In Recorded Conversation, John Deere Dealer Talks Up Predatory Design
In a recorded exchange, an employee of a prominent John Deere dealership said the agricultural equipment giant might use software updates to block third party GPS hardware on its equipment.
Secretly recorded audio of an employee at one of the nation’s largest John Deere dealerships suggests that the agricultural equipment giant may use software updates to block third party precision agriculture hardware and software applications from working with John Deere equipment - a possible violation of U.S. anti trust laws.
The recording, first reported by YouTuber Louis Rossmann, was made by Kevin Kenney, owner of AgraSoft, a U.S. based reseller of Agra GPS CRG, an aftermarket GPS receiver. That product is designed for use with Deere hardware and software: providing GPS access to farm equipment with sub-inch accuracy required for use in precision agriculture. As such, it competes directly with Deere’s own StarFire GPS product line.
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In the recording, a copy of which was shared with Fight to Repair, Kenney poses as a farmer and strikes up a conversation with an individual that he identified as an employee of C&B Equipment, a large John Deere dealer, at the company’s booth at Dakotafest -an agricultural fair in Mitchell South Dakota.
Kenney told Fight to Repair that he decided to approach the dealership after multiple farmers visiting his company’s booth at DakotaFest said that C&B told them that Deere would likely block the Agra GPS hardware from working with its equipment.
In the recorded exchange, Kenney starts by asking the representative about the process for upgrading Deere equipment from the company’s legacy 3000 series StarFire GPS receiver, which are being phased out, to newer 6000- or 7000-series receivers (or “globes” in precision farming parlance).
Some background here for the non-farmers: the 3000 and 6000 StarFire GPS receivers use so-called real time kinematics (RTK) which combines satellite based GPS signals with signals from ground-based towers to boost the accuracy needed for precision agriculture applications from feet- to mere inches and even sub-inch accuracy. The newer Deere 7000 series, however, provides RTK-level sub inch accuracy purely via a satellite signal, without relying on ground based RTK radio towers.
In the recording, the C&B employee tells Kenney that to upgrade from the 3000 series to the 7000 series would cost a farmer $4,300 for the 7000 series receiver (not including a $1,250 trade in should the farmer turn in their older 3000 series hardware). Farmers would then have to pay Deere $1,500 per device for an annual subscription to access the GPS signal on the 7000 device, he explained
Boot Competitors? “Why Wouldn’t They?”
Kenney then asks the rep about Agra GPS’s product, which was on display at the fair and retails for $4,000. Agra GPS’s product, which Kenney resells, provides RTK level accuracy with no annual subscription required. The Agra GPS CRG product also enables farmers to use federal- and state- funded CORS Networks that correct GPS signals for greater accuracy, as opposed to the private and proprietary RTK networks operated by local dealers like C&B.
The price difference is considerable. The five year TCO (total cost of ownership) for each Deere StarFire 7000 receiver would be $11,800 - nearly three times the cost of the Agra GPS CRG receiver enabled with the public CORS RTK signal.
The C&B representative’s response to Kenney’s inquiry about the Agra GPS product is where things get interesting.
Referring to Deere’s response to another, unnamed company that sold hardware that farmers could plug into the StarFire GPS “globe” to obtain non-Deere RTK services (likely the Leica MojoRTK, according to Kenney) the C&B representative hypothesized that Deere wouldn’t tolerate the competition.
“If Deere sees another company doing this in a year from now, they’ll say, ‘You know what, screw it. We'll rewrite the software so everybody's gotta update their globe for it to keep working.’”
The clear implication is that Deere would use the update to evict those third party products from its platform, thereby eliminating aftermarket competition.
Asked by Kenney whether he thought Deere would do something like that, the C&B representative responds: “Oh yeah. Why wouldn't they?… If you were building something and somebody was just taking your stuff and working around it…?”
What Was (And Wasn’t) Said
From the standpoint of the “right to repair” discussion, this is an interesting exchange. But before we get into the question of why it matters, let’s talk about what this recording isn’t.
First, this isn’t a recording of a John Deere employee - let alone an executive- describing official Deere policy, nor is it internal company communications that articulate such a plan. If it were, that would be a (really) big deal. Instead, what we’ve got is a recording of an employee of a large John Deere dealership speculating about how the company might respond to the threat posed by a third party, aftermarket parts provider. Big difference.
