PLAYING IT CLOSE TO THE VEST
Ford says it’s not interested in sharing customer data with advertisers. But what about the others?
If you are like me, you probably get mildly annoyed by online ads.
Click on or like a couple of cat videos and up pops a paid pitch by some pet food company on your Facebook feed.
We are all concerned about our privacy, but very few of us ever read the full agreements for online or mobile services. Like it or not, it’s tacitly understood that some of our information is funnelled to third parties for some form of monetary gain. It’s a way of our connected lives.
The Googles of the world know data are currency and they have figured out ways to make the benefits of information- sharing so compelling for us that we generally don’t think much about what we are giving up.
Car companies want to be Google and Facebook, but they don’t know how.
Modern cars carry a wealth of real-time and embedded information — about our cars and us. How we drive, where we go, which parts may fail and so on. The depth of data that can be gleaned from our vehicles only multiplies every year. But currently, nobody’s even scratching the surface. Automakers continue to be hesitant.
Lack of legislative clarity is one reason. Companies such as General Motors have landed in hot water in the past for allegedly sharing information with third parties. Nobody wants to appear to be “selling out” out its customers — especially customers who are not using a free product but have paid thousands of dollars for it. Ford and BMW are among carmakers that have stated explicitly that they are not interested in sharing their customer data with advertisers and service providers such as Google and Apple.
They are looking out for your interests, protecting your information — the general rationale goes. But that’s only part of the truth. Auto companies also know that they are sitting on a gold mine and they would like to keep as much of it to themselves as possible. Consulting firm AlixPartners estimates connected car services will generate $40 billion (U.S.) globally by 2018.
But the problem is automakers still haven’t figured out the framework for using and monetizing the data.
For instance, insurance companies are currently deploying third-party plug-in devices that can monitor and track driver behaviour, leading to potential rate discounts. Many of these companies actually would like automakers to get involved, to eliminate the use of brought-in devices.
Could they make money for sharing this data with insurance firms? What kind of contractual and legal obligations would they have with the car buyer? Would it be beneficial enough for at least some drivers to give up their driving information?
There are other opportunities. For example, General Motors recently patented a cloud-based storage system that can enable drivers to transfer their own settings to different vehicles.
Is this a service that GM could potentially offer to rental and carsharing companies, for instance, so that customers have a sense of continuity? Again, would this be attractive enough for drivers to part with private data?
I think, down the road, many of us will be compelled to view our cars differently. That may happen in the form of offered services from automakers, as well as a transactional shift at dealerships or through online stores where we get to sign consent forms on how we would like automakers to handle our digital information.
The question is: Will you hit “I accept?” Kumar Saha is a Toronto-based automotive analyst with the global research firm Frost & Sullivan.
Auto companies know they are sitting on a gold mine of customers’ information and would like to keep it to themselves, but automakers still haven’t figured out how to monetize the data