want Apple to be almighty, but there are laws in place to prevent companies from becoming too dominant in markets. If it was Microsoft being investigated, everyone would automatically assume Microsoft was guilty. Apple can break laws too, so lets not jump to conclusions. They are being investigated for the possibility of fair trade laws being broken, the South Korean Fair Trade Commission will decide if they broke the law.

[dliao @ Dec 19th 2005 12:20AM]

Yes, investigate, and then we'll see why there's no 4gb version of iRiver U10

[Shnugi @ Dec 19th 2005 12:20AM]

I think the main problem is the fact that Apple's getting a 40%, or so I heard, discount, which seems a tad bit excessive.

[Hassan.L @ Dec 19th 2005 12:20AM]

Number 5: Yes apple can be quilty and NO, I'm not an apple fan boy. I think this whole thing is an attempt to digg into Samsung and apples deal. I don't think that a crime has needed to be made.

It is pretty simple. If you buy 100 cookies from me you will get 5% off and if you buy 1000 cookies from me you will get 50% off.

Off cource this might be harsh on the competitors since ipods are so popular but hey that's business. It is not apples fault that the iRiver H10 isn't selling so good that Samsung want to cut a deal with them.

[sum 1 @ Dec 19th 2005 12:20AM]

But if the complaint is upheld will they stop the supply of flash memory to apple making them look for another supplier?

[Alex @ Dec 19th 2005 12:20AM]

>exactly how do you know its not unfair or illegal?
>You don't know.

It's not like I love Apple, but I believe Apple hasn't done anything wrong. Just like bobb points out, if you buy more, you can get a cheaper deal.
Would you sue the person who bought the 12 pack soda for $3 while you spent $1 buying 1 can from a vending machine, just because you don't have $3 in your pocket?

[Pal @ Dec 19th 2005 12:20AM]

I hope the Koreans win. Stupid Apple needs to stop growing. They're going to get big and strong and they're going to start shoving crap products at us because they'll know we'll buy it based on their name. If the iPod nano is any indicator, we're going to get great looking promises with bad delivery. Those scratches make the iPod nano look ten years old in three weeks...

[mike @ Dec 19th 2005 12:20AM]

I hope the Koreans win. Stupid Apple needs to stop growing.

---
Ahem... 30 year old company...

Like someone already said.. those three tiny Korean players together don't make up 1/10th of Apple's volume.. so why would Samsung ignore the money coming their way.. for patriotism? Are you crazy? This is the 21st century, we live in a global economy, Apple can shop wherever it wants for suppliers and Samsung has to compete for their business too. They can't be turning down a huge customer like that.

[Iknow @ Dec 19th 2005 12:20AM]

Hassan doesn't know anything

he always say stupid things when it comes to Korean product

[BM5k @ Dec 19th 2005 12:20AM]

Anyone who pays several hundred dollars for an MP3 player, no matter what brand, and doesn't spend the 30$ for a case is a MORON & deserves to have their player scratched up.

[Kamil Mytnik @ Dec 19th 2005 12:20AM]

GOOD. VERY GOOD.

Because who wants a trendwhore peice of shit iPod that lasts 18 months anyways?

iPods are like tampons, every pussy has one.

[Chris @ Dec 19th 2005 12:20AM]

"You can buy a 12 pack of cokes for $2.99 or you can buy one can for .75 cents. Your choice."

You'd have to be an idiot to buy a 12 pack in that situation. You could buy all 12 singularly for 9 cents!

Or maybe you meant 75 cents...;)

[The ELektrophile @ Dec 19th 2005 12:20AM]

HAH! The Elektrophile suspected something like this happening when the Nano just came out!

http://elektrophile.blogspot.com/2005/09/ipod-nano-nono.html

[Alex @ Dec 19th 2005 12:20AM]

I don't think Apple is any worse than Sony and Dell...

Sony's NW-HD5's buttons crack easily; many Dell PCs have hardware failure in the first few months after purchase.

If Apple's ipods and macs are overpriced, how about Sony's VAIO desktops and laptops? Their MP3 Players? What about their expensive headphones that break the whole time?

Correct me if I'm wrong, but if we hate Apple for pricing and quality, it's not like the other companies are that much better. Therefore, I dont think there's any other companies out there that we do not hate as much...

So why favor the other companies and hope Apple goes out of business?

[Bolo @ Dec 19th 2005 12:20AM]

Well, Apple can buy from Sandisk/Toshiba...:P

[lip @ Dec 19th 2005 12:20AM]

What blows me away time after time is that for most people, Apple can do no wrong but Microsoft is just evil.
I know this is a different issue but let's face it, we are talking about Apple becoming a monopoly in an industry. You can argue that Apple has the marketshare because they have superior products,but I would say they have the marketshare because of the same reasons that MS has a monopoly.

For the sake of product differentiation and consumer options in the future, I hope Apple starts to lose some marketshare really fast. Unfortunately, if they are getting these sweetheart deals, I fear that the competition will not have any chance, no matter how good their products are.

LIP

[Paul @ Dec 19th 2005 12:20AM]

Apple losing market share? Don't they have a paltry 5% of the PC Market?

I'm amazed at how many people think Apple is such the end-all of companies. They have had tons of failed products (Apple 2GS to name one in history).

All they have done is made one product very well and it has reached the Tipping Point - nothing more, nothing less. (Yes we can argue about the Mac's superiority, but at less than %5 marketshare we won't go there.)

The ipod is a great product, no doubt. Make something else (to appeal to mass market) and then we'll talk.

[cvas @ Dec 19th 2005 12:20AM]

@lip-

Huh? The problem with MS is not that they are a monopoly, it is how they use that monopoly. There is nothing inherently evil in a monopoly, the evil is in the actions. Educate yourself as to what the problems with MS are and how they abused their position. And stop spreading FUD.

@Paul-

People think Apple is the end-all of companies because they make good products and because they innovate. Of course by your definition something has to "appeal to the mass market" to be good. I guess that means it has to sell a lot. You'll excuse me if I don't follow the herd and use the "does everyone else like it" method as a barometer for what I buy.

And as for their failures, you could say that about nearly any company, atleast Apple is trying.

[chip @ Dec 19th 2005 12:20AM]

i'm sick of people complaining about nano scratching, did you guys ever think that maybe it's becaues it's black? --black shows more. ex. take a look at an oldish black car and an oldish white car, you'll see what i'm talking about. they didn't "skimp on the plastic" or anything, it has to do with the color... morons.

[Urza9814 @ Dec 19th 2005 12:20AM]

I hope apple gets fucked in the ass! they deserve it!

[Badison @ Dec 19th 2005 12:20AM]

post #1: "Cry me an iRiver" I second you on that lol

[T.H. @ Dec 19th 2005 12:20AM]

#20, If Apple makes crap products there must be a TON of idiots in the consumer industry. Apple's various products have recieved industrial design awards. Magazines have rated Apple products highly. Web sites have rated Apple products highly. Last but not least, users have rated Apple's products highly.

That's not to say Apple's products are flawless nor does it mean Apple as a company is flawless. However, I do think that they actually try to release high quality and well designed products.

For all the anti-fanboy whining about the scratches on the iPod Nano's, the devices themselves work great and are pretty sturdy. Just check out the Ars Technica article.

[JAmerican @ Dec 19th 2005 12:20AM]

Made in USA huh,

Oh thats why its soo cheap and I don't mean the price :)

I knew something was flawed and this device.

[JJ @ Dec 19th 2005 12:20AM]

What do you want?

A korean Flash Memory companies or the iPod nono?


I chose the latter

[tommy @ Dec 19th 2005 12:20AM]

"You'll excuse me if I don't follow the herd and use the "does everyone else like it" method as a barometer for what I buy."

HAHA this is exactly why the iPod has managed to become as popular as it is.

[johnnyprozac @ Dec 19th 2005 12:20AM]

sorry for the damned double post ...engadget is wonky sometimes...

the result of this investigation would just be that Apple pays market price like others do OR that others will get similar pricing.

Again let me repeat this has NOTHING to do with Apple and EVERYTHING to do with Samsung.

Apple is not being targeted in this investigation...it's Samsung. Most of the time when it is a question of unfair pricing and/or uncompetitive practices it is often the supplier that is being targeted.

It is amazing how ignorant and how weird the commentary on this has become. This is not about Ipod anything or attempts to reduce Apple's market share.

This is about pricing of NAND flash memory where Samsung is honestly bilking other makers who order the same memory out of money. Paying more when someone else is paying less.

Again get it through your thick and weirdly configured heads : THIS IS NOT ABOUT APPLE. the Korean FTC comments have basically oriented more on Samsung's practices. I live here....I read and analyze the financial tech news for a living: and again let me repeat for those still don't get it: the focus on this investigation is SAMSUNG.

[steve D. @ Dec 19th 2005 12:20AM]

I am not an apple fan but you are right apple has nothing to do with it they tried to get a good price and they did its all samsungs doing they are the ones that are being investigated why are you bashing apple for bringing cheap player to the market.Again i dont even like the ipod but i wont bash when its not deserved.

[hall @ Dec 19th 2005 12:20AM]

It's funny...and won't affect apple at all

[Jeff Lewis @ Dec 19th 2005 12:20AM]

First off - contrary to what a lot of people here seem to think - it's not actually legal to give an unreasonable deal to one company and then exclude other companies from similar deals.

That's one of the things Microsoft got nailed with: their uneven discounting practices.

If Samsung gave Apple a discount - they have to give any other company who agrees to the same purchase levels a similar discount, otherwise it's not fair trade - it's collusion - and it's illegal.

Second, as for Apple being 'a US company beating the pants of an Asian company'... they only pulled it off because an Asian company gave them an unusually large break. If they charged Apple a rate more in line with what they're charging the other MP3 makers, Apple's iPod nano wouldn't be that competitive.

[Everytime I read an engadget comment, I lose an IQ point... or two... @ Dec 19th 2005 12:20AM]

so many Grade 10 economics experts in this forum! I am so happy to have read all of these awesome comments! Yay for price discrimination! Maximizing profits for businesses by extracting extra utility from consumers is a great practice! More profits to companies! More super-smart engadget reader comments! More common nonsense! Hooray for everything!

[L. M. Lloyd @ Dec 19th 2005 12:20AM]

You know, aside from the guy who is from South Korea, and keeps saying this has nothing to do with Apple, I don't really see why the rest of you are so sure that there has not been a law broken here? Are you all experts on South Korean law?

I mean, there might be a law on the books in South Korea saying that if Korean company gives one price to an American company, then they have to give the same price to any South Korean company. I'm not saying that there is such a law, but if their were, neither you nor I would probably have any idea that law existed. If such a hypothetical law did exist, then it would be quite clear that a law HAD been broken.

It is really quite asinine how the second Apple's name is attached to any story, the immediate web reaction is "even though I have no idea what is going on here, my favorite company can do no wrong, so whoever is claiming they are in the wrong is an idiot, who doesn't understand how great they are."

Mind you, take the exact same story and put the name Microsoft in it, and suddenly it is great to see the bastards get what they deserve.

[Craig @ Dec 19th 2005 12:20AM]

Man you guys are all barking at eachother for no reason. Dont know a thing that is going on. I live in korea work in korea and study in korea. I am studying law in my past time, to get ready to be an international lawyer.

With what I know about the situation and the laws pertaining to it, there is nothing that can be done and no precedent has been set forth.

This is simply a case of the koreans being the smallest fish in the pond. They think they are small and unimportant so they try to do anything they can to look big and strong. So they are strong arming the goverment into doing their bidding. They might win not based on laws but because they want to look big or because they get paied off (happens all the time here).

This is all a load of bull and if it didnt involve an american company I doubt the koreans would care.

Also the market share of apple mp3 players seems to be a bit understated. I know far too many people and see far too many people on the subway with ipod minis that there is no way that their share is that low in korea. The nano is freaking sold out here with the first shipments looking to be in the 10,000 range. Everplace was sold out on the first day. Same thing happened with the nano.

[johnnyprozac @ Dec 19th 2005 12:20AM]

In reply to #43

If you have been following the news this is part of a continuing investigation by teh FTC and the Korean government involving other irregularities involving Samsung and other companies/issues as well...

From investigations of
1) Samsung and SEMES: unfair subcontracting practices and obstruction of evidence...there is a piece detailing that here : http://www.eetimes.com/news/semi/showArticle.jhtml?articleID=171000204
2)continual efforts to have Samsung adhere to the new guidelines involving crossownership, regulatory controls, anti-collusion rules
a short summary of what is really a more complex process here: http://www.busrep.co.za/index.php?fArticleId=2884025

So you see...it has nothing to do with "unimportance" and looking "big and strong" and everything to do with reforms being brought into place to temper the power of huge chaebols like Samsung. This is similar to the process that the Japanese went through in reconstruction and regulation of the keiretsus and are benfiting from now with an economic revival now.

I believe that Craig with this kind of FUD, has no freaking idea what he is talking about. And he's training to be a lawyer. Well heh thats par for the course eh?

[johnnyprozac @ Dec 19th 2005 12:20AM]

AND in regards to Ipod market share as given by again my favorite poster Craig:

Oh yes..and of course your own personal observations are more valid than actual hard market place data *rolls eyes*. And of course initial debut figures in the 10,000 area quantify a success (it doesn't).

here is some data in these following articles regarding Apple's market share in Korea:

here is a dense analysis of the market:
http://www.ittimes.co.kr/en/node.asp?em=M&mcode=200504&idx=477

here is a simple even easy for engadget posters to understand article:
http://au.news.yahoo.com/050810/3/vg2p.html

and more: http://playlistmag.com/news/2005/08/12/koreans/index.php?lsrc=mwrss

As of hard market data today in Korea...IPod's marketplace share is not projected to go beyond 2% for the next 6 months and may remain static at 1.9%. This is granted in-store sales...which is discounting online sales...however considering that often in these market-wide surveys many stores lump offline and online together..there wouldn't be much change.

I have no opinion favorable or antagonistic towards Apple..its just I hate when people try to bring in weird support for a view instead of actual supportable verifiable data.

[m @ Dec 19th 2005 12:20AM]

haha Craig got owned

[VoiD @ Dec 19th 2005 12:20AM]

I agree with what johnnyprozac said. This is all about Samsung. they currently being investigated for illegal practices.