Second, the representative doesn’t outright say that Deere would use a software update to its equipment to make it impossible for the Agra GPS CRG receiver to communicate with Deere’s display terminal. He just strongly implies that they would.
Fight to Repair reached out to both John Deere and C&B on multiple occasions via email and phone seeking clarification about the recorded statements. We got crickets from Deere corporate (shocker). Reached by phone at the Yankton, South Dakota branch of C&B, which staffed the booth at Dakotafest, Miles Lammers, the Service Manager, told Fight to Repair that he was aware of the Rossmann video and the conversation recorded by Kenney, but referred questions to Store Manager Jeff Pravecek. Pravecek did not respond to multiple phone requests for comment. We promise to update this should we hear back.
The bigger question: is Kenney’s recorded encounter evidence of illegal anti-competitive behavior by John Deere?
No. Looked at one way: this is just a salesman at a Deere dealership talking smack at an ag fair to scare potential customers away from a competitor. That kind of thing just goes with the territory.
See Also: Predatory Design
However, would it be illegal for Deere to actually implement a scheme such as the one described and use its software updates to block third party GPS receivers from communicating with its equipment?
Absent hard evidence of John Deere pursuing such a strategy, questions about anti competitive practices are merely speculative, Perzanowski said. However, “assuming the plan he describes plays out, I do think it could raise some serious antitrust issues.”
The legal question is one of so-called “predatory design,” said Perzanowski. That is a term used to describe product design choices that offer only minor benefits and improvements to a product, but work mainly to exclude competitors. Such behaviors violate U.S. antitrust law, he said.
In fact, predatory design was one of the main claims made about Microsoft’s efforts to block competitors to its Internet Explorer browser. And it has been successful in challenging the business practices of medical device- and pharmaceutical manufacturers as well, Perzanowski said.
So far, however, that hasn’t been the experience at Agra GPS.
Johannes Heupel, the President of Heupel Farms Inc. founder of Agra GPS said that since founding his company in 2015, he has not seen evidence of Deere attempting to prevent Agra GPS’s products from working with Deere machinery. In fact, in one on one conversations with Deere executives, Heupel said he has gotten the sense that the company is “not opposed to what we do.”
That said, Heupel said he wasn’t surprised when he listened to Kenney’s recording and is angered by Deere dealers’ use of fear tactics to push customers away from competing products. “They should compare products on their actual plusses and minuses - about what works and what doesn’t. Don’t use fear to scare them away,” he told Fight to Repair by phone.
Precision Ag? Think Ma Bell On A Tractor
Looking ahead: the Deere employee’s claims raise important questions about the strategies that major agricultural equipment OEMs like Deere, AGCO, CNH and others might take in the months and years ahead, absent strong oversight by regulators and enforcement of existing anti-trust laws, to try to lock farmers into their precision agriculture software and hardware ecosystems.
For manufacturers like Deere, precision agriculture offers the enticing prospect of billions of dollars of net-new recurring (subscription) revenue for the use of that precision ag hardware and software. Shareholders love that idea.
The rosy view is that the widespread adoption of precision agriculture technology will birth a huge, vibrant new marketplace that will be a big boost to agricultural communities and states. In this view, federal authorities will take pains to stymie vendor lock out and exclusionary tech ecosystems. All manner of companies large and small will compete for precision agriculture dollars: with an explosion of innovation in precision ag hardware, software and services for farmers and other supply chain providers.
Properly done, farmers would be able to choose from GPS from Deere, or Agra GPS or any number of other suppliers based on (low) price, functionality, service and support (including repair-ability) and more. They would be able to take advantage of new, smart hardware add ons or third party software applications that can boost the capabilities and performance of critical farm equipment, regardless of OEM, to make their farms more productive.
For that to happen, Heupel said that Deere and other equipment makers will need to be much more transparent. For example: abandoning black box proprietary communications protocols and embracing standard protocols, not to mention thoroughly documenting Deere CAN BUS communications; and so on.
