Google just bought Nest for $3.2 billion. What happens to Nest’s user data?

January 13

(Brian Fung / brendan-c)

Thermostats generally aren't that exciting. But this one is — so much so that Google is willing to pay $3.2 billion to own the company that makes them.

The firm in question is Nest, which produces learning thermostats that adjust their programming to your daily routine, as well as smoke alarms that communicate with the company's other devices. In a company memo, Google informed employees about the acquisition and later said in a press release that Nest would continue to be run independently under CEO Tony Fadell.

"We're looking forward to continuing our great partnership and remain devoted to you above all else," wrote Nest founder Matt Rogers in a blog post to consumers Monday. "We know you entrust your homes and information to us and are committed to protecting that the same way we've always done."

Last year, Google Ventures, the search giant's investment arm, plowed $80 million into the start-up. Two weeks ago, Nest raised another $150 million in funding, indicating the company may be valued as high as $2 billion.

That was before Google finally snapped up the company for a price that was 60 percent higher than even that.

"Google wasn't kidding when it was saying it wanted to organize all the world's information, I guess," joked Jay Stanley, a senior policy analyst at the American Civil Liberties Union.

While Nest insists its customer data will be used only for improving its services, it didn't rule out sharing that data with Google — prompting some critiques from civil libertarians:

The concern is more than simply academic. By monitoring customers' thermostat use, Google would be able to determine when a user is at home and when they're out. It would know the limits of your comfort zone, and perhaps even combine it with information gathered from your cell phone to make even deeper determinations.

With its expansion into smoke detectors, Nest has proven its interest in becoming a major vendor of connected home appliances. Conceivably, any new product it might come up with (light switches, security alarms and so on) would also be made under Google's banner. Asked about the information sharing, a Google spokesperson pointed to Nest's privacy policy, which (again) commits Nest to using data only for its own products and services. But any promises Google or Nest makes could be easily reversed by editing the privacy policy, said David Jacobs, a consumer protection lawyer at the Electronic Privacy Information Center.

"Google has made several changes to its privacy policies and its business practices," said Jacobs. "Whenever it does, the message to consumers is, 'You accept the changes or you use something else.' There's nothing really stopping the companies from changing their mind down the road and deciding to use it for advertising or something else."

A Nest spokesperson declined to comment further.

Brian Fung covers technology for The Washington Post.
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