Liberate the tractors!: Customer lock-in and the right to repair movement

Michael Stead and Paul Coulton (Lancaster University) had an interesting article in The Conversation last week:

The software that runs John Deere tractors was successfully “jailbroken” at this year’s DEF CON hacker convention, enabling farmers to repair or retune their equipment without engaging with the company that sold them their vehicles.

The hacker involved, who calls himself Sick Codes, was responding directly to US farmers’ long-standing concerns that their “smart” tractors are run on software that only John Deere can access to repair. Smart tractors, including those manufactured by John Deere, are also widely used in the UK.

Sick Codes’ jailbreak was undertaken to “liberate the tractors”, he said.

Why did the tractors need liberating? Because John Deere was using customer lock-in to extract additional profits from their customers. Here's how it works. In order to repair or service a John Deere tractor, the repair technician requires access to the repair software and diagnostic tools. John Deere only makes access available to its own technicians, and to other accredited technicians. Who accredits the technicians? John Deere does, for a fee. So, if a farmer wants their tractor repaired or serviced, they have two options. The farmer either goes direct to John Deere (paying John Deere for the cost of repairing or servicing their tractor), or goes to an accredited technician (who pays John Deere in order to remain accredited). Either way, John Deere gets paid. There isn't any alternative for the farmer. They can't avoid paying John Deere. This effectively locks farmers into repair services with John Deere for the life of their tractor. This is no doubt a very profitable arrangement for John Deere (which is why they do it). It allows John Deere to increase the price of repair services, either directly, or through increasing the fee for technicians who want to be accredited.

This is really similar to elevator manufacturers, which is an example I use in my ECONS101 class. Once an elevator is installed in a building, the building owner is essentially locked into a long-term servicing contract with the elevator manufacturer. In order for the building to remain compliant with the building code, they must have a regularly serviced elevator. And servicing the elevator to code requires an accredited elevator technician. And who accredits the technicians? The elevator manufacturers.

Customer lock-in is very common, once you know how to recognise it. Stead and Coulton offer some more examples:

Owners of smart or “Internet of Things” (IoT) devices – from smartphones to internet-connected coffee makers – may have experienced similar frustrations to the owners of John Deere tractors.

To encourage customers to purchase their latest device, some tech firms effectively shut down older models by withdrawing the digital support services that keep them up and running...

Additional layers of software also allow manufacturers to control their customers’ access to features built in to their products. For instance, BMW now requires new customers to purchase a subscription to use the heated seats installed in the vehicles they own.

Many smart devices are purposefully designed to have short lives and to be quickly usurped by newer models, a manufacturing strategy termed planned obsolescence. Other practices, such as adjusting a smartphone’s battery performance via its operating system, have led to accusations of deliberate battery throttling by manufacturers to increase sales.

I discussed the BMW heated seats example in this post earlier in the week. It illustrates not only customer lock-in, but price discrimination as well. The examples of planned obsolescence and battery throttling are particular pernicious. You might not think that customers are lock in, but they are. If you have a particular model of smartphone, and you want to upgrade, you are likely to buy the same brand. Some of this is brand loyalty, and some of it may be related to identity (iPhone users are a classic example). However, it may simply be because learning a new brand of phone is awkward and annoying, and buying a phone that is similar to the previous one offers a lower cost of switching phones than adopting a totally different phone. Switching from an Android phone to an iPhone is costly in more than just dollar terms. Mobile phone manufacturers may be able to exploit that to nudge you into a new model more quickly than you would otherwise prefer.

Customers are fighting back though. As Stead and Coulton write:

To address these issues, campaign groups like Repair.EU, Repair.org and The Restart Project have successfully lobbied governments to introduce “right to repair” legislation for electronic products. These laws were first announced at the EU level in 2020 and came into effect across the UK in the summer of 2021.

However, it's unclear how effective government regulation and popular movements like the 'right to repair' have been so far. I wouldn't be surprised if firms like John Deere respond by making the software tools available, but having the software lack detailed specifications and include a number of hidden features that are not obvious to the casual user. This would increase the costs of non-accredited technicians relative to the accredited technicians. Or, they will find some other creative way of ensuring that something close to the status quo prevails, and their customers remain locked in. To resolve this situation in the favour of customers and win this game of 'whack-a-mole', it's going to take a matching level of creativity from the 'right to repair' movement.