The more pessimistic view is basically the status quo: in which federal and state oversight and regulation of anticompetitive practices fall (far) short of what is needed. In that scenario, today’s nascent precision agriculture industry - in 5 or 10 years time - looks a lot like the mid-20th century telecommunications industry in the U.S., with a massive vertical monopoly (Bell Telephone -aka “Ma Bell” aka “The Phone Company”) using its exclusive control over the phone network to lock out third party players (e.g. phone makers) under the guise of ensuring “quality” and “safety.”
"There is tremendous market pressure for companies to not just sell products, but to sell platforms they completely control. Those platforms only work if there if your customers are locked in, and they can't go elsewhere for the software or additional features you want want to sell,” said Nathan Proctor, Executive Director of the Right to Repair Campaign at US PIRG.
The result of that will be high costs, negligible choice and low levels of innovation for customers and the U.S. economy.
“When you control the platform, you can charge pretty outrageous markups, take a cut of every sale, or do all manner of things that allow you to reap huge profits beyond what could be earned competitively,” said Proctor.
And, with lawmakers looking to use federal dollars to juice adoption of precision agriculture technology, the “what”s and “how”s of precision ag technology could quickly evolve from an obscure debate to one that sits on the front burner for cash strapped U.S. farmers.
The path to monopoly would be paved not just by federal incentives, but also by the U.S.’s fraught legal and regulatory landscape, which for the last four decades has mostly looked the other way at anti-competitive practices and the resulting massive concentrations of market power.
Laws like Section 1201 of the 1998 Digital Millennium Copyright Act (DMCA) make it a federal crime to circumvent software locks. That has prompted manufacturers of all kinds to liberally deploy digital locks to secure access to all manner of features and functions. By larding its equipment and in-cabin displays with digital rights management (DRM) technology and other software locks, Deere and other agricultural equipment manufacturers can plausibly claim that third parties seeking access to disable those locks are engaged in software piracy as they seek to conduct basic maintenance and repair.
So hearing an employee at a major John Deere dealership running on about software updates that will boot unwelcome aftermarket competitors from Deere equipment is concerning. Sure, it’s not a Deere employee spouting that idea. But that C&B employee got the idea of software updates as a way to evict third party competition from somewhere or someone. Who or where was that, exactly?
It Fits A Pattern…
The final reason this matters is that it’s a small part of a much bigger story - or stories. After all, John Deere’s exclusive embedded software, which can be managed only via Deere’s Service Advisor software, makes it all but impossible to carry out complex service and repair of Deere equipment without the say-so and active involvement of a Deere authorized service provider.
That has earned the company the ire of farmers across the country and made it Public Enemy #1 for right to repair advocates. (CBS This Morning recently highlighted the plight of farmers attempting to repair their own equipment.) It also prompted passage of a state law in Colorado this year giving farmers and independent repair shops the right to access the same information, tools and parts as manufacturers’ authorized repairers.
Deere is also the subject of a class action lawsuit filed by farmers over its restrictions on owner repair of their equipment. In February, the Department of Justice sent a letter in support of the farmers in that case, which is being heard in Federal District Court in Illinois,
But the story extends beyond the agriculture sector. Automakers, also, are pursuing similar business models: using their control over in-vehicle telematics systems to compel “tie in” sales. As we reported, Tesla is alleged to disable the “trailer mode” safety feature on its vehicles that do not use Tesla-branded trailer - which sell at a hefty premium over non OEM trailer hitches.
Should these business models go unchallenged, we can expect them to metastasize. To quote the C&B employee: “why wouldn’t they?”
“This is a great example of why we need ‘Right to Repair’ legislation in states and why we need Congress to restrain the use of DRM locks to prevent repair, absent any actual risk of IP Proliferation," wrote Gay Gordon Byrne, the Executive Director of The Repair Association in an email.
Assignment: Ask Uncomfortable Questions
What next? We all need to ask hard questions of John Deere and its competitors about their support for an open precision agriculture ecosystem. Hardware, software and equipment makers in this promising new sector should compete on the basis of product quality, price and customer service.
If allowed to exist - or persist - such practices will come at a high price for farmers and those of us “food eaters” who consume what farms produce. Let’s take this encounter and see it for what it is: an early warning about what’s to come.
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