Reports indicate that authorities in South Korea raided the Seoul office of Apple earlier in the week just prior to the launch of iPhone X. Though neither the South Korean Authorities nor Apple disclosed reasons for the raid, it is understood that it was necessitated by the business practices of the iPhone maker in the country.
There was even speculation that with the iPhone X launching in South Korea on Friday, the raid was carried out to hamper iPhone X’s success. This is in light of the fact that the biggest competitor to Apple, Samsung, is a South Korean company. Currently Samsung’s Note 8 and Galaxy S8 are competing with the iPhone 8 and the iPhone X with Apple outperforming the former globally. And even in South Korea Apple’s market share is rising.
Free Trade Commission
Last year an investigation was started by the Free Trade Commission of South Korea to probe the business dealings of Apple. The main area that the FTC was looking into was Apple’s contract terms with South Korean carriers. Some of the terms included the wireless carriers being required to order a specific quantity of iPhones. The wireless carriers were also required to share the burden of repair costs.
The raid’s timing suggests the deep connection that South Korean firms have in the government. Samsung as a conglomerate is deeply entrenched in the economy of South Korea and is estimated to be responsible for 20% of the Asian country’s economy.
During the pre-order period in South Korea, the iPhone X sold out with orders exceeding 300,000. This is believed to have greatly hurt the sales of Samsung’s devices. Pre-orders for the Galaxy Note 8 were 395,000 in the initial 24 hours following the launch of the device. The South Korean government has previously been accused of being protectionist by Endpoint Technologies’ associate president, Roger Kay.
“The KFTC [Korea Fair Trade Commission] has pretty much run amok in recent years, slapping spurious charges on foreign companies as it attempts to execute a protectionist agenda that it thinks benefits entrenched South Korean manufacturing interests,” wrote Kay in an article published in 2015 on Forbes magazine.