The level of affordability presented by TP-Link for its networking products has landed it in hot water. A report states that the United States Department of Justice has opened an inquiry into the company, wanting to confirm if it poses any national security risk to the country. Additionally, seeing as how TP-Link has formed a household name in the U.S. by sticking to pricing brackets that other companies cannot adhere to, the investigation also wants to find if the manufacturer employs predatory tactics to have an advantage over its competitors.
With a market share of 65 percent in the U.S., TP-Link allegedly sells its wireless equipment at a loss to prevent the competition from gaining a foothold
Like every other market, U.S. consumers are drawn towards high-quality goods sold at a lower price, with TP-Link capitalizing on the networking space by heavily undercutting the competition. This approach has allowed the Chinese firm to obtain an unrivaled 65 percent market share in a single region, but according to Bloomberg, this is the same reason why the company has placed itself in the DOJ’s crosshairs. The report states that the investigation surrounds a pricing strategy where TP-Link would sell products at a loss to curb the competition.
Once it achieves the aforementioned goal, the company would raise its prices to maximize profits, with the customer paying the premium. However, when browsing through TP-Link’s product catalogue and comparing it to what rivals have stocked, the Shenzhen-based firm continues to have the edge in terms of pricing on consumer goods. Another reason the DOJ has opened an inquiry into TP-Link is its connection with China, and wants to see if there is a national security risk.
Given that wireless networking products can establish a backdoor that would allow for cyber espionage, if proven, TP-Link could be fined a maximum of $100 million. If the cybersecurity concerns are as risky as these reports suggest, and it is proven that TP-Link had a backdoor installed in its products, it can potentially be banned in the U.S. The company says it is unaware of the inquiry, with a spokesperson informing Tom’s Hardware that it has never resorted to predatory pricing tactics.
“To date, TP-Link Systems Inc. has not received any inquiry from the Department of Justice regarding these matters. As a U.S.-based company, TP-Link operates with the utmost integrity and transparency, and stands ready to cooperate fully with any government inquiries, should they arise.
Unlike competitors, TP-Link owns its manufacturing and R&D operations, enabling cost savings and enhanced control over the security of our vertically integrated supply chain. We do not sell products below cost and maintain a policy of transparency in our business practices, ensuring fair pricing for our valued customers.”
Such investigations can last months, and aside from the aforementioned $100 million fine, TP-Link’s executives could face a $1 million penalty, and up to 10 years in prison. Then again, the company would gladly wait out the lengthy procedure, where it can continue to grow in the U.S.
News Source: Bloomberg
About the author: Omar Sohail is a reporter and analyst for Wccftech's mobile section, specializing in the technology and business of the mobile industry. His expertise lies in the intricate hardware supply chain, covering developments in semiconductor manufacturing, chip lithography, and camera sensor technology.
Follow Wccftech on Google to get more of our news coverage in your feeds.
