Privacy and the Internet of Things – FTC Workshop (The Smart Home)

Attribution: Vovastepanov

Attribution: Vovastepanov

The Federal Trade Commission (“FTC”) held a public workshop on November 19, 2013 to explore consumer privacy and security issues related to the Internet of Things (“IoT”).  After briefly describing what the IoT is and the intended focus of the FTC workshop, this post will highlight excerpts from the panelists who spoke at the workshop.   I will limit this recap to the first part of the workshop that dealt with the home-based IoT (i.e., the “Smart Home”).  For a full transcript of the entire workshop, you can find that here.

The “Internet of Things” is a term used to describe the system made up of devices, each of which is enabled to communicate with other devices within an integrated information network.  Or, to use the Wikipedia definition, the “Internet of Things refers to uniquely identifiable objects and their virtual representations in an Internet-like structure.”  Often, we hear the individual devices within the IoT ecosystem labeled as “smart” devices.  Smart devices generally have the ability to communicate with consumers, transmit data back to companies, and compile data for third parties.

According to the FTC, “the workshop focused on privacy and security issues related to increased connectivity for consumers, both in the home (including home automation, smart home appliances and connected devices), and when consumers are on the move (including health and fitness devices, personal devices, and cars).”  The workshop brought together academics, business and industry representatives, and consumer advocacy groups to explore the security and privacy issues in this changing world.

Following the workshop, the FTC published questions and requested public comments by January 10th on issues raised at the workshop, including:

  • How can consumers benefit from the Internet of Things?
  • What are the unique privacy and security concerns and solutions associated with the Internet of Things?
  • What existing security technologies and practices could businesses and consumers use to enhance privacy and security in the Internet of Things?
  • What is the role of the Fair Information Practice Principles in the Internet of Things?
  • What steps can companies take (before putting a product or service on the market) to prevent connected devices from becoming targets of, or vectors for, malware or adware?
  • How can companies provide effective notice and choice?  If there are circumstances where effective notice and choice aren’t possible, what solutions are available to protect consumers?
  • What new challenges does constant, passive data-collection pose?
  • What effect does the Internet of Things have on data de-identification or anonymization?
  • How can privacy and security risks be weighed against potential societal benefits (such as improved health-care decision-making or energy efficiency) for consumers and businesses?
  • How can companies update device software for security purposes or patch security vulnerabilities in connected devices, particularly if they do not have an ongoing relationship with the consumer?  Do companies have adequate incentives to provide updates or patches over products’ lifecycles?
  • How should the FTC encourage innovation in this area while protecting consumers’ privacy and the security of their data?
  • Are new use-restrictions necessary to protect consumers’ privacy?
  • How could shifting social norms be taken into account?
  • How can consumers learn more about the security and privacy of specific products or services?
  • How can consumers or researchers with insight into vulnerabilities best reach companies?

Panelist Excerpts

Here are my favorite excerpts from the “Smart Home” panel, which was comprised of Carolyn Nguyen (Microsoft, Director of Technology Policy Group), Eric Lightner (DOE, PM of Advanced Technology Development), Michael Beyerle (GE Appliances, Manager of Marketing), Jeff Hagins (SmartThings, Cofounder and Chief Technology Officer), Lee Tien (EFF, Senior Staff Attorney), and Craig Heffner (Tactical Network Solutions, Security Researcher).

