At the North American International Auto Show (formerly the artist known as the Detroit Motor Show) last week, one automaker made a very curious revelation. BMW's (NASDAQOTH:BAMXF) board member for sales and marketing, Ian Robertson, said that the company has been inundated with requests from advertisers and technology companies to get their hands on vehicle data that BMW collects.
He mentioned companies are asking for information from sensors, like the ones used for airbag systems to tell whether a child is sitting in a specific seat.
This points to a growing privacy problem not just with seat sensor data, but with all the information being sent to car companies through Internet-connected systems.
Automakers are tapping into the Internet more than ever before for infotainment, safety, and telematics purposes and use companies like Sierra Wireless (NASDAQ:SWIR) to make those connections possible. Sierra makes wireless embedded chips for BMW, Ford, Tesla Motors, Volvo, and Toyota for features like roadside assistance, stolen vehicle information, navigation, remote vehicle immobilization, vehicle diagnostics, and infotainment systems.
But in the wrong hands, all of this data could pose some serious problems.
Privacy in the fast lane
Robertson told the Financial Times (paywall) that advertisers could use vehicle data to target ads based on who's in the car and where it's going. That concerns privacy watchdogs and the U.S. government.
At the International Consumer Electronics Show this month, Federal Trade Commission Chairwoman, Edith Ramirez, presented a keynote on Internet of Things problems, and privacy topped the list.
Ramirez said, "Will the data be used solely to provide services to consumers? Or will the information flowing in from our smart cars, smart devices, and smart cities just swell the ocean of 'big data,' which could allow information to be used in ways that are inconsistent with consumers' expectations or relationship with a company?"
The FTC isn't overreacting. ABI Research published a report last week noting that automotive embedded telematics will exceed 50% penetration by 2020 -- quite a jump from just over 13% in 2014.
Meanwhile mobile tech companies Qualcomm and NVIDIA (NASDAQ:NVDA) are creating new versions of connected cars with more data processing than ever before.
NVDIA's new Tegra X1 chip is as powerful as supercomputers from 15 years ago and powers the company's Drive CX infotainment platform and its Drive PX autonomous driving technology. Drive PX taps into on-board sensors, 12 high-resolution cameras, and lots of data processing to give the vehicle deep learning and situational awareness so it can drive itself. Of course, that requires car companies using the tech to record a lot of data in the process.
Stemming the data tide
BMW didn't make it clear which tech companies are asking for the data, and I'm not implying any of these companies are begging for it. Rather, these companies are simply creating new automotive technologies -- to make vehicles safer -- but this could have unintended privacy consequences.
BMW said it won't hand over any data to advertisers or tech companies, and the automaker has firewalls in place to protect the information from prying eyes.
In the Financial Times article, Morgan Stanley analyst Adam Jonas noted that carmakers are vigilant about protecting customer data, because they don't want to receive the huge public relations black eye they'd get if their cars were hacked.
For now, BMW and others have managed to keep outside companies at bay. But as more cars come online -- and begin tracking even more data -- you can be sure this privacy debate will remain an issue.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Ford, Nvidia, Sierra Wireless, Starbucks, and Tesla Motors. The Motley Fool owns shares of Apple, Ford, Qualcomm, Sierra Wireless, Starbucks, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.