Customers’ protection comes before data sharing for carmakers

Having your house broken into is a harrowing experience. Researchers being able to hack into and control a Chrysler Jeep owing to a vulnerability in the in-car internet service Uconnect – should be considered a similar violation, according to Audi Chief Executive Officer Rupert Stadler (See Protecting user data could be the best car sales pitch). “The Internet, cookies and other data collectors are almost common courtesy but a car today is a second living room – and that’s private”. That Audi isn’t selling their data – to some obscure North Korean agency or a big corporation that wants to spam you with the latest windshield scrapers – is a comforting thought for consumers driving around in the Audi A3 or the upcoming A4.

Of course Audi is not alone in wanting to preserve the privacy of consumers’ second living room. Competitors like General Motors (GM) agree fully with Stadler, as Connected Vehicle PR manager Stuart Fowle explains: “Customer privacy is and always has been important to us. We do not share data without direct consent from customers, as spelled out in our privacy statement.”

And the threat of cybercrime is being taken very seriously. Even more so after the Chrysler report, Ford said in a statement: “Ford takes cyber security very seriously. We invest in security solutions that are built into the product from the outset.” Although the company has not experienced a security breach as such, it is interested to learn from Chrysler’s experiences. At GM the safety of their vehicles is also paramount. “We continue to take steps to protect our vehicles from vulnerabilities”, Fowle says without revealing details for competitive and security reasons. “Cybersecurity is a global issue facing virtually every industry today.”

In protecting the customer’s privacy, carmakers have recently been pushing back against pressure from technology companies like Apple and Google to share more data collected from their connected cars. Although GM is thoroughly integrating CarPlay and Android Auto apps in their 2016 Chrysler line, the company sets limits to this cooperation. Fowle: “The CarPlay and Android Auto apps have access to a very limited number of data points” – like location – “required for a safe and positive user experience.”

But safeguarding their customer’s privacy is not the only reason carmakers are wary of letting third parties access driver data. According to business advisory firm AlixPartners the market for connected cars will grow exponentially in the next few years. It estimates global revenue in this field will top 40Bn dollars in 2018, compared to 16Bn in 2013.  Others, like PricewaterhouseCoopers, project that this market will be even bigger: 113Bn dollars. This includes revenue from services ranging from driver assistance and mobility management to entertainment applications. Sharing driver data to insurance companies might prove lucrative for both car companies and for responsible consumers getting lower rates.

Apple and Google have already expertly cornered the market for applications on smartphone and other mobile devices. Mining user data, for such things as targeted advertising, has provided these companies with lucrative revenue streams. Carmakers want their piece of the pie and are keeping vehicle data – like the amount of passengers detected by weight sensors, fuel range of cars – to themselves. Or as Ford’s executive director of connected vehicle and services Don Butler, recently told Reuters: “We need to control access to that data. We need to protect our ability to create value.”

It is no wonder the triumvirate of Audi, BMW and Daimler have negoitiated to buy Nokia Mapping Service HERE. It currently ranks as one of the most advanced, if not the most advanced, map of the world’s major roads. The acquisition of the mapping service would decrease dependence on third party-applications for navigation services and create a new revenue stream for these carmakers, The Wall Street Journal reports.

HERE, which was also in the crosshairs of Uber and Chinese tech company Baidu, collects data from cars to create a real time map. Not only does this lower the dependence on third party map applications but it would also help Audi, BMW and Daimler help catch up on Uber and Google. Both of these Silicon Valley companies are working on driverless vehicles. Having technology like HERE at their disposal puts these three carmakers back in the race. More importantly Audi, BMW and Daimler can monetise HERE by selling real time data on “every pothole and new feature of the landscape”, although offering the service for free to all OEMS, to mapping services and even make Google’s Streetview cars obsolete.

Although car companies seem to be willing to keep driver data to themselves to create new revenue streams, what the consumer wants is a different story. “Automakers must recognise that while they may want to own the consumer eyeballs in the front seat, consumers may not want to bifurcate their app experiences”, Stacey Higginbotham writes in Fortune. “No one wants to open up a version of their music playing app that’s specific to their car, or learn new mapping software because they happen to be in an Acura as opposed to a Toyota.” She might be right. That is why carmakers are not totally shunning popular apps on smartphones. Ford’s Service Delivery Network (SDN) lets consumers services like Pandora, Accuweather and Spotify engage with the cars infotainment system SYNC 3.

There is a case to be made for car makers pushing back against sharing more consumer data with third parties, as illustrated above. Should auto companies invest resources in building new, and different, digital infrastructure in their cars instead of giving that task to companies like Google? As these tech companies are competitors on the dashboard – and might even become rivals in the future owing to the development of driverless cars – the answer of the car industry could be a resounding ‘no’.

However, as GM’s Fowle explains, car makers are not writing off further cooperation with tech companies: “Our attitude is to keep the customer at the centre of every decision we make, and that the best idea wins. We have the scale and the engineering knowledge to solve many problems to make our customers lives easier, but we are open to collaboration where it makes [LA2] sense for the customer”. Audi still also hopes to attract third-party programmers for its MMI connect technology, while creating its own brand-specific apps as Reuters reports. In this way the company owns the business model of its connected car. And that brings us back to the privacy concerns of its CEO Stadler. Even though companies like Audi, GM, Volkswagen and Ford want to monetise driver data in one way or another, the fact that customers can hold one party accountable for the privacy of their data might be better than entrusting an indiscriminate number of companies with your speed, whereabouts and the number of passengers you’re transporting.