1)      Excerpts from Carolyn Nguyen (Microsoft, Director of Technology Policy Group)

  • On the individual consumer: “[…] a unique aspect of the IoT, as far as the individual is concerned, is its potential to revolutionize how individuals will interact with the physical world and enable a seamless integration between the digital and the physical world as never before […] The IoT, with its network of sensors and potential to sense the environment, can help assist individuals and people to make optimized and context-appropriate decisions […] As the individual is increasingly objectified by the quantity of data available about them, it’s important that we have a dialogue today and now, as we are just at the dawn of the IoT, to create a viable, sustainable data ecosystem that is centered on the individual.”
  • On the IoT ecosystem: “Taking a look at the evolution and the emerging data-driven economy, this is how we all started, where a person shares data with another person that they have a good relationship with and can trust that the data won’t be misused. The terminology that I use is that the data is being actively provided to the individual. In the evolution going forward, we evolve from this model to where I share data with an entity for which I receive a service: a store, a bank, a post office. Again, this is usually an entity with whom I either have a good relationship with or know I can trust. And this is true, whether this is in the physical world or in the digital world. So if we evolve this a little bit further, where there is now such an entity may be able to share personal data with other entities, with or without my knowledge. We talk about the terminology, as this data that is being generated or inferred as data that is passively generated about me. In other words, I am not actively involved in this transaction.  So as we move further in the evolution, there is more and more data being shared. And furthermore, it is now also possible that other parties that are in my social network can share data about me. So for example, a friend uploading my photo into the service. In this view, it is already very difficult for an individual to control the collection and distribution of information about me. And traditional control mechanisms such as notice and consent begin to lose meaning, as the individual most often automatically gives consent without a true understanding of how the data is distributed or used.  Moving forward, into the Internet of Things with ubiquitous sensors, the situation is clearly further exacerbated. We’ve already heard about Fitbit, sensors in my shirt, sensors in pants that can tweet out information about me, my car giving out information about potholes in the street, average speed, etc. There are devices in my home that are giving information about activities, temperature, whether I am home or not. Devices in my workspace, as well as devices in a public space. So increasingly, the amount of data that will be generated, as was already mentioned this morning, would be primarily passively collected and generated. It is, however, in the data-driven economy, it is this flow of data that has the potential to create new benefits and new innovations and create a foundation for a new economy. Over-restriction of this flow can restrict the potential value, but lax regulation can clearly harm the individual and violate their rights.”

2)      Excerpts from Eric Lightner (DOE, Director of Smart Grid Task Force)

  • On energy usage data privacy: “So we started a number of, I would say, initiatives around this, centered on the consumer. A couple I will just mention quickly. One is called Green Button and that’s really an effort to standardize the information, the customer usage, the energy usage information that you can have access to through your utility in a standardized format and download that information and use that in different applications. We also stimulated the market by funding some developers of technology to look at, okay, if you have this standardized customer energy use and information, what kind of applications and services could we create around that. So we funded some companies to develop some of those technologies. That sort of gave rise to questions of privacy. Hey, I want to use my information, I want to look at it in a more detailed fashion. I probably want to share it with third parties for additional services to me, what are the privacy implications of that? So we started another initiative called the Voluntary Code of Conduct on Data Privacy.  This is something that is actively ongoing. We are working with utilities and a number of stakeholders to really figure out what sort of — just the baseline of protections and processes that we can put in place across utilities in a voluntary way. Many utilities are regulated by their states and they already have policies and laws about how to handle data, but it’s not consistent across the states, so we really wanted to try to develop a voluntary, consistent practice. So you, as a consumer, would then feel more comfortable about how that information is being used within the utility and what the process is for you to give consent to share that information with third parties of your choice for different products and services.”

3)      Excerpts from Jeff Hagins (SmartThings, Cofounder and Chief Technology Officer)

  • On the current state of the IoT: “And what is at the center of that is this interesting development that, each of these manufacturers is pursuing a model where I build my device, I connect my device to my cloud, my manufacturer-specific cloud, and then I give you, as a consumer, an app for your smart phone. And it begs the question, where this goes. Where does all of this end up? […] If I end up with more apps on my phone to control the physical world than I have on my phone to begin with, to control all of the other stuff, it feels like we’ve failed the consumer in a big way. And so at SmartThings, what we are working on is actually bringing a solution into the middle of this. We’ve created a platform that is targeted at the smart home, initially, and to put in the palm of the consumer’s hand not one app per device, but rather one app. But more importantly, to allow these devices to work together.”
  • On data security and data ownership: “Our things and our data have to be secured. And we, as the consumer or the owner of our things, need to own the data that comes from those things. They are our things, it should be our data. Just because I bought it from a particular manufacturer doesn’t mean it’s their data. It’s my data. That sharing of that data then needs to be contextual […] These systems need to be highly reliable and available and they also need to be open.”

