Internet of Things: FTC preparing to tighten up on regulation

By October 28, 2013
FT and IoT

The Federal Trade Commission is working towards a new approach to the Internet of Things that will meet the demands coming from all sides of the IoT space.

Following a sharp rise in the number of complaints from consumers, the United States Federal Trade Commission – whose basic mission is to promote consumer protection and eliminate anti-competitive business practices – has announced a date for its planned workshop on regulation governing the Internet of Things. It will focus on working towards clear-cut recommendations for enforcing privacy and security. This highly complex industry already accounts for over 2 billion connected objects worldwide, and is now increasingly the center of public concern over network security and personal data protection. These two areas of concern are inextricably linked, for example in such areas as ‘smart’ homes.

Broadening the categorization of ‘sensitive data’

Up to now the FTC has followed the lead of legislation in force governing online data. In its 2012 Privacy Report, it defines a number of categories of what is deemed to be ‘sensitive’ data. These comprise a pot-pourri of financial, medical and geolocation data, plus any and all information regarding minors. Developers are required to seek explicit prior consent before using these kinds of data and companies are called upon to beef up their data protection measures. However, the category-by-category approach used up to now leaves all other types of data in a sort of regulatory limbo – for instance, video content is not specifically covered by the current definition. Looking at the outcome of an FTC decision taken last month, law firm Hogan Lovells believes that the Commission is now trying to distance itself from its earlier position and seeking to extend the concept of sensitive data to a much wider range of services.

Joint demand from consumers and developers

Lack of clear, stable regulation constitutes a destabilizing factor for this emerging sector, which looks certain to become a mass market industry. Kaivan Karimi, Executive Director of Global Strategy and Business Development at semiconductor manufacturer Freescale, recently called on the FTC to clearly define the meaning of data protection before serious dysfunctions arise which damage the credentials of the industry. Meanwhile both the Electronic Privacy Information Center on the one hand and a large number of sector entrepreneurs on the other are calling for a stronger regulatory framework that will enable the industry to develop in a stable manner. In addition to personal data protection, some consumers are also becoming concerned about the knock-on effects of more widespread surveillance systems.For example some car hire firms now automatically charge extra when the customer exceeds the speed limit or makes use of certain in-car services.


Legal mentions © L’Atelier BNP Paribas