Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Chairwoman Ramirez and Commissioner Ohlhausen address FTC’s Internet of Things workshop, (Nov 19, 2013)

By Linda O’Brien, J.D., LL.M.

FTC Chairwoman Edith Ramirez and Commissioner Maureen Ohlhausen were panelists at the FTC’s workshop on the Internet of Things on November 19 in Washington, D.C.

Ramirez began her remarks in the session entitled “Privacy and Security in a Connected World,” by setting forth the focus of the workshop in examining the technological leap when most everyday physical objects are able to communicate with other objects, as well as individuals, through a sensor network and continuously transmit data in real time.

She cited examples of the Internet of Things that has already entered the daily lives of many consumers: (1) home security systems that show the homeowner who is at the front door on a tablet screen even when they are across the country; (2) wireless medical and fitness devices that share blood glucose readings with patients’ doctors; and (3) sensors on plants to send reminders to smartphones when they need watering.

Although it is still early when it comes to the Internet of Things, Ramirez believes that tremendous change is underway. By 2020, an estimated 90 percent of consumer cars will have some type of vehicle platform, up from 10 percent today. Ramirez also estimates that by 2015, there will be 25 billion things connected to the Internet.

The Internet of Things is poised to transform manufacturing, business, and agriculture. In the consumer market, the benefits to consumers will be great. But the benefits will come with undeniable privacy risks, Ramirez noted. She stated that there are three main challenges to consumer privacy associated with connected devices. The first is the collection of vast amounts of consumer data. The enormous data trove will contain a wealth of revealing bits of personal information and it will be left to companies that take part in the information gathering system to embrace their role as stewards of the consumer data they collect and use. That means adherence to three core best practices espoused by the FTC: privacy by design, simplified consumer choice, and transparency, Ramirez stated.

The Chairwoman observed that the collection of data gives rise to concerns about how all the personal information will be used. She questioned whether the data will be used solely to provide services to consumers or will allow the creation of profiles about consumers and inferences about their behavior. The collected data may be used in ways that are unexpected by consumers. The third challenge of the expansion of the Internet of Things is that it puts the security of the collected data at greater risk. Any device connected to the Internet is potentially vulnerable to hijack, and companies will need to build security into their products with no exceptions, she observed.

Ramirez concluded that the dawn of the Internet of Things brings promise of improved safety, health, and efficiency as items of our everyday life become connected. However, we must be alert to the challenge of protecting consumer privacy in a cyber environment.

Ohlhausen focused on technology policy in her speech in the session entitled “When Things Talk Among Themselves.” She began by noting that the Internet of Things has the potential to transform many fields, including home automation, medicine, and transportation. The new capabilities will clearly offer greater benefits to consumers in their daily lives but the ability to collect large amounts of information raises important consumer privacy and data security issues.

The FTC’s interest in the Internet of Things raises the question of what is the best approach for the agency to take with regard to technological and business innovation. She believes that the Commission can help ensure the promise of innovations, like the Internet of Things, by using its unique set of policy and enforcement tools. First, the FTC can use its policy R&D function to better understand the technology itself, the new business models it may enable, any existing regulatory structures, market dynamics, and competitive benefits and risks. Second, the FTC should use this information to educate consumers and businesses on how to avoid or minimize any risks that are identified. Third, the FTC should use its antitrust enforcement to investigate and challenge competitive harms occurring in the Internet sphere.

Ohlhausen next discussed three specific issues that are relevant to the development of the Internet of Things: data security, mobile privacy, and big data. The FTC, with its broad focus on consumer privacy, has an active data security program that will continue to grow with the Internet of Things. She also noted that it is crucial that companies offering technologies, such as Internet-connected home surveillance systems, take the necessary steps to safeguard the privacy of users.

Additionally, the use of mobile devices has grown astronomically and has brought great benefits to consumers and opportunities to businesses. Mobile devices play an important role in the Internet of Things as they collect, analyze, and share information about users and their environments. Ohlhausen noted that the FTC has been very active on the enforcement in the mobile space. Internet-connected devices that collect personal information about users have obvious implications and prudence suggests that such technologies should include a way to notify users and obtain their permission.

The Commissioner observed that the amount of data in the world will increase with the volume and detail of information collected by new technologies, including the Internet of Things. Although the ability to collect and analyze large data sets offers benefits in medical, scientific, and economic research, as well as for business innovation, the collection of large amounts of data about individual consumers raises privacy concerns.

Ohlhausen concluded that the Internet has evolved into one of the most dynamic forces in the global economy. The FTC’s practice of conducting policy R&D to gain a good understand the technology, educate consumers and businesses on how to maximize benefits and reduce risks, and use traditional enforcement tools to challenge any harms that arise offers the best approach. This type of informed action allows free markets and technological innovation to serve the greatest good while maintaining a government role in protecting consumers and ensuring competition.

News: ConsumerProtection Privacy FederalTradeCommissionNews