Are you looking forward to the day when your sleeping baby’s diaper tells you it’s wet before the wee wakes Junior? Or are you haunted by the idea that an insurance company, retailer or hostile government could learn everything about you that your TV, appliances or even internal organs are able to divulge? Either way, that future is arriving, as cheap sensors connected to fast wireless networks and the internet invade our lives. Communicating without human intervention, these chatty devices make up what’s known as the internet of things. For consumers, it could mean homes that look after themselves and cars that take over the driving. For industries, the technology is creating automated “smart factories” and warehouses that can fulfill their own orders. But smart sensors also unleash a host of new problems, changing the very nature of privacy itself.

The Situation

Wireless carriers and tech companies such as Samsung, Apple and Google are stepping up efforts to connect all kinds of devices — from light switches and smoke detectors to gas meters, door locks and “smart speaker” voice assistants such as Amazon’s Echo, also known as Alexa. They offer convenience along with efficiency and cost savings; the use of electronic monitoring, for instance, can let patients leave the hospital sooner or enable seniors to continue living at home. The proliferation is driven by advances in miniaturization and artificial intelligence, and will be fueled by the arrival of speedy 5G mobile networks. At the same time, the risks of web-linked devices are becoming better understood: In 2018, U.S. authorities issued a security alert to let consumers know the gizmos could be exploited by malicious actors, and studies have shown that devices from security cameras to cars aren’t hard to hack. Privacy concerns are coming into focus: Reports emerged in 2019 that Amazon workers had listened to recordings of Alexa customers. Many appliances are harvesting data that could prove valuable — for better or worse — to product designers, advertisers, governments and law enforcement.

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The Background

In 1982, computer science students at Carnegie Mellon University put sensors in a beverage vending machine and connected it to an early version of the internet so they could tell if it was empty without having to walk there. It was the first known example of the internet of things, though the term wasn’t coined until 1999 by Kevin Ashton, the co-founder of a center at MIT that helped develop radio-frequency indentification chips used to track goods and materials. Despite hype dating back to the late 1990s, web-connected gadgets remained largely out of the reach of consumers until the rise of smartphones boosted demand for smart gizmos by putting a master control panel in everybody’s pocket. Sensors typically connect to a home or industrial Wi-Fi network or to other devices via Bluetooth wireless. Growing numbers of devices now connect directly to mobile networks and could one day talk to satellites. Among the early internet-of-things success stories was startup Nest Labs, which makes connected thermostats and security cameras and was acquired by Google in 2014 for $3.2 billion.

The Argument

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Connected devices are convenient, but they come with tradeoffs in security and privacy. Smart factories cut machine downtime by alerting supervisors to problems, though they can also monitor workers’ movements — even trips to the toilet. Health-tracking gadgets know a person’s blood pressure and heart status at any given moment — and might share that data in unexpected ways, such as with an insurance company. In one incident, criminals hacked into a digital thermometer in a casino’s aquarium and worked their way through the company’s network to gain access to its database of high rollers. Critics say that developers of connected devices aren’t doing enough to satisfy such security concerns. These worries might worsen as Chinese companies, such as Alibaba Group Holding Ltd. and Huawei Technologies Co., race to take advantage of China’s head start in 5G wireless to set global standards for the internet of things.

To contact the writer of this QuickTake: Olga Kharif in Portland at okharif@bloomberg.net

To contact the editor responsible for this QuickTake: Andy Reinhardt at areinhardt2@bloomberg.net, John O’Neil

First published Jan. 15, 2015

©2019 Bloomberg L.P.

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