The growth of technology has contributed to higher competition levels among companies in different industries. The availability of online products that can be downloaded free or on payment of a specified price has allowed companies to increase their profits dramatically. Geoblocking is the practice of limiting internet access to some websites by businesses based on the location of access. This essay will look at geoblocking, and how it is used by businesses and governments around the world especially businesses in the United States. Most businesses cite profit control as their main aim of geoblocking. Businesses are able to monitor and therefore make changes in different regions for platforms that they use to reach their consumers (Gregory & Glance 130).
Geoblocking by different companies
Companies that use geoblocking utilize network access limitations to different users in different countries. Multinationals especially those in the technology industry are the most notorious for using this profit making strategy. Different prices are set for users depending on their location when they access a company’s products. The companies selling the digital products are capable of using their network infrastructure to be able to tell the location of a user. If this is not possible, the companies use the credit card information provided by the client, or track the location of the internet service provider, which they can be able to access. Acquiring this information is legal since companies have to do all that they can to ensure that the consumers that they market and sell their products to are of legal age (Kennedy 2).
Consumers feel that they are ripped off because the cost of production of online products is the same regardless of the location where the products or services are being accessed from. Netflix is an example of a site that is unavailable in Australia due to geoblocking; yet it is easily accessible in the United States. Netflix has been criticized as neglecting Australia though the company has cited strict local network rules as one of the reasons why they have not ventured into the country (Kennedy 4). Digital books from companies such as Amazon are also priced differently depending on the location of the consumer. Most of the books are lowly priced in the United States in comparison to other locations in the world. Apple iTunes also does geoblocking whereby the company’s products are available to different consumers at different prices depending on their geographical location. Consumers in the United States enjoy the lowest prices in comparison to users in other countries around the globe.
According to Gregory & Glance (131), geoblocking is a pricing and profit strategy that might be ineffective in the near future. Australian policy makers have strongly advocated against the practice with recommendations of consumer education so that they can minimize the purchase of unreasonably expensive online products. The Australian government has also questioned the use of coding and internet service providers in determining the geographical location of clients.
However, companies that use geoblocking as a pricing strategy cite the need for local support offices as one of the reasons why they need to price their products at higher prices in different geographical locations. Clients are more likely to purchase international products that have local support and client care offices in comparison to those that might not have local offices. Companies that use geoblocking also cite changes in currency rates as one of the reasons why they price products differently according to geographical location (Kennedy 6).
Gregory, Mark & David Glance. Security and the networked Society. New York: Springer, 2013.
Kennedy, Joseph. Consumer Welfare and Improve Income Equality. The information
Technology & Innovation Foundation. 2014, print. Accessed December 1, 2014 from http://www2.itif.org/2014-geoblocking-increase-consumer-welfare.pdf