Jerri-Lynn Scofield examines the business models that could make socially networked cars profitable and how regulatory issues might impact development
While Internet connectivity can provide both a richer and safer driving experience, connected cars face the same risk as other connected devices—security.
Ellen Siegel, an information privacy professional who runs Practical Privacy Consulting, notes that security concerns fall into two categories.
The first arises from the information a user voluntarily makes available.
You get in your car and it automatically updates your status, or you tell your car to let your friends know you’re on the move.
If you’re tweeting from your car, for example, your tweets can be reposted to Facebook and LinkedIn and Plaxo as well as your favorite social gaming sites.
Anyone could read your posts and realize you’re not at home.
Pioneer’s new Aha product option even allows for a map to appear on your Facebook page, tracking your movements.
“Most people don’t understand how broadly they’re posting information,” Siegel says.
And it’s not just human access to location and other posting information that’s a concern, she notes.
Facebook applications have access to that information and “then who knows where it goes,” Siegel suggests.
“It’s often used for things like behavioral advertising. This new service is only going to exacerbate that problem.”
Users can, of course, hide data from some friends, lie about their location, or turn off the app completely.
But in most cases, users must proactively choose settings for each and every friend and then remember to change them or update them accordingly.
“The security issue with broadcasting your every location, current and historical, [is that] your locations and habits are online for all those folks beneficent and malicious to look at, query, study,” warns Rochelle Grober, a computer consultant, Silicon Valley veteran, and key player at Loopt Inc., one of the first location-based social networking companies.
A second category of security concern is the dlna technology employed by connected car systems, which is basically a way for devices to locate each other and pass information around.
But this technology was designed for home networking not mobile systems, “which means it may or may not have enough security embedded in it for operating out in the wild,” according to Siegel. (For more on connected car security, see ‘Telematics and security: Protecting the connected car’ and ‘How to profit from telematics driver data’.)
The revenue models being developed by social networking companies impose another potential barrier to the future of the connected car.
“Since no one wants to pay for the social network, the service provider must sell ads to pay for their service to you,” Grober notes.
“How will they do this for smart cars? Talking ads that are tied to either social network content, or ads interrupting your streaming media as you pass within a set distance to a nearby location of an advertiser’s shops.” (For more on location-based ads, see ‘Telematics and local search: The next big thing’.)
Grober believes this kind of commercial model might turn off consumers.
James Moody, a Washington DC-based public interest lawyer and expert on regulation and technological innovation, disagrees, pointing to the Google example.
“The Internet would be completely useless without a search engine,” he says.
“In order to use the search engine, we watch the advertising. Searching is valuable, and people will pay for that service by clicking on the advertising. The same dynamic will apply to Web-based services offered in cars.”
Google currently earns significant revenue with shelf space and slotting allowances. Moody believes these car services will make a lot of money from businesses that want to be ‘found.’
“It won’t be long before they start broadcasting advertisements at you based on where you are,” adds Siegel.
And this targeted advertising will not stop with tracking location, but also be based on broader behavioral patterns.
“If they have access to your whole Facebook account,” Siegel observes, “who knows what they’ll come up with. It won’t just be your location.” (For more on revenue models, see ‘Can telematics make ads profitable in cars?’, ‘In-car telematics services: There’s an app for that’, and ‘How to customize telematics to meet consumer preferences’.)
Revenue generation raises its own regulatory concerns, feeding into a hot debate unfolding at the federal level in the US.
The White House launched its draft National Strategy for Trusted Identities in Cyberspace in July of last year.
In December, the Federal Trade Commission (FTC) released its proposed privacy framework.
The Department of Commerce circulated a privacy green paper in the same month.
One aspect coming under scrutiny: behavioral advertising.
The industry is pushing for self-regulation as opposed to tougher mandatory restrictions.
“Unless strict attention is paid to privacy controls, by both the user and the company offering the service, lots of information would likely be available and it would be surprising if it were not used,” Siegel suggests.
The FTC—the major player in this area—is still formulating its policy.
Yet some call for much tighter regulation. In February, for example, Jackie Speier, a member of the House of Representatives from California, introduced the Do Not Track Me Online Act.
This measure would restrict the sort of information on on-line behavior that services could track, and follows from the example of the national ‘do not call’ registry, which permits people to opt out of receiving telemarketing calls.
So far, it’s not clear which route will be taken.
“It’s still a work in progress,” says Siegel, “and we could see much stronger regulation on behavioral targeting in particular and the privacy space in general.”
Siegel predicts, however, “the most likely outcome won’t be an absolute brick wall. Instead, people embedding these technologies in cars will probably have to do some more work protecting the privacy of the people using these technologies.” (For more on this topic, see ‘Telematics and the socially networked car, Part I’.)
Jerri-Lynn Scofield is a regular contributor to TU.
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