John Deere Pays 9.9 Billion Yen. Now It’s the IT Industry’s Turn

John Deere has agreed to pay $99 million (approximately 9.9 billion yen) in settlement to farmers. The reason is that the company has long restricted farmers’ rights to repair the agricultural machinery they purchased themselves.

While this may seem like an agricultural issue, it actually has the potential to fundamentally change the cost structure of IT equipment for small businesses.

If the “right to repair” is established, the current structure where specific vendors control repairs and upgrades, forcing customers to pay exorbitant prices, will be dismantled. For small businesses, this could translate to annual savings of several hundred thousand yen to millions of yen.

What Was John Deere Doing?

John Deere is the world’s largest manufacturer of agricultural machinery. Not only does it sell tractors and combines, but it has also monopolized repairs and diagnostics through the software embedded in those machines.

Here’s how it works:

• Even if the machinery breaks down, farmers cannot diagnose or repair it themselves due to software locks.
• They have no choice but to take it to authorized dealers, where on-site repair costs range from tens of thousands to over a hundred thousand yen per visit.
• If a breakdown occurs during peak seasons (harvest time), farmers may have to wait several days to weeks for a dealer appointment.
• While waiting, crops can rot, resulting in damages that far exceed the repair costs.

Farmers have long suffered from the absurdity of not being able to repair machinery they purchased themselves. This class-action lawsuit and the resulting 9.9 billion yen settlement are the culmination of their frustration.

The Same Structure Exists in the IT Industry

Did you think, “This doesn’t apply to us because we’re not in agriculture”?

Take a look at the IT environments of small businesses. The same structure exists there.

Printers. Designed to recognize only genuine ink cartridges. If you use compatible ink, a “non-genuine product” warning appears, and you can’t print. Genuine ink costs three to five times more than compatible options.

Business Software. Forced migration from on-premises to cloud services, leading to monthly subscription fees. If you cancel, data migration becomes difficult, leaving you with no choice but to comply even if prices increase.

VMware Case. After Broadcom acquired VMware, the licensing structure was significantly changed. Some customers saw their fees increase by two to ten times. According to Nutanix CEO Rajiv Ramaswami, around 30,000 VMware customers migrated to Nutanix. Customers “escaped.”

Microsoft Copilot. A convenient AI assistant, but available only with higher-tier Microsoft 365 plans. An additional charge of $30 per user per month (approximately 4,500 yen). For a company of ten, that’s 45,000 yen per month, or 540,000 yen annually. To benefit from AI, dependency on specific vendors deepens.

What is common to all these cases is the structure of “losing options after purchase.” It’s the same as with John Deere’s tractors.

What the “Right to Repair” Will Change

The John Deere settlement is not just about 9.9 billion yen going to farmers. It sets a precedent.

In the United States, several states have already enacted laws regarding the “right to repair.” These include New York, California, and Colorado. The scope is expanding beyond agricultural machinery to include electronic devices, smartphones, and medical equipment.

Similar movements are accelerating in Europe, with the EU adopting the “Right to Repair Directive” in 2024. This mandates manufacturers to supply repair parts and publish repair manuals.

If this trend spreads to the IT industry, what will change?

• Software locks will be loosened. Users will be able to freely repair and customize their IT equipment.
• Third-party repair businesses will be able to enter the market. This will create price competition for repair services, lowering costs.
• Data portability will improve. Businesses will not be locked into specific vendors, making it easier to switch to other services.
• Negotiating power against vendor lock-in will change. The phrase “If you don’t like it, leave” will no longer hold.

Specific Impacts for Small Businesses

Let’s consider the numbers.

Assuming the annual IT-related costs for a small business with ten employees:

• Maintenance and repair of PCs and peripherals: 300,000 to 500,000 yen
• Business software licensing fees: 600,000 to 1,200,000 yen
• Cloud service usage fees: 300,000 to 600,000 yen
• Total: 1,200,000 to 2,300,000 yen

If the “right to repair” is established and vendor lock-in is loosened, it is estimated that 20-30% of these costs could be reduced. This means annual savings of 240,000 to 690,000 yen. Over ten years, that amounts to 2.4 million to 6.9 million yen. For small businesses, this is a significant amount.

So, What Should You Do Right Now?

There is no need to wait for laws to change. There are actions you can take starting today.

1. Inventory Vendor Lock-In

List the IT equipment and software your company uses and check what would happen if you canceled or changed them. Is data export possible? Are there alternative services? What are the switching costs? Just being aware of this will change your negotiating power.

2. Consider Open Source Alternatives

Open-source business tools like LibreOffice (an alternative to Microsoft Office), Nextcloud (an alternative to Google Workspace), and Proxmox (an alternative to VMware) are steadily maturing. You don’t need to replace everything, but it’s important to create a situation where you can “escape if necessary.”

3. Get Competitive Quotes at Contract Renewal Time

This may seem obvious, but many companies do not do it. When renewing software contracts, always obtain quotes from competing services. Simply stating that you are considering other options can often lead to discounts.

4. Watch the Trends of the “Right to Repair”

In Japan, the Fair Trade Commission is conducting investigations into vendor lock-in in software. This trend is expected to accelerate. By keeping an eye on potential legal changes, you can be proactive.

What the 9.9 Billion Yen Teaches Us

The John Deere settlement has proven that the “right to maintain options after purchase” holds monetary value.

The same applies to the IT environments of small businesses. The structure of dependency on specific vendors and paying whatever price they set is gradually but surely beginning to crumble.

What is important is not to wait for that change, but to understand your current “lock-in state.” When the structure changes, the cost difference will widen between companies that can act immediately and those that are unaware of what is happening.

What you buy should be something you can repair yourself. That fundamental right is finally making a comeback.