Danny De Gracia: Corporate Greed Is Best Foiled By Consumer Action Rather Than New Laws - Honolulu Civil Beat


About the Author

Danny de Gracia

Danny de Gracia is a resident of Waipahu, a political scientist and an ordained minister. Opinions are the author's own and do not necessarily reflect Civil Beat's views. You can reach him by email at dgracia@civilbeat.org or follow him on Twitter at @ddg2cb.

Opinion article badgeA new and very annoying approach to profit-seeking has begun in the auto industry.

In 2020, automaker BMW began requiring digital “microtransactions” – ongoing subscriptions to activate and use already installed onboard car features – for vehicles sold overseas in select countries. Last year, these microtransactions drew the ire of motorists in freezing Europe when it was discovered BMW added a minimum monthly subscription of $18 just to activate and keep on the heated seats function.

In decades past, this type of profit-seeking would have been impractical because most devices were “dumb” in that they were offline, analog, mechanically controlled. Today, the “internet of everything” which puts a computer, an operating system, sensors and a wireless connection to the internet in even the smallest component of a larger machine has made it possible to control and even charge customers for services at a level unprecedented in human history.

To be fair, automobile manufacturers are not the first or only companies to use this business model. Long gone are the days when you could just one-off buy a single installation CD pack of Microsoft or Adobe productivity and graphics software and use those programs for life. Today, you have to purchase monthly or annual subscriptions to use and continue to use these programs.

Anyone using a smartphone or smartwatch in 2023 also knows that there are many features in both which require microtransactions. Do we like it? Not at all, but because many of the microtransactions are cheap, or we know when we’ll use them and when we won’t, they’ve become a tolerable aspect of “smart” ownership in 2023.

Disney theme parks have started charging for every little thing. Flickr: Dan Belanescu

And, if you’ve ever been to a Disney theme park since Covid-19, your experience has probably been hellacious for your pocketbook, where everything costs exorbitant prices and you’re being charged for even the smallest little thing now. Termed “yield management” by industry insiders, the process focuses less on making money by sheer volume of customers and more on milking deep-pocketed, enthusiastic customers who they know are reliably willing to pay the price again and again.

Upset and frustrated by this new business model? Me too. It sucks, and it feels like one more step toward the dystopian world of “The Matrix” or “Daybreakers” where humans are connected to machines that use their very lifeforce to feed an evil empire.

As a GenXer, I still remember a time when you bought a quality product that lasted and you enjoyed it for life, or when paying for an expensive service came with complimentary perks. These days are long gone.

The Hawaii Senate appears to be pushing back against this business approach, however. Sen. Chris Lee has introduced for the new session Senate Bill 382, Relating to Motor Vehicles, which has a short and simple message for auto companies:

“No manufacturer shall charge to any customer in the State a subscription fee for the use of any service that employs equipment already installed in the applicable motor vehicle at the time of sale as a new motor vehicle.”

Senator Chris Lee gestures while speaking at Civil Cafe 2022.
Sen. Chris Lee introduced a bill banning subscription fees for equipment already installed in cars. Cory Lum/Civil Beat/2022

My first reaction when I read that bill was to say to myself, “Hell, yeah, that’s what I’m talking about!” I like the senator a lot, and he typically introduces admirable power-to-the-people legislation. (As a point-in-case, another bill introduced by him, Senate Bill 369, is inspired by mainland legislation which prohibits prisons from predatorily charging inmates who make phone calls to family.)

But then I realized when it comes to international corporations and mass-manufactured products, the legal response has to be at the national or international level. Example: the European Parliament brought even the mighty Apple company to its knees when it passed a law last year requiring the computer and cell phone giant to sell all phones with USB-C charging systems.

Apple, rather than making two different iPhones for Europe (with USB-C) and the rest of the world (with Lightning interface), will now begrudgingly transition all phones sold everywhere to USB-C by 2024. This worked because the level of legislation that smacked Apple was high enough to throw a wrench in their business model.

With SB 382, if we were somehow able to pass this bill into law, my guess is that BMW and other companies wouldn’t make special “unlocked” models for Hawaii because a law here prohibited microtransactions. Instead, they’d simply stop shipping BMWs to Hawaii altogether, because eating the dip in profits from no sales in Hawaii would be acceptable compared to them changing their business model.

Now, yes, I’m an idealist, so I get it that a spark in a small place can ignite other states to do the same. But this, as well-intentioned as it is, merely is another example of over-legislating in the Big Square Building in downtown Honolulu. As we used to say as committee clerks, “Do this one as a resolution, instead.”

If we want to stop BMW and other car companies from microtransactions, short of Congress banning them, the only thing we can do is buy other competitor’s cars instead. Yes, that’s not what we wanted to hear, but customer behavior is the only real thing that can change corporate bad behavior – or get you a better product.

And that’s the bigger, more important lesson I think Hawaii residents need to learn: Private citizens, making market choices with their wallets, can be more powerful in the long term on every issue and every injustice than government. We just talked about Martin Luther King Jr. last week, and he used boycotts strategically to great effect to produce change as a private citizen.

When it comes to things you don’t like, just vote with your wallet and with your feet. If you can’t make them see the light, as the late Ronald Reagan said, make them feel the fire.


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About the Author

Danny de Gracia

Danny de Gracia is a resident of Waipahu, a political scientist and an ordained minister. Opinions are the author's own and do not necessarily reflect Civil Beat's views. You can reach him by email at dgracia@civilbeat.org or follow him on Twitter at @ddg2cb.


Latest Comments (0)

The main reason I keep my old Toyota Corolla around is to AVOID all computerization... Remember when 3G died and those people had cars that relied on 3G? They either had to live without that tech or upgrade to expensive new components or a new car if they wanted that feature.And now cars with subscriptions... for stuff already in them? Next thing you know you are going to have to pay a fee to roll up and roll down car windows... much less start the car... oh I heard there is already a FOB fee for that. New 21st century vehicles suck.Moving on to cell phones and other electronic devices... Good for Europe to regulate Apple to adopting USB C. I agree... government regulation works for a large region and not a small, local island state in so far as mass produced consumer products go.The internet of things forces obsolescence, through such tactics as making things impossible to repair and sealing batteries inside the product. Give me the days when smartphone batteries could easily be replaced. When I buy an expensive product I expect it to last at least 10 years. That's how it used to be and should be. None of this subscription crap, operating systems and built in obsolescence.

macprohawaii · 2 weeks ago

The number of lost sales from Hawai`i consumers and their disgruntled comrades globally "sending a message" will definitely not be enough for BMW to change their ways. Hell, if it wasn't for The National Highway Traffic Safety Administration (NHTSA) Corvairs would still be sold today. The legislation is fine. If BMW won't sell here other companies that do not use microtransactions will likely gladly fill the void. If they just jack the price up then rich folks won't care and cost conscious folks will buy a different car.Do this one as a bill.

Frank_DeGiacomo · 2 weeks ago

Generally, I agree that too often we look to pass laws to address every problem that we have without fully understanding the knock on effects they will have.

justsaying · 2 weeks ago

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