All brands should heed VW’s ‘data monster’ warning

‘The internet of things’ received a fresh boost from David Cameron this week. Arriving at the CeBIT technology trade fair in Germany, the prime minister announced plans to more than double the research funding for projects that look at how the internet can improve everyday devices. “We are on the brink of a new industrial revolution,” said Cameron as he pledged an extra £45m.

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This was an important speech by Cameron, signifying that the concept of a fully digitised world has now passed from the realm of science fiction into the mainstream political discourse. Connected appliances are already emerging into the mass market and at the start of the year Google signalled its intent to lead the way by acquiring smart thermostat maker Nest Labs for $3.2bn (£2bn). The possibilities for further technology breakthroughs are apparently endless.

“These are developments that could allow literally billions of everyday objects to talk to each other over the internet using low-cost, low-power chips,” said Cameron. “Electricity meters that talk to the grid to get you the best deals. Health monitors that keep an eye on your heart rate. Water pipes that warn of a fall in pressure.”

In this flurry of excitement and rush to innovate, business leaders must act as a calming influence. The internet of things holds the promise of more convenient and efficient ways of living, but it also carries the threat of a Big Brother society in which all aspects of people’s lives are quantified and analysed by businesses and governments. This explosion of personal data is of particular concern to consumers in the wake of the Edward Snowden revelations last year in which the CIA whistleblower revealed systemic online spying by security agencies.

Martin Winterkorn, chief executive of car maker Volkswagen, has thankfully shown that big business is aware of these dangers and of the need to tread carefully when developing connected products. In his own speech to CeBIT on Sunday, Winterkorn argued that as more and more connected technology is incorporated into new car models, “the car must not become a data monster” that abuses consumers’ data and privacy.

“I clearly say yes to big data, yes to greater security and convenience, but no to paternalism and Big Brother,” he said. “At this point, the entire industry is called upon. We need a voluntary commitment by the automobile industry. The Volkswagen Group is ready to play its part.”

The global ‘connected car’ market is set to nearly quadruple between 2015 and 2020 to $113bn, according to research by Booz & Co. The consultancy notes that car makers are currently developing a variety of new technologies that will make cars far more digitally connected than they are now, including safety and driver assistance systems and connectivity with mobile devices. 

These advances could reshape the car market, just as the ‘internet of things’ could shake up all industries, but brands will only reap the benefits if they keep consumers front of mind and retain their trust. Cameron is right to be excited, but Winterkorn is right to be cautious, too.