The death of ownership: Companies use software and subscriptions to make money off customers

Andy Harding has been running his own little electronics repair shop, Salem Techsperts, in Salem, Massachusetts, for the past eight years. He does a steady job of fixing phones for college students and nurses from the nearby hospital. But shortly after the launch of the iPhone 13 in September 2021, Harding noticed a small change in Apple’s software that he thought might close his convenience store for good.

One of Harding’s most popular repairs — and one of his biggest revenue drivers — is repairing cracked iPhone screens. But Apple added a new feature to the latest model that would detect when the screen is switched, including screen fixes, and then disable FaceID. This transformation startled the owners of several repair shops, including Harding’s.

“People pay good money for a phone with FaceID, and they want it to work,” Harding told me recently. “Broken iPhone screens are the number one fix for stores like mine. I couldn’t survive without this part of the business.”

Finally, Apple rolled out a software update that allowed FaceID to work after the screen was fixed. But the phone still warns users that the screen is not original unless they use an “Apple authorized” repair provider. But why would anyone need Apple’s blessing to fix their phone? You already paid for it – you own the phone, you should be able to fix it on your terms.

Apple isn’t the only company that places restrictions on the goods people have already purchased. As more devices in our lives run on software, manufacturers have begun to exercise more control over their products even after a customer takes them home. In some cases, companies force customers to use they repair services, and disable the product if they try to fix it themselves. In other cases, companies require people to pay for an ongoing subscription to access basic features of the goods.

Modern software allows manufacturers to associate product users with them forever. Corporations are just beginning to monetize this control, using sloppy methods and the help of America’s unbalanced copyright laws. But there are ways that consumers and policymakers can counter this company’s attempt to redefine what it means to “own” a product.

You bought it, but you don’t really own it

Imagine a hypothetical summer beginning on a Monday, sometime in the future. You start your coffee machine remotely ($5 per month app for scheduling brewing in advance and another $25 for recurring connection of compatible pods) while you hit your stationary bike for a speed workout ($30 per month for access to classes). When you’re ready to head to the office, the smart thermostat automatically turns off the air conditioning (a $10 per month feature) while you use an app on your phone to remotely start your car (which costs $20 per month). And if you want to fix any of that? Put the screwdriver away, because you’ll have to go to the manufacturer for a minor adjustment.

While this may seem far-fetched, the explosion of subscription services for consumer products is actually pushing that assumption closer. The global market for e-commerce subscriptions is expected to increase from about $73 billion in 2021 to about $904 billion in 2026. In addition to the proliferation of meal delivery boxes and streaming services, companies are in many cases making access to the very thing. Bought contingent on your payment: no subscription and you have a lot to take up space. For businesses, the allure of subscriptions is pretty clear: a steady stream of revenue and lots of money collected from their customers over time. While software development and maintenance comes with its own set of costs, overheads are much lower than hardware manufacturing and give companies more opportunities to make additional sales—which means recurring revenue comes with huge profit margins.

Companies use a large number of tactics to keep customers at bay after purchasing the product. One approach is to use technical sensors to prevent unauthorized changes to the product. Take the experience of America’s farmers: modern equipment such as tractors and combines often require special tools that manufacturers offer exclusively to authorized dealers. Combined with high-tech computer systems, this makes it nearly impossible for farmers to repair their own cars. My organization, the Public Interest Research Group, or PIRG, has calculated that repair restrictions cost farmers an additional $4.2 billion each year, with $1.2 billion going to local authorized dealers and another $3 billion lost to equipment failure. Likewise, Tesla’s software can detect and restrict features from car owners that aren’t from the company, such as after-market tow hitches (while Tesla’s own hitches are out of stock).

In other cases, companies have tried to prevent consumers from accessing certain features at all unless they pay first. Car companies have taken the lead in pushing this trend. Mercedes-Benz and BMW have made headlines for charging users a monthly fee for better acceleration and the use of heated seats, respectively. You’ve already bought your seat heater (and the luxury car that has it), but now you need to pay for the right to turn it on? Printer companies have used similar tactics to get people to sign up for subscriptions that monitor ink levels remotely but can also turn off your machine if you fail to pay. Imagine if you had to pay the contractor who built your house a monthly wage to get the light switches to work!

