Google knows your birthday, your favorite places to shop online and your flight schedule. Are you ready for it to know your home security code too? With all of the excitement about home automation surrounding deals like Google’s $3.2 billion acquisition of Nest Labs in February 2014, one of the company’s related initiatives has stayed a bit under the radar. In addition to connecting with your washing machine and your sprinklers, Nest may also soon connect with cameras in your home or even your ADT-run home security system.
There are a lot of pluses to having Google, Apple or Amazon manage your whole life: It’s convenient; it may save money; and, frankly, a lot of these tools are simply cool. But in addition to the cost of these products, what are consumers really giving up in exchange? Living with the so-called Internet of Things has increasingly become about finding a balance between “how much convenience we want and how much we are going to trade off our personal information,” says Kim Caughey Forrest, a senior analyst and vice president at Pittsburgh-based investment firm Fort Pitt Capital Group, which has $1.4 billion under management.
Concerns about the potential implications of letting technology and the companies that produce it into every area of our lives are as old as the advent of technology itself. The most recent round of paranoia about Google in particular perked up in December after ADT Corp. CEO Naren Gursahaney told Forbes that he had been in talks with the team at Nest — led by former Apple vice president Anthony (Tony) Fadell — about connecting Nest with ADT’s Pulse system. Pulse, which operates through a platform run by Redwood City, California–based firm Icontrol Networks, already allows users to control their ADT security systems with a mobile application. The collaboration — which neither Nest nor ADT agreed to comment on for this story, though Boca Raton, Florida–based ADT noted that the company is “in regular conversations with many tech companies about potential partnerships” — could give Google access to home security expertise and brand recognition while allowing ADT to compete with the growing number of do-it-yourself security options attaching themselves to smart home systems.
But it would also bring one of the largest companies in the world — one that is already attracting scrutiny, thanks to concerns about privacy — one step closer to consumers’ lives.
The report about Google teaming up with ADT came about six months after the tech giant purchased Dropcam, a San Francisco–based company that allows people to view live feeds of their homes on wireless cameras through a cloud-based service that could soon be integrated with the Nest smart thermostat. That deal set off alarms for some industry observers. Todd Morris, CEO of New York–based security and surveillance company BrickHouse Security, which has been offering wireless home and business security for about a decade, believes Google’s quiet acquisition of Dropcam shows that it knows people are worried. Google snapped up the company last summer for $555 million in cash, framing the deal as an acquisition by Nest, with the parent company barely mentioned in press releases.
“When [Google] acquires a company, they have a history of changing the terms of service,” says Morris. “Nest acquired [home automation start-up] Revolv ... what happens to that data? With Nest and Dropcam, terms can evolve over time. Will they be targeting you with ads based on the fact that you’re home?”
Home automation had long been something most people could only fantasize about or watch in sci-fi movies, but products like the Nest thermostat, which costs only $250 and “learns” your schedule so it can adjust the temperature in your home accordingly, have had a democratizing effect. Google isn’t alone in this realm, of course. Amazon’s Echo costs as little as $99 for Prime members and responds to the user’s voice to provide information about weather, travel and music, and clever consumers have found ways to “hack” the device to control lights and other appliances in their homes. DIY home automators also use brands like X10 to rig their homes to be smarter.
Convenience and technological savvy are increasing, but when big corporations get into the mix, as they must to remain competitive, the amount of data available to them grows as well.
“There are so many aspects of how they could sell this data and use it,” says Fort Pitt’s Forrest. “It’s alarming.”
Branching out into home security may be a clear path for many large tech companies, but each of their motivations is likely different. Google has an interest in selling advertising and collecting data, whereas Amazon, Apple (which offers a security system known as iSmartAlarm) and Microsoft Corp. are more interested in selling specific products. These goals made jumping into home automation an easy decision for these companies, but the benefits — and potential privacy pitfalls — of expanding into home security are not quite so clear.
Providing security services requires a license, so some question whether the companies trying to get into the industry will be willing or able to clear the regulatory hurdles. “I’m not sure Google wants to get into the business of offering monitored security and dealing with contracts and the liabilities that go along with that,” BrickHouse Security’s Morris says.
The “Works with Nest” program is a sign of this phenomenon with regard to other industries. Google may know about automation, but it doesn’t know much about large appliances, so instead of creating a washer and dryer, it’s connecting Nest users with Whirlpool. That would explain partnerships with an established security player like ADT, which provides both the expertise and the brand recognition that consumers are looking for, and Dropcam, which has built a strong DIY following. But will it be enough?
Google prides itself on not being “evil,” and consumers are putting ever more trust in that promise and its and other large firms’ ability to keep their data — and now potentially their belongings and families — safe.
If you’d like to get in touch with the author of this story, you can reach her at kaitlin.ugolik@institutionalinvestor.com
