IoT & AI

Big data is the money maker of the Internet of Things

Data generated through Internet of Things (IoT) technologies are expected to be its main source of income, but needs forward looking privacy rules to be fully exploited.

Where is the value of the IoT?

I have just run a presentation for the heads of all the business units of a global supplier of IoT technologies and the most frequent question was

How do we make money through IoT technologies?

Their point of view was that the main source of income in the Internet of Things might derive from value added services that can be generated through such devices. But they also added that customers might not be willing to pay for such technologies! If I have a free App to locate my car, I will not pay even a single penny to my insurance company to track the location of my vehicle through their black box device.

This certainly is an interesting position, but I always remember the popular sentence

There is no such thing as a free lunch

And this sentence is certainly true in the Internet of Things. Data is commonly considered the “currency” of the future and data generated by IoT technologies, including big data, certainly is among the most valuable categories of data as they might be used to, among others,

  • optimize processes and save considerable costs,
  • predict potential malfunctionings and
  • tailor your product offering to your customers’ needs in order to maximize sales.

Customers might not pay any amount in cash for the offered services, but they are providing a very large amount of data for free.

Are privacy rules ready for a change in business models?

The trading of data has to be assessed in two different contexts:

  • in case of processing of data of identifiable individuals, this is personal data and therefore needs to comply with privacy regulations and
  • in case of processing of anonymous data (as more frequently big data is), this cannot in any case be freely used/exploited as it triggers the following issues
    • What is anonymous data under privacy rules?
    • Data that in a specific period cannot be linked to an individual, can subsequently become linkable as a consequence of the technological evolution?
    • Can anonymous data be protected

If shared data is personal data, it belongs to the individuals to which it relates. Individuals can grant their consent to the transfer of their personal data to third parties, but cannot waive their privacy rights to any possible use of their personal data. However, the issue is whether such “waiving practice” shall become easier to perform, given the potential revenues and services generated by means of IoT technologies and whether privacy regulators shall push for that simplification.

And such simplified waiving can be obtained by means of ways of granting a simplified privacy information notice and consent as for instance it was mentioned in the contribution submitted by the association IoTItaly as part of the consultation of the Italian data protection authority on the IoT. Privacy rights can be preserved collecting a consent to the processing of personal data by means of a banner/notice/message containing a simplified privacy information notice linking to an extended privacy information notice incorporating third parties’ privacy information notices as prescribed by the Italian privacy authority in relation to cookies.

Unfortunately though this is not the direction towards both the GDPR and the draft ePrivacy Regulation are heading. Indeed, the European data protection authorities issued very strict guidelines on requirements applicable to privacy information notices. And a stringent approach is being taken also through the ePrivacy Regulation which in its last version extends its scope to M2M communications and relies on consent as legal basis of processing, excluding the possibility to exploit legitimate interest.

And if you are not interested to supply data?

And if a company is not interested in supplying data it cannot in any case ignore the IoT.  Steven Odell, an EVP at Ford Motor Company, said

Cars are the smartphones of the future

commenting on a survey in which 79% of industry experts argued that IoT connectivity will soon be the primary decision in car purchases and 80% of cars will be connected by 2020. Cars with no connectivity and value added services will have no market in 5/10 years and therefore any company investing in the sector shall keep up with the development of Internet of Things technologies.

The IoT is defined as the 4th Industrial Revolution and the above seems to confirm that.

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Giulio Coraggio

I am the head of the Italian Technology sector and the global head of the IoT and Gaming and Gambling groups at the world leading law firm DLA Piper. Top global IoT influencer and FinTech lover, finding solutions to what's next for our clients' success.

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