Brand Image and Freedom to do Business

The Right to Repair bill in Massachusetts demonstrates a few interesting business phenomena.  The ability of companies to engage in particular practices and maintain their brand varies widely.  The automakers are not doing anything that Apple doesn’t also do.  But the result is different. 

For anyone not familiar with the bill, here is some background.  From way back when, cars were simple enough machines that many car owners could do their own maintenance.  For anyone who didn’t want to, there was some auto repair shop in town that would be happy to do it for you.  Car dealers could do it too, but usually for a higher price.

Over time, the market for cars became really price competitive.  Dealers had such low margins on selling cars that they were forced to shift their profit model to add-on services like maintenance.  This created a problem.  If they charged higher prices for maintenance, owners could simply take the car down the street to the local repair shop.  But if not, they couldn’t afford to stay in business selling cars.

More time has now passed and the industry has continued to evolve.  Most cars now are based on computer platforms.  Maintenance has become as much an exercise in IT as it is in mechanics.  Doing maintenance requires a significant investment in computer technology and training.  Only economies of scale justify this investment so the owner is out of the maintenance picture.  It is just the dealer and the local repair shop who remain.  

One last step. The automakers created a technology lock that prevents local repair shops from getting access to the computer code in the car.  These shops can’t do the maintenance and now car owners have to bring the car to the dealer to get maintenance.  No more competition and dealers can charge higher prices.

Now for the Apple side of the story.  If you are the owner of something, regardless of the IP, you have the right to tinker with it.  Some technology vendors get around this by licensing a product to you under certain contractual conditions rather than selling it to you.  Software is a domain where this is common – hence the pages-long end user license agreements that come with software.  Same result as with the automakers.  You need to bring your iPhone to Apple to get it fixed.  You may remember the old practice of “bricking” your phone, which was when Apple would wirelessly find out the phone was hacked and would send an update to the iOS that would make the phone inoperable.

Which takes us to the Right to Repair bill.  The monopoly practices and prices for auto maintenance got the public really angry.  They collected the signatures for a referendum that will require automakers to unlock the car’s computer – allowing local repair shops back into the market.  We never did this with the iPod/iPhone/ iPad (even though it is largely the same system) in part because we have a much more favorable opinion of Apple than we do the local car dealer.  The car dealers and the personal electronics makers did virtually the same thing, but there was public outcry only on one of them.