4)      Excerpts from Lee Tien (Electronic Frontier Foundation, Senior Staff Attorney)

  • On IoT privacy considerations:  “I’m not really a cheerleader for the Internet of Things. To me, it raises a huge number of privacy and security issues, to the extent that IoT devices entail ubiquitous collection of large amounts of data about what people do. And I mean, I think that’s the main thing, that what we are talking about is collecting data about people’s activities, and therefore that is always going to raise some very serious privacy issues. […] So with respect to the home, my starting point is probably pretty conventional. As Justice Scalia said in the 2001 Kyllo Thermal Imaging case, in the home, our cases show all details are intimate, because the entire area is held safe from prying government eyes. Now we are not discussing government surveillance today, but I think all consumer privacy, anyone who thinks about the privacy issues thoughtfully, is going to have an eye on what data about household activities or personal activities the government could end up obtaining, either directly from the devices or from IoT providers, whether using legal process or other less savory means.”
  • On smart meter technology:  “Smart meters are a good example. And in California we, along with the Center for Democracy and Technology, helped write very strong FIPPS-based approach to energy usage data that is in the hands of utilities, recognizing in California that there were a lot of serious privacy issues around the granular energy usage data.  I like to use this quote from Siemens in Europe a few years ago where they said, you know, we, Siemens, have the technology to record energy use every minute, second, and microsecond, more or less live. From that, we can infer how many people are in the home, what they do, whether they are upstairs, downstairs, do you have a dog, when do you usually get up, when did you get up this morning, when you have a shower. Masses of private data. And obviously, this is a European perspective, which is especially solicitous of privacy, and yet the ability to make those kinds of inferences from energy usage data is clearly there. Now in the California proceeding, one of the things that we do not do is we do not regulate anything about what the consumer, per se, can or can’t do with the data that they have. Indeed, the whole thing is, right now, very consumer empowerment based, because it is consumer consent that provides the main way that utilities can hand the information off or share it with someone else. […] We also use rules that are modeled after HIPAA business associate type rules, so that downstream recipients of data shared from the utilities are bound in a similar way.”
  • On IoT data security considerations: “I think that you have to worry also about the way that the wireless networking exposes data to interception. We are wary that industries who are moving into this space are not necessarily as mature about the security issues as those as, say, at Microsoft. The relatively cheap or lower grade devices may lack the computing resources or, for economic reasons, there will be less incentive to put good security in them. And fourth, that the security perimeter for IoT devices is actually rather different because, depending on where the endpoint devices are, there may be a higher risk of direct tampering. […] I think that one of the things that is going to be important in this area is also the ability of the consumer to exercise what we at the EFF call the right to tinker or right to repair. I think in the comments, there were some rather interesting points about various kinds of consumer rights that could be built into this area. But I think one of the most important is actually being able to know, inspect your device, and understand them, to know what they do, because transparency is going to be a big problem.”

5)      Excerpts from Craig Heffner (Tactical Network Solutions, Security Researcher)

  • On security of firmware and IoT devices: “And consumer devices typically, they don’t have any security, at least by today’s standards. I mean, you have simple things like vendors leaving backdoors in their products, either because it is something that the developer left in and they just forgot about or maybe they left it in so that when they get a customer support call, they can remote into the system and fix it for them and so it lowers, you know, the time they have to spend doing tech support and things like that. And we are not even dealing with sophisticated types of attacks to break a lot of these systems. I actually teach like a five day class on, you know, breaking embedded systems. And people – that’s why I’m trying to condense five days into five minutes here, but people are astounded at, you know, especