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A consumer's next car may reveal more about him than his Facebook profile

September 11, 2015
A consumer’s next car could reveal more about him than his Facebook profile, promising a lucrative cash flow for automakers and drawing scrutiny from European regulators concerned over who can control that data and make money from it.
As they increasingly become smart mobile devices, cars will be able to track where the owner goes as well as gather information about whom she calls or texts and what she Googles on the way. That’s valuable information for the likes of BMW, Volkswagen and Daimler.
"The industry talks about uncovering a gold mine," said Stephan Appt, a Munich-based partner at law firm Pinsent Masons LLP. But what data automakers can gather and use isn’t yet clear cut, he said.
Germany’s luxury brands underscored their interest in data by agreeing to jointly buy digital-map company HERE from Nokia Oyj for $3.2 billion. And they’re also moving to track their customers even when they’re not on the road.
Daimler’s Mercedes-Benz has created a service called "Mercedes me" to provide remote access to vehicle data such as how full the tank is. It also offers live-traffic information and apps to access news, find parking and get flight information.
On its privacy statement, the Stuttgart-based company says the data may be used for marketing. BMW and Volkswagen’s Audi have similar programs. 
Representatives for the world’s three biggest makers of luxury cars said the companies are committed to keeping data safe and secure and complying with relevant regulations.
Privacy by design
Still, consumer watchdogs are on alert, especially in Europe, which is sensitive to privacy concerns after a backlash over Google Inc.’s Street View service.
"We are emphasizing privacy by design" so that systems produce "no more data than necessary," said Manfred Ilgenfritz, responsible for car-data issues at the Bavarian data-protection authority for the private sector. The agency wants to require automakers to inform drivers about how their data will be used and actively seek their approval to collect it.
Regulators and the German auto industry’s lobby group VDA are in talks and plan to publish a joint position paper on privacy issues as soon as mid-September. The proposal will probably address data from off-line and connected autos as well as car-to-car communication, Ilgenfritz said. The VDA declined to comment on the discussions.
French data-protection authority CNIL is already working with carmakers on privacy issues. Its framework is currently being overhauled to make it simpler for the manufacturers to comply with the country’s rules.
Detailed data
In the U.S., the government has so far been mostly concerned with car data from a security context, such as protecting against incidents such as the July hacking of a Jeep via its entertainment system, said Kit Walsh, a staff attorney for the San Francisco-based Electronic Frontier Foundation. That puts the onus on Europe to lead the way in privacy, Walsh said.
About 90 percent of new vehicles in western Europe will be able to send and receive data by 2020, compared with roughly one-third next year, Hitachi Ltd. estimates. Once hooked into the Web, the car’s driving data could be coupled with information as detailed as a driver’s contact list, favorite routes to work and even financial information from mobile-payment systems.
As cars get closer to driving themselves, their cameras and sensors will collect data about what happens in and around the vehicle and what passengers are doing. That prospect has created disputes about what data can be collected and who needs to agree to it. Rules in this area could hamper automakers from fully tapping their newfound gold mine.
"The bottom line is that most connected-car data will need to be considered personal data" unless identifying details are stripped out, which could make it less valuable, said Pinsent Masons partner Appt. "That is the challenge" for the carmakers.