Examining Google’s repair track-record as shareholders call for change

Google’s parent company, Alphabet*, faces shareholder proposal because of history of repair restrictions

Google office building

In November, Apple* announced it would be launching a new Self Service Repair Program — on the very same day arguments were due to the Securities and Exchange Commission (SEC) by shareholder advocates to advance a company shareholder resolution about expanding repair access. 

The shareholders who filed the resolution, Green Century Capital Management°, PIRG’s affiliated environmentally responsible mutual fund company, announced on Jan. 3 that they had filed a similar resolution with Alphabet, Google’s parent company. 

In their release, Leslie Samuelrich, president of Green Century Capital Management notes: “Given the current regulatory landscape and growing interest from consumers, any company in the technology industry that is not embracing repair exposes itself to significant risk.”

Google’s responsibility to repair is different from other companies. As the supplier of the Android operating system many cell phones use as well as the leading search engine, the company has multiple ways to enable a healthy repair market — or to make it harder for people to fix their stuff. Unfortunately, historically, it has put up obstacles for consumers.

Google features prominently in anti-Right to Repair lobbying

A search of lobbying records related to Right to Repair bills shows Google fighting the passage of key legislation in a number of states (including California and Colorado, according to PIRG analysis). Bloomberg and the New York Times have reported on Google’s lobbying on state legislation as well. 

As was reported in Bloomberg and by Paul Roberts of the Security Ledger, Google’s lobbyist raised a number of rather dubious warranty concerns in Colorado, which helped defeat that legislation. 

Mark Bergen wrote for Bloomberg: “Google hired Mary Kay Hogan, a lobbyist from the Fulcrum Group in Denver, who raised concerns in a March email to [State] Representative [Brianna] Titone about the proposal’s impact on phone warranties.” Roberts outlines how these concerns were echoed in the hearing by other lawmakers, comparing the comments emailed from the lobbyists to questions asked by lawmakers, suggesting that Google lobbying efforts led lawmakers to believe there are warranty issues with the legislation. 

It’s almost not worth explaining that warranty law is not impacted, and in fact there are provisions in warranty law that protect non-manufacturer repair (provisions which manufacturers regularly ignore, and the Federal Trade Commission is lax at enforcing). The FTC in their “Nixing the Fix” report detail both warranty law and how Right to Repair is compatible (and essential). 

Google leaves repair out of its environmental report

Google has many lofty environmental goals. The company promises to, by 2030, “operate on carbon-free energy, everywhere, 24/7.” In addition, Google has pledged to reduce material demand in a push toward a circular economy:  

“We’re constantly looking for new ways to build products, design out waste and pollution, and keep materials and resources in use for as long as possible. We’re committed to maximizing our reuse of finite resources across our operations, products, and supply chains — while empowering others to do the same … We believe that by incorporating circularity into our designs from inception, things created today can become the resources of tomorrow and enable reuse, repair, and recovery.”

It is important that Google understands that designing things to be repairable is an essential to environmental responsibility. If you review the product impact reports Google produces, you can see why: The biggest contribution to climate change for a product like a Pixel phone is manufacturing and transportation. For example, 80% of the Pixel 5’s carbon footprint is making and shipping the product. 

However, a look at Google’s 2021 Environmental Report reveals that repair is not mentioned a single time. The only mention of “reuse” is in the general circularity goals and in reference to Google’s Data Centers. In other words, Google is investing in reusing hardware that it owns, but does not report on reuse of the hardware that it sells to others. It seems worth noting that without environmental goals, Google would have an incentive to reuse their own hardware and increase the rate of replacement for products it sells. 

It is no wonder that green investors are pressing the company to consider their responsibility for the products they sell if they want to improve their environmental record. 

Google search takes down repair shop ads

For more than three years, Google has blocked independent repair shops from “Ad Word” advertising on its search engine — while still permitting manufacturers to advertise. 

