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Planned Obsolescence: Exploring the Role of Free Markets and Regulation in the Right to Repair Movement

Last month, Tesla was hit with two class action lawsuits from Model S owners who claimed they were charged excessively high prices and faced long wait times for vehicle maintenance and repairs; John Deere faced a similar class action lawsuit over their alleged violation of antitrust laws through their tractor repair policies, including software locks and restricted access to repair tools; additionally, in 2017, a class action lawsuit was filed against Apple, accusing the tech giant of intentionally shortening the lifespan of its iPhones by slowing their performance.

In a similar vein, flower-shaped screws called pentalobe screws became synonymous with Apple products since its 2009 MacBook release. They are designed in a way that an ordinary screwdriver cannot be used to unscrew them. While Apple claims that pentalobe screws make its products tamper-resistant, critics argue that this is an exclusionary tactic to make repairing Apple products difficult.

So, what’s the real story behind pentalobe screws, slowing down of iPhones, tractors, and the irreparable Tesla Model S, and what impact do they have on consumer rights and product repairability?

Planned obsolescence is a tactic of designing products with a pre-set date of expiry, also known as “death dating.” Through planned obsolescence, businesses artificially limit the usefulness of a product to encourage more frequent purchases by consumers.

Obsolescence can be planned in different ways – by making repairs difficult, by designing products so they deteriorate quickly, by making products appear out of style, or by introducing software lockouts that make a product unserviceable because of its inability to be updated.

To make sense of how planned obsolescence came about, consider its history.

Bernard London, an American real estate broker credited with coining the term “planned obsolescence,” argued that building products with obsolescence would help end the Great Depression by increasing consumer spending on goods. At the time, his paper was well received but has since attracted ire from several factions of society.

The Costs Associated with Planned Obsolescence

A direct cost of planned obsolescence especially in the appliance industry is the rising problem of waste and in particular, electronic waste comprising discarded electronic devices around the world. E-waste is the fastest-growing waste stream in the world with more than 57.4 million tonnes of waste generated in 2021.

A 2009 study revealed that the average cathode-ray tube computer screen has five to eight pounds or more of lead. Heavy metals like lead are persistent bioaccumulative toxins (PBTs) that create environmental and health risks when the products are incinerated, put in landfills, or melted down. They release particulate matter into the air and contaminate water systems.

Another argument against planned obsolescence is spurred by the business community questioning the ethics of making consumers spend more. According to Elena Giaretta, “relentless product change is a one-sided strategy because it focuses on the needs of the firm at the risk of detriment to the environment and consumer welfare.” She argues that differentiating a business through customer satisfaction, environmental friendliness, and the long-term usefulness of its products would improve a firm’s market positioning.

The Repair and Refurbishment Economy

In several parts of the world, repair is an unregulated and untapped market that can be leveraged by businesses to make repairs cheap while providing employment opportunities. In labor surplus economics, on-demand repair and maintenance services are readily available through original manufacturers as well as third-party vendors. Investments are continually made in upskilling labor in these services.

Repairing products can also be viewed as a chance to broaden production diversity and enhance aftercare services. Researchers have shown that service management activities can offer competitive advantages such as extra revenue streams, improved customer loyalty, and the ability to charge higher prices for products. This approach allows traditional producer business models to be adapted to take advantage of service-based economic opportunities.

Additionally, services are increasingly being used as central business strategies in the form of Product Service Systems (PSS). These options have the potential to increase employment in the repair service sector, but they do not necessarily democratize product repair on a user level.  The extent to which companies incorporate the repair into their business models will be influenced by macro-level regulations and incentives.

Due to the COVID pandemic and the disruption of supply chains, an issue regarding the fragility of system dependence and the role of resale and repair in maintaining stability has surfaced. This issue is particularly important for essential goods like heating, cooling, and refrigeration, where the ability to repair and resell products can help ensure that people have access to these necessities even in times of supply chain disruptions.

In a unique move, Apple announced that the option of Self Service Repair of Apple parts, tools, and manuals has been made available to individual consumers. Patagonia, a worldwide leader in the corporate environmental movement, has been allowing the repair of its clothing products for the last several years through its Ironclad Guarantee which offers repair, reuse, and recycling of all products. Their Worn Wear Patch kit is a novel repair product that repairs tears in outdoor gear. 

Challenges in Enabling Repair

Skill sourcing or hiring individuals with the necessary skills needed for repair is an active challenge, especially in economies with persistent labor shortages. For instance, Patagonia is currently taking 10 weeks to complete its repairs in the United States. Similar complaints have been voiced by Tesla owners around the country who are unable to receive service appointments for weeks due to the lack of availability of repair services. A second constraint is changing individual repair behaviors. Repair transforms the user’s position into that of a caretaker of objects. It is important to recognize that these actions are the result of the way our consumer mindsets have been primed to value convenience over commitment.

The Rationale for Planned Obsolescence

In the case of Apple’s slowing down of the iPhones lawsuit, the suspicions were confirmed by the company, but Apple explained that the slowdown was caused only by the natural deterioration of the old lithium-ion batteries performance. However, users had to pay more to replace the batteries to bring back their phones’ original speed. Following a class action lawsuit in 2017 and a long legal battle, Apple finally agreed to pay $500 million in compensation in 2020, which worked out to be approximately $25 per affected user.

Planned obsolescence has also been justified by the industry as a way to provide access to technology for low-income groups and to spur innovation and economic growth.  However, the cost to consumers over a period of time levels out as the replacement rate for each product increases. In the end, planned obsolescence capitalizes on present bias and people’s willingness to pay a small amount upfront but continue paying in the long term at short intervals. In a time when waste has become a pressing global challenge, planned obsolescence cannot be sustained.

Incentivizing Planned Durability: Legislative Action Around the World

Right to Repair, the leading movement pushing for enabling the repair of consumer durables, has its foundations in the United States. Massachusetts passed the United States’ first Motor Vehicle Owners’ Right to Repair Act in 2012, which “required automobile manufacturers to sell the same service materials and diagnostics directly to consumers or independent mechanics as they provide exclusively to their dealerships.” The Massachusetts statute was followed by several states. In 2023, 20 states have filed for right-to-repair legislation, but only 2 states have enacted them so far.

Legislation around the world on right to repair is currently in the form of information disclosures, fees and fines, tax deductions, and rebates. The UK government introduced a Right to Repair Regulation in 2021 providing professional repairers with access to spare parts and technical information along with ecodesign and labeling requirements for specified electrical products sold in Great Britain. France has adopted a requirement that manufacturers contribute to a repairability scoring system to allow consumers to consider repair as a buying criterion. In 2015, the French National Assembly established a fine of up to €300,000 and jail terms of up to two years for manufacturers that deliberately planned the failure of their products.

The Government of India has recently expanded its right-to-repair program, which now includes four sectors: consumer durables, electronic devices, automobiles, and farm equipment. The program has also brought on board major brands to a single digital platform. According to this framework, manufacturers must provide customers with product information, enabling them to repair their items independently or via third parties, rather than solely relying on the original manufacturers. This framework also seeks to facilitate trade harmonization among Original Equipment Manufacturers (OEMs), third-party buyers, and sellers, thus generating new employment opportunities.

Swedes are permitted to receive a reimbursement of up to 50% of the labor expenses for repairing household appliances, such as washing machines, refrigerators, and stoves, through their income tax, and Austria reimburses up to 50% of repair labor costs, per year according to Rreuse’s report. In addition, more inclusive theoretical scenarios for tax shifts have been proposed. These scenarios suggest shifting a significant portion of the current labor taxation—which accounts for approximately 51% of tax revenue in the European Union—towards consumption and natural resource taxes. Although these models indicate tremendous potential benefits, their implementation has been limited. The suggested shift prioritizes and encourages the development and utilization of human capital.

Policy Opportunities

Governments around the world have a unique opportunity to promote the growth of a repair economy by implementing various measures. This includes providing financial incentives such as tax rebates and deductions for both third-party repair vendors and in-house repair by manufacturers. Additionally, subsidies for repair could be funded by reducing the financial burden on waste management systems in state and municipal setups. Moreover, mandatory disclosures on repair guides and promoting do-it-yourself activities can help challenge existing norms around fast consumption. Incentivizing communities-led action through Repair Cafes is another way to encourage repair. Born out of grassroots movements around the world, Repair Cafes offer people space to come together and repair items from everyday life. Typically held at community locations, tools are made available and device owners can seek help from volunteers.

It is imperative that we act now and urge our leaders to prioritize the growth of a repair economy. By taking these steps, governance can play a critical role in reducing waste, conserving resources, and creating new job opportunities while simultaneously contributing to a more sustainable future for our planet.

Photo credit: Tyler Lastovich via Pexels