Op-Ed: Don’t Let Privacy Concerns Stifle Innovation

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The Internet of Things could stoke the economy and improve lives, but not if it’s choked by new regulations.

The Internet is a powerful network connecting people to news, facts and other information. Increasingly, however, the prominence of “smart” Internet-connected devices is moving us closer to an “Internet of Things” -- a network of people, places and devices.

The Internet of Things has jaw-dropping implications for our everyday lives. Objects we use all the time will connect with each other and with us, automating tasks and information exchanges. This technology will touch every aspect of our lives, from daily chores like watering plants, grocery shopping and commuting, to monitoring our health and home security. We will be safer. We will have many of our needs anticipated and met. We will also have more control over our time as traffic lights respond more effectively to traffic dynamics and cars become self-driving.

We already see this phenomenon in many areas of our lives. The 2013 International Consumer Electronic Show demonstrated just how widespread the Internet of Things will be. By connecting everyday objects -- everything from refrigerators and washing machines to thermostats and cars -- and tailoring their operations to our individual needs and preferences, developers are making them more useful. Smartphone apps track sleep cycles to help us get optimum rest, gadgets like Fitbit track workout routines and fitness goals, cars have driver-assist technology and there’s even a “learning thermostat” (Nest) that figures out your schedule and sets the temperature accordingly. Connected devices are even making inroads in health technology, with innovations like the Pill Jogger that reminds patients when to take their medication.

As the Internet of Things evolves, it will have a profound impact on the way we live. Imagine commuting in your self-driving car while you to catch up on email or other tasks; picture receiving a heads up from your refrigerator when the milk is running low. More critically, think how valuable a real-time connection to health care providers could be, with devices conducting internal body scans to find sources of illness and even contacting emergency services in life-threatening situations.

The Internet of Things has enormous implications for the economy as well. Already the technology sector drives job creation, and as more of our daily objects become connected, we will see more demand for high-tech jobs. According to GSMA, the international trade organization representing mobile operators worldwide, we could see an impact of $4.5 trillion globally by 2020 in connected technology. Cisco estimates the Internet of Things could generate $14.4 trillion by 2022.

Privacy and Innovation

Despite its promise, many worry the Internet of Things will hurt our privacy. By necessity, the backbone of the network is data about you, the user. Your data gives manufacturers and providers the information they need to figure out what services will benefit you most, based on where you live and spend your time, how you spend your money and so on. Concerns about privacy and security should be taken seriously. But we have to be careful that such concerns don’t chill disruptive innovation.

Technology developers must build trust with users by disclosing what information their software, apps and devices share. They also must allow easy opt-out unless safety or health is involved. But much of this is unexplored territory. Only as we gain more experience -- through innovation and experimentation, as well as public dialogue such as the Federal Trade Commission’s upcoming workshop on privacy in November -- will we know what standards are needed to protect consumers. We must be careful that over-broad rules designed to protect privacy do not also hamper innovation. Any forthcoming rules must be based on hard data and known facts.

Much data about us is already available on the Internet. We trust companies to protect the information we entrust to them, and as consumers we have the responsibility to be aware of the data we share. This system leaves room for innovation. And if consumers don’t trust a company, they won’t buy its products. Self-regulatory regimes have been proven to work in this area, allowing industries to determine and implement best practices to protect customers’ information.

Regulators must be cautious as the Internet of Things becomes a reality. Fear of the unknown is not a guiding principle for putting mandates on innovative approaches to solving problems and creating new services. Instead, we must define our desired objectives and cooperate to match new rules to hard data, as problems arise.

Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA)®, the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times best-selling books “Ninja Innovation: The Ten Killer Strategies of the World's Most Successful Businesses” (William Morrow, 2013) and “The Comeback: How Innovation Will Restore the American Dream” (Beaufort Books, 2011). Connect with him on Twitter: @GaryShapiro.