12 Technology Quarterly |The Internet of Things The EconomistSeptember 14th 2019
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more technology quarterliesPrevious TQs, and a list of forthcoming ones,
can be found at: Economist.com/technology-quarterly2 semble computer firms. In expensive,
high-tech industries, where the econom-
ics of the iothave made sense for decades,
the results of this are already visible. Rolls-
Royce, a big British maker of jet engines,
launched its “Power by the Hour” service in
1962, offering to maintain and repair its en-
gines for a fixed cost per hour. Its digital
transformation began in earnest in 2002,
built around the ability to do continuous,
real-time monitoring of its products. Real-
time data mean that the firm’s engineers
can watch engines wear out as they fly.
When something needs fixing, they can ar-
range for repair teams to be waiting on the
ground. The firm’s data offer flying tips to
pilots that can result in fuel savings worth
hundreds of thousands of dollars.
A changing business has meant a changing culture. The firm
now hires computer programmers as well as aeronautical engi-
neers. It has an internal software division, called r^2 Data Labs,
which is run like a startup, to look for new ways to turn the flood of
data into new businesses. It even plans to remodel parts of its in-
dustrial-looking campus, replacing the low brick buildings with
the manicured-lawn-and-mirror-glass architecture popular in Sil-
icon Valley. After all, says Andrew Hutson-Smith, the head of r^2 ,
“We’re competing with Facebook and Google for staff.”
Rolls-Royce is not alone. General Electric, its chief rival in the
jet-engine business, offers similar services. As costs falls, the mod-
el will spread. At an iotconference in London earlier this year,
companies from tvh, a Belgian firm that makes forklifts and in-
dustrial vehicles, to abb, a Swedish heavy engineering firm, were
lining up to describe the benefits of what Alexandra Rehak, an iot
expert at Ovum, a firm of analysts, describes as “servicisation”.Secure beneath the watchful eyes
If ubiquitous computing will turn companies of things into com-
panies of services, the iotwill transform consumers of things into
computer users, with all that implies. Like social networks or
email, smart gadgets offer convenience and comfort, at the price of
turning everything done with them into fuel for an ever more per-
vasive data economy.
Smart televisions already watch the users watching them, send-
ing back data on programme choices and viewing habits; some
even monitor background conversation. These data, sold on to ad-
vertisers and programme-makers and crunched by machine-learn-
ing systems, subsidises the price of the televisions themselves
(which explains why non-connected, “dumb” televisions have be-
come very difficult to buy). Consent is murky. In 2017 Vizio, an
American tv-maker, was fined $2.2m by the Federal Trade Com-
mission after regulators found it was not properly seeking users’
permission to harvest and resell information on viewing habits.
Nor is it just televisions. Smart scales monitor weight and fat
percentage, a gold mine for the fitness industry. IRobot, maker of
the Roomba line of robot vacuum cleaners, caused a furore in 2017
when it revealed plans to share the maps its products build up of
users’ homes with Google, Amazon or Apple (it has since said it
would not share such data without its users’ explicit consent). Gad-
gets from high-tech locks to new cars come with privacy policies
running to thousands of words (see chart).
Refuseniks might choose not to put such gadgets in their home.
But outside, in public places, they will be surveilled anyway. The
advertising industry is already experimenting with “smart” bill-
boards, which can use cameras and facial-recognition software to
assess people’s reactions to their contents. Hundreds of American
police departments can request access to video recorded by Ring,
an Amazon subsidiary that makes camera-equipped doorbells. In-ternal company emails also show Ring
providing suggested talking points for po-
lice officers to help them persuade home-
owners to buy its products, and to allow
their recordings to be shared. The Ameri-
can Civil Liberties Union, a campaigning
organisation, complains that the result is a
half-private, half-public, murkily regulat-
ed video-surveillance network.
Consumers may discover other down-
sides. Computerisation allows data to flow
from users to companies, but it also allows
power and control to flow in the other di-
rection. Most smart-home services require
a durable connection to remote servers
that can fail without warning. Apple is
famously unwilling to allow its customers
to have broken iPhones repaired anywhere
except in its own shops, going so far as to use software updates to
disable replacement touchscreens installed by cheaper third-party
fixers. John Deere, an American tractor-maker, has spent four years
facing down a rebellion from farmers angry at being subject to sim-
ilar restrictions. Its products have become so computerised that
the firm has argued that farmers no longer own their tractors, but
merely purchase a licence to operate them.We’re all surveillance capitalists now
If the iotcontinues along these lines, it has the potential to reshape
the entire world in Silicon Valley’s image. One reading of the his-
tory of the internet is that, for all the hand-wringing about privacy
and control, they are dogs that have never truly barked. The rise of
surveillance capitalism proves that, in the end, consumers are will-
ing to trade their data for the products and conveniences that it of-
fers. A survey in 2016 by the Interactive Advertising Bureau, a trade
body, reported that 65% of iotusers seemed happy to see advertis-
ing on their devices, presumably in return for lower prices.
Another reading, though, is that the business models of the in-
ternet established themselves early, at a time when neither regula-
tors nor consumers properly understood the technologies underly-
ing them, and when not even the most avid techies could have
predicted all their implications.
These days, things are different. Blamed for everything from ad-
dicted children to nurturing terrorism, Big Tech has lost its Utopian
shine. That disillusionment has fed back into gloomy predictions
about the iot. In many ways, that is valuable, for if problems can be
foreseen they can be more easily prevented. But if the techno-opti-
mism that infused the 1990s and 2000s now looks naive, the
techno-pessimism that is fashionable today can be similarly over-
done. Like the original internet, the iotpromises huge benefits.
Unlike the original internet, the iotwill mature in an age that has
become sceptical about where a connected, computerised future
might lead. If it has to earn the trust of its users, it will be the better
for it in the long run. 7Small print
Number of words in privacy policies,September 2019Sources: Companywebsites;The EconomistSmart TVs
SamsungConnected cars
Ford
Smart locks
AugustSmart-home kits
Nest (Google)Smart lightbulbs
Signify/PhilipsWireless speakers
Sonos 7,3682,8525,2423,4023,9831,141