Everything’s computer: The black box of consumer data privacy in connected cars

The automobile industry has come a long way from engines that required hand cranking to start and drivers using their arms to signal turns. Connected cars map you where you need to go, track location constantly, and can update with over-the-air fixes that avoid time-consuming visits to the dealership.

The cars coming into the market today are filled with sensors, screens, and cameras collecting and generating data around the clock. They operate with the push of a button or voice command – recording every interaction with the driver.

The sleek digital features of a Model S Tesla prompted U.S. President Donald Trump’s to exclaim, “Everything’s computer!” which quickly became a meme.

Counterpoint Technology Market Research estimates that by 2030, over 90% of consumer cars will have 5G connectivity built in.

But what’s the impact of all this data collection and connectivity on consumers and automakers, especially when it comes to data privacy?

🎼 I always feel like somebody’s watching me and I have no privacy 🎼 Connected cars and consumer data collection

For consumers, there are many upsides to vehicles collecting and acting on data. They might be able to suggest preventative maintenance based on an individual’s driving habits or suggest the best charging station on the way to the driver’s destination.

But where does that data go afterward? Data collection has been a black box in the auto industry and not everyone is pleased that their vehicles track them and store their personal data.

Consumers deserve to know who gets access to this data, how it’s protected from bad actors, and how it’s used. But auto companies have been murky at best about this.

In fact, Mozilla performed a privacy audit of the auto industry and determined it was the worst they’d ever reviewed. Of the 25 brands studied, 84% said they can share consumer data with partners like data brokers and 76% said they were allowed to sell it.

But will consumers actually opt out of data collection and sharing if given the opportunity? Not if it will render their maps and remote unlock useless. Currently, auto companies are in control when it comes to data collection because it’s embedded into the features that attract consumers in the first place.

Some auto companies include this information deep within their privacy policies, but others like Tesla warn that opting out of vehicle data “may result in your vehicle suffering from reduced functionality, serious damage, or inoperability.”

Protecting consumer data privacy in connected cars

Ultimately, consumers don’t have much of a choice—an issue the US Federal Trade Commission is watching closely.

The FTC notes, “Over the years, privacy advocates have raised concerns about the vast amount of data that could be collected from cars, such as biometric, telematic, geolocation, video, and other personal information.”

“Car manufacturers—and all businesses—should take note that the FTC will take action to protect consumers against the illegal collection, use, and disclosure of their personal data,” agency staff wrote in a blog last year.

There are many long tail impacts of connected cars. Beyond data privacy considerations while using the car, what about when selling or donating the vehicle in the future? The FTC suggests treating it like selling any other tech device: wipe it first to make sure personal data (think home address, phone contacts, or garage access codes) doesn’t land in the wrong hands.

According to the FTC, companies don’t “have the free license to monetize people’s information beyond purposes needed to provide their requested product or service, and firms shouldn’t let business model incentives outweigh the need for meaningful privacy safeguards.”

The reality is that data privacy often enters into a gray area for automotive companies. Consumer data collection is quite attractive as a way for them to generate new revenue streams by offering subscription services based on vehicle data.

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Data collection practices under fire

Auto companies are increasingly being held accountable for how they use consumer driving data. Many markets across the US and Europe have data privacy provisions that auto companies have to abide by, but these rules vary widely.

Some auto companies are being held accountable, with lawsuits popping up alleging they sold driver data to third parties, which used the it manipulate insurance rates. insurance. The issue came to light after many drivers saw their insurance rates jump, despite nothing in their driving record changing or specific price hikes by their insurers.

In January, the FTC took action against an automaker, alleging that it collected and sold behavior data (like exact vehicle location) from millions of drivers across the US without permission. In the proposed settlement, the company can’t release customer data for five years and must improve transparency in communications with customers about data collection and use. This was the first connected car ruling from the FTC and is unlikely to be the last.

Consumers want to know how their data is used and protected. Auto companies must be transparent about how they use data and allow consumers to opt out without rendering their vehicles useless.

Companies that overlook best practices and data privacy laws will erode consumer trust and possibly even dampen future sales of connected cars.

The future of connected cars

Statista estimates that the number of connected cars on the roads will skyrocket to more than 400 million this year, up from 237 million in 2021.

Auto companies have a distinct opportunity to benefit from data collection that comes with these vehicles, but they also have a learning curve, as aren’t experienced as data brokers.

To maintain consumer trust while meeting the monetization potential, auto companies should:

• Get customer consent to collect and use data
• Store all driver and vehicle data safely and in a centralized database
• Explain clearly what will happen if a driver opts out
• Allow drivers to opt out while still being able to use the vehicle as intended
• Share and sell data only to partners that have a high standard of data privacy

Auto companies that make consumer consent and communication a priority will have the most success at monetizing connected car data. Having customer data in one place makes it easier and cheaper to create new data-driven business models and features that drivers will like.

As connectivity becomes the norm going forward, investing in strong data practices now will help auto companies secure their place in the future of mobility.