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 IoT 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 and whether data that in a specific period cannot be linked to an individual can subsequently become linkable as a consequence of the technological evolution and
    • whether anonymous data is protected
      • under contractual confidentiality obligations
      • by intellectual property rights such as database sui generis rights and
      • as trade secrets.

If shared data is personal data, it belongs to the individuals to which it relates. Individuals can waive their privacy rights granting their consent to the free transfer of their personal data to third parties. But the issue is whether such “waiving practice” shall become easier to perform given the potential revenues and services generated by mean 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. Privacy rights can be preserved collecting an implicit 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.

If the shared data is NOT personal data, the matter is not totally easier. And indeed, contractual and statutory rights as intellectual property rights might prevent the free transfer of data. However, the matter can be contractually regulated in a B2B transaction without dealing with thousands of individuals as it occurs in case of processing of personal data.

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.