Apple faces backlash from smartphone retailers

Apple's new iPhone models are on display at KT Square in central Seoul, Nov. 2. Courtesy of KT

By Jun Ji-hye

Smartphone retailers here are protesting Apple's “unfair” policies, arguing they shouldn't have to pay for iPhones used only for display and other promotional purposes.

The Korea Mobile Distributors Association (KMDA) issued a statement Wednesday, saying Apple's policies contrast with those of other smartphone manufacturers, which provide all smartphones needed for promotional demonstrations at stores and collect them afterward.

“Apple has increased the burden on retailers by pressing them to buy in-store tester iPhones,” the statement said.

The association said retailers had no choice but to accept this due to the popularity of iPhones.

The U.S. firm has recently released several iPhones at the same time ― the iPhone XS, the iPhone XS Max and the iPhone X ― at higher prices, further biting into dealers' bottom lines.

The KMDA noted that Apple does not allow them to sell iPhones if they do not purchase demonstration devices.

“We cannot hold out any longer,” the statement said.

The association also said retailers bear the costs needed to build shelves to display the devices, but Apple also gives them strict instructions on the location of such shelves as well as where posters should be hung.

The association said its members are now collecting information on the full extent of the damage caused by Apple's policies.

It added it will cooperate with other associations representing retail stores of SK Telecom, KT and LG Uplus to respond to the situation, adding it was considering taking joint legal action, including filing a complaint with the Fair Trade Commission (FTC) against Apple.

Apple did not respond to the statement issued by the KMDA.

The U.S. firm was investigated by the FTC in 2016 for having charged advertising expenses to SK Telecom, KT and LG Uplus and forcing the mobile carriers to assume responsibility for the repair costs of iPhones.

In November last year, a TV commercial for the iPhone 8 and the iPhone X was paid for by the mobile carriers, not Apple.

Industry sources said the carriers had no choice but to accept Apple's demand due to the strong position of iPhones in the smartphone market.

In April, the FTC sent an examination report to Apple, saying the company could face fines for any unfair practices.

The corporate regulator will make a final decision on action it will take against Apple during a meeting next month.