Originally, Google sought to remove ads for scammers posing as repair or IT service companies and said that it would create a verification system to allow legitimate shops to resume ads. In an announcement, Google’s Director of Global Product Policy David Graff explained the company was seeking to prevent “misleading ad experiences” by third-party technical support businesses. But for more than three years, the company has not completed this verification system. 

In September 2020, PIRG delivered a petition with nearly 7,000 signatures to Google, calling for an end to the company’s ban on electronics repair ads — and also sent a copy of our letter to Congress and the FTC. The company never responded. 

Because Google is both an electronics manufacturer and the leading search engine, the company benefits from increased new phone sales. However, it does not gain from a more robust market for repair shops. 

In 2017, Google’s vetting process led to a takedown of 3.2 billion ads. For industries that are prone to fraudulent advertising, such as locksmiths and garage door services, the search engine introduced a verification process. But Google has not managed to extend this to electronics repair – or respond to advocates’ questions about why they haven’t. 

Search engine traffic is a key strategy to find customers, and some repair shops reported drops in revenue of as much as 70% after Google removed their ads. Advertising requests that would have been approved under normal circumstances were now repeatedly rejected.

“We were doing 15 to 20 repairs a day,” said JJ Brown, CEO of HookUpCellular, during a 2020 phone interview with U.S. PIRG. “Now we get five, maybe 10 if we’re lucky.” Brown added that this had cut his company’s revenue by at least half.

Okay Google, Don’t Be Evil

As I draft this article in Google Docs on Google Chrome, it’s fairly clear that Google is a powerful company. Many of the world’s smartphones run Google Android, and Google Chromebooks and cell phones are growing in popularity. Imagine if Android had a set of pro-repair features built in — features that not only could result in more Google Pixel phones getting fixed, but those of many other manufacturers as well. 

Google has not been at the center of the debate on Right to Repair to the extent that Apple*, Microsoft* and John Deere* have been, all of which have also faced shareholder resolutions. But as other companies work to address issues raised by Right to Repair, Google needs to clarify where it stands. 

For the sake of consumers and the planet, let’s hope they can choose to support repair — or their shareholders might force them to. 

———–

U.S. PIRG is not a registered investment adviser. U.S. PIRG is not providing any investment advice to any recipient of this communication.

Banner photo by Thomas Hawk, Creative Commons. 

About Green Century Capital Management

°Green Century Capital Management, Inc. (Green Century) is the investment advisor to the Green Century Funds (The Funds). The Green Century Funds are the first family of fossil fuel free, responsible, and diversified mutual funds in the United States. Green Century Capital Management hosts an award-winning and in-house shareholder advocacy program and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.

*As of September 30, 2021, Alphabet Inc. Class A comprised 2.79%, 4.13%, and 0.00%; Alphabet Inc. Class C comprised 0.00%, 3.98%, and 0.00%; Apple Inc. comprised 3.01%, 0.00%, and 0.00%; Deere & Co. comprised 0.57%, 0.51%, and 0.00%; and Microsoft comprised 2.94%, 10.35%, and 0.00% of the Green Century Balanced Fund, the Green Century Equity Fund, and the Green Century International Index Fund respectively. As of the same date, other securities mentioned were not held in the portfolios of any of the Green Century Funds. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.

You should carefully consider the Fund’s investment objectives, risks, charges, and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds please click here, email [email protected], or call 1-800-934-7336. Please read the Prospectus carefully before investing.

Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic and political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to a variety of risks including interest rate, credit, and inflation risk. A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.

This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.

The Green Century Funds are distributed by UMB Distribution Services, LLC. 235 W Galena Street, Milwaukee, WI 53212. 1/22

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Authors

Nathan Proctor

Senior Director, Campaign for the Right to Repair, U.S. PIRG Education Fund

Nathan leads U.S. PIRG’s Right to Repair campaign, working to pass legislation that will prevent companies from blocking consumers’ ability to fix their own electronics. Nathan lives in Arlington, Massachusetts, with his wife and two children.

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