Finally, manufacturers use your internet connection to monitor and control what you do. If they find out you’ve done something they don’t like (maybe hot-wiring your hot seat), they can remove or disable other features. Tesla has been charged charge capacity invalidationand compatibility with fast charging and other remote features. Consumers are afraid to do anything that upsets manufacturers, knowing they could be penalized.

We need to end the constant monitoring of our behavior by some remote manufacturer who can approve or disapprove of the choices we make with the products we’ve purchased.

You might think there should be a law against policies that make people “buy” and “rent” things at the same time. But the existing laws work against consumers, allowing manufacturers to control what you can and cannot do. For example, overly general copyright laws can, in the hands of overzealous manufacturers, make it a copyright offense to bypass technical regulations to tamper with or repair your device. The Digital Millennium Copyright Act aims to prevent people from pirate music, games, or movies. But manufacturers have argued that the DMCA applies to software or firmware needed to repair or make a piece of hardware work. This very broad definition of intellectual property was taken advantage of to prevent independent reform and redefined consumers’ relationship to the goods they buy. By this interpretation, if a manufacturer installs a digital security measure around the heated seats, bypassing that could be seen as hacking in the first place. If this is confusing, it’s because it’s silly.

Manufacturers also author user agreements thick with language to prevent customers from tampering with the product. Most people have encountered long Terms of Use documents filled with laws that stretch for pages and pages. In most cases, consumers simply check OK with little or no knowledge about what they’re signing up for. A 2017 Deloitte survey of 2,000 consumers found that 91% click through to agree to terms and conditions without reading them.

But within this thick documentation are rules that prevent people from repairing their goods or allow the company to reclaim ownership if they don’t agree with how customers use the product. A breach of these Terms and Conditions in the past undermines a consumer’s basic rights.

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I believe in truth in advertising. If you are going to sell something to someone, sell it to them. If you are going to rent something to someone, rent it to them. If you tie their future purchases to a secret “agreement” that you’ve inserted into technology they know nothing about, that’s a scam. Not to mention that tinkering and fixing is an American tradition. The ethos of “if it’s broken, then fix it” has other benefits, too. Repair teaches basic skills, saves consumers money, and helps reduce waste and product obsolescence. Repair and repair also leads to product innovations that can benefit everyone.

There are solutions to protect property. The first is the Right to Repair legislation, which I’ve worked to pass in various states over the past five years. The right to repair requires manufacturers to provide the parts, tools, and information needed to make repairs to consumers on fair terms. It also says that these parts and tools cannot require remote authentication to become operable, which means no need to ask permission to perform repairs. So far in 2023, 28 states have considered some form of right to repair legislation, and Congress has held several hearings on the subject. Legislatures have now passed laws in Massachusetts, Colorado and New York – and we’re just getting started.

Another step is to make it clear that fixing is not a copyright offense. The Freedom to Repair Act, introduced last year, gives a broad and permanent exemption to repair activities under copyright law. In addition to passing new laws, we need to enforce the laws we already have on the books. It is supposed to be antitrust-breaking to create a “tied” arrangement that forces someone who buys one product to buy other products or services. Anyone with a printer who’s tried to find cheaper ink knows that this wasn’t enforced effectively.

The US Federal Trade Commission and the US Department of Justice need to crack down on embedded software that forces product owners to pay a monthly fee to use the devices they own. Regulators must also crack down on toxic legal clauses placed in user license agreements, just as they have banned some anti-consumer clauses from credit card usage agreements.

In the digital age, we need new protections for consumers to reflect our agency as the people who own the product. We must be able to fix things without fear of retaliation. We shouldn’t have to give up our rights when we buy something. We need to end the constant monitoring of our behavior by some remote manufacturer who can approve or disapprove of the choices we make with the products we’ve purchased.

Until then, we, like Andy Harding of Salem Techsperts, are waiting nervously to see what we’ll miss when the latest “innovation” hits shelves.

Nathan Proctor is the senior director of the American Public Interest Research Group (PIRG) Campaign for the Right to Fix.

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