Apple's 'Gapjil' to Telecoms, Offers 100 Billion Won Win-Win Fund... iPhone Repair Cost Discount

Fair Trade Commission Finalizes Consent Decree on Apple Shifting Advertising Costs to Telecoms
Apple Offers 10% Discount on iPhone Repairs... Also Establishes Manufacturing R&D Center with 40 Billion Investment

Jongwook Cho, Chairman of the Fair Trade Commission

[Sejong=Asia Economy Reporter Kwon Haeyoung] Apple Korea, which has been engaging in 'gapjil' by shifting iPhone advertising and free repair costs onto domestic mobile carriers, has decided to present a win-win support plan worth 100 billion KRW as a corrective measure. They will offer a 10% discount on repair costs for iPhone users and allow the same 10% discount at carrier AS centers. Additionally, they will invest 40 billion KRW to establish a manufacturing R&D support center for small and medium-sized enterprises (SMEs).

The Fair Trade Commission announced on the 3rd that it finalized Apple's consent decree containing these details on the 27th of last month. A consent decree is a system where if the Fair Trade Commission reviews a corrective plan proposed by a business operator and deems it reasonable, it closes the case without determining illegality.

Apple proposed a total win-win plan worth 100 billion KRW. First, they will spend 25 billion KRW to discount paid repair costs for iPhone users until the fund is exhausted, and offer discounts or refunds on AppleCare+ (insurance) services. It is expected that iPhone users will receive benefits of 20,000 to 30,000 KRW per person. They will establish a manufacturing R&D support center for SMEs in the manufacturing sector to operate various programs (40 billion KRW), establish a Developer Academy selecting about 200 trainees annually to provide a 9-month education program (25 billion KRW), and support digital education in innovation schools, educational blind spots, and public facilities (10 billion KRW).

Key Points of Apple's Win-Win Support Plan

Apple also prepared corrective measures including ▲improving procedures for sharing advertising costs and consultations ▲removing warranty repair promotion costs and Apple's arbitrary contract termination clauses ▲introducing a mutual mechanism to prevent patent disputes and guarantee carrier rights ▲adjusting minimum subsidy levels in consultation with carriers.

Apple will implement the voluntary corrective measures over the next three years, and the Fair Trade Commission plans to monitor the implementation status semiannually through an implementation supervisor.

Chairman Cho Sung-wook of the Fair Trade Commission emphasized, "The finalized consent decree broadly includes not only remedies for trading partners but also win-win measures to enhance consumer welfare and support SMEs," adding, "The Fair Trade Commission will meticulously check whether Apple properly implements the promised corrective measures so that this plan can benefit the entire domestic ICT ecosystem."

Apple has been accused of shifting TV and outdoor advertising costs, as well as in-store display and exhibition costs, onto carriers since launching the iPhone 3GS in Korea in 2009. When the Fair Trade Commission investigated abuse of bargaining position, Apple applied for a consent decree in June 2019, and after consultations, both sides prepared a provisional consent decree in August last year.