The IoT market is developing faster than ever before, with more products released daily into an already crowded market.
As we covered in a previous blog post, concerns about privacy and security are already one of the biggest blockers to mass-market adoption. Whilst there is always a ‘bad news story’ floating around on social media, this week saw a notable development. The step from suspicious consumer to regulatory intervention has now beem made by the European Commission’s Rapid Alert System for dangerous products.
The Rapid Alert System this week issued its first product recall based on privacy/data-protection concerns.
This could have a huge impact on the industry.
What Was the Product Recall?
What compounds this issue even further is that the product recall was for a product specifically targeted at children.
As per the Commission’s Report for 1st February, the ENOX children’s watch had GPS tracking functionality, a built-in microphone and the ability to make phone calls to key contacts in an emergency. The identified risk was as follows:
The mobile application accompanying the watch has unencrypted communications with its backend server and the server enables unauthenticated access to data. As a consequence, the data such as location history, phone numbers, serial number can easily be retrieved and changed. A malicious user can send commands to any watch-making it call another number of his choosing, can communicate with the child wearing the device or locate the child through GPS.
Further investigation found that the app, which also used these unencrypted communications, used trackers for the following services, too:
- Google Ads
- Google Analytics
- Google DoubleClick
- Umeng Analytics
- Baidu Location
What Impact does this make on the Industry?
If nothing else, this is a wake up call to all those in the Smart Home and IoT industries; if you want to release your product into the European market, you have to take privacy and encryption seriously. This product has been recalled not just from retailers, but the risk to the market has been deemed so serious, it’s also been recalled from all end users.
It also means that any company, from startup to corporation, if it fails to take these concerns seriously, is subject to press that’s bad enough to make a not insignificant dent in revenue, market share, or growth potential going forwards. That’s if they have the resources to weather the storm to begin with.
Privacy by Design
Going forwards, if manufacturers want their products to not just survive, but flourish in the market, then privacy, encryption, and security must form a key part of the engineering process. From design to manufacture to market, every component must comply. It’s as simple as that!
But then there’s the elephant in the room: how can regulatory alignment be achieved if there is no standard within the industry?
What is considered compliant for the manufacturer of the processor may not be compliant for the software engineer. It is more important than ever that the industry begins putting competitive considerations aside, before the momentum that has been built over 25 years of innovation and engineering is lost.
And if not?
The Verge have reported this week that Lowe’s Smart Home offering is closing down. Their entire product line, which is dependent on a centralised infrastructure, is soon to be defunct.
Not only this, but they’re having to run a ‘redemption scheme’, where they’ll be offering customers in-store credit for returning their products. No word yet on whether those refunds will be full, or any conditions on that refund, but it’s a bit of a blow to customers that have invested in products that are soon to just… stop working.
In the words of Verge reporter Nick Statt:
The smart home still remains a messy web of competing ecosystems and wireless protocols. And while companies like Amazon, Google, Samsung, and others are making this easier by building out interoperable platforms that sit on top of all these devices, like Alexa and SmartThings. It still remains a stubbornly fragmented market for most standard consumers. At least with Iris gone, it’s one less compatibility issue users will have to deal with.
Developing technologies and a growing appetite for these technologies should see the market flourishing, but here we are seeing established brands closing up shop.
And the message that consumers are sending the industry is clear: it doesn’t matter what it can do, if it risks my privacy to do it, I won’t buy it.
It’s time we took notice.
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