Saturday, December 4, 2021

The shareholder fight that forced Apple’s hand on repair rights

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Wednesday morning, Apple announced that the company will soon make parts and repair manuals available to the general public, reversing years of restrictive repair policies. The new policy represents a seismic shift for a company that has fought independent repair for years by restricting access to parts, manuals, and diagnostic tools, designing products that are difficult to fix, and lobbying against laws that would enshrine the right to repair.

But Apple didn’t change its policy out of the goodness of its heart. The announcement follows months of growing pressure from repair activists and regulators — and its timing seems deliberate, considering a shareholder resolution environmental advocates filed with the company in September asking Apple to re-evaluate its stance on independent repair. Today represented a key deadline in the fight over the resolution, with advocates poised to bring the issue to the Securities and Exchange Commission to resolve.

Apple spokesperson Nick Leahy told The Verge that the program “has been in development for well over a year,” describing it as “the next step in increasing customer access to Apple genuine parts, tools, and manuals.” Leahy declined to say whether the timing of the announcement was influenced by shareholder pressure.

Activist shareholders believe that it was. “The timing is definitely no coincidence,” says Annalisa Tarizzo, an advocate with Green Century, the mutual fund company that filed the right-to-repair resolution with Apple in September. As a result of today’s announcement, Green Century is withdrawing its resolution, which asked Apple to “reverse its anti repair practices” and evaluate the benefits of making parts and tools more available to consumers.

That’s exactly what Apple seems to be doing with its new Self Service Repair program. Announced this morning, the program will allow members of the general public to order genuine Apple parts in order to make basic iPhone repairs at home — something Apple has long argued is too dangerous for individuals to do. According to Apple, Self Service Repair will initially focus on the display, battery, and camera for iPhone 12 and 13 models. Individuals interested in doing screen repairs or battery replacements for those models at home will be able to place an order for genuine Apple parts through a new Apple Self Service Repair Online Store, send in their old part for recycling, and receive a new one.

Apple’s announcement of the program is light on details, including whether the program will be expanded beyond iPhone 12 and 13 as well as Mac computers using M1 chips, how much genuine parts will cost customers, and whether it will eventually make parts available for a wider range of repairs. Although the announcement implies it will, Leahy declined to confirm that the program will eventually be expanded to other iPhone models. Still, the announcement effectively fulfills Green Century’s request that Apple make significant changes to its repair policies to facilitate independent repair — assuming the tech giant follows through with it.

Apple’s initial response to the Green Century resolution was less than conciliatory. Tarizzo says that on October 18 (30 days before the self service announcement), Apple submitted a “no action request” to the Securities and Exchange Commission asking the investor oversight body to block the proposal. According to Tarizzo, Apple’s argument before the SEC was that the proposal — that the company “prepare a report” on the environmental and social benefits of making its devices easier to fix — ran afoul of shareholder proposal guidance by infringing on Apple’s normal business operations.

However, earlier this month, the SEC issued new guidance concerning no-action requests that includes a carve-out for proposals that raise “significant social policy issues.” In other words, shareholders can bring resolutions that affect a company’s day-to-day business operations if those proposals raise issues with significant societal impact. Tarizzo believes that this change made it much more likely the SEC would side with Green Century rather than Apple, particularly since the mutual fund company connected the dots between increased access to repair and the fight against climate change. (Using devices as long as possible through maintenance and repair is one of the best ways to reduce the climate impact of consumer technology since the majority of the emissions associated with our gadgets occur during the manufacturing stage.)

“It wasn’t a guarantee that the SEC would side with us, but the new guidance indicates it’s very likely we would prevail,” Tarizzo says. “It effectively took away a lot of Apple’s leverage in the process.”

Now, Apple seems to have regained some leverage by announcing its new Self Service Repair program on the same day that Green Century was required to respond to the no-action request. Instead of arguing that the SEC should allow the shareholder resolution to move forward, Green Century is now withdrawing the resolution entirely.

Companies routinely ignore shareholder resolutions, and many had assumed Apple would respond to Green Century’s resolution the same way — but it came at a time of unique momentum for the right-to-repair cause. This year, a record 27 states have considered right to repair bills, and the first national right to repair bill was introduced to Congress in June. None have passed into law, but they’ve sent an alarming message to companies like Apple that restrictive repair practices may not be legal for much longer.

That’s also resulted in pressure from the federal government. In May, the Federal Trade Commission came out strongly in favor of independent repair with the release of a report finding “scant evidence” to justify restrictions imposed by companies like Apple. In July, President Biden himself signed an executive order encouraging the FTC to craft new regulations that would limit the ability of cell phone makers to restrict DIY repair. Those rules are a long way from coming into effect, but the specter of looming regulations was certainly a factor in Apple’s decision.

Some of Apple’s biggest competitors have already embraced right-to-repair policies, adding even more pressure on the company. Last month, Microsoft agreed to comply with a first-of-its-kind right-to-repair resolution brought by environmental nonprofit As You Sow in June. The resolution asked Microsoft to study the environmental and social benefits of increasing access to repair; Microsoft not only agreed to conduct such a study but to act on the findings by the end of 2022. Microsoft’s concession to activist shareholders came on the heels of Green Century filing a similar shareholder resolution with Apple, a move activists speculated could pressure on the iPhone maker to respond in kind.

The result is a huge victory for Green Century and a validation for shareholder activism more broadly. Tarizzo says that while Apple’s new program “doesn’t go all the way where we want the company to go, we think it’s a significant enough step that it warrants a withdrawal. The fact they’ll be selling common replacement parts, tools, releasing repair manuals, it’s all very much in the spirit of what we were hoping to see happen.”

While Tarizzo feels that the timing of Apple’s announcement is directly related to Green Century’s shareholder resolution, she believes the company’s about-face on independent repair is “really the product of the combined pressure of all sides of the right-to-repair movement” from federal action to statehouse bills to grassroots advocacy.

Nathan Proctor, the senior right to repair campaign director at the US Public Research Interest Group, agrees.

“If I was to hazard a guess, it would be the whole compilation of the campaign has successfully changed Apple’s position,” Proctor tells The Verge. “I don’t think you can point to any one particular thing that was done that made it happen. It all made it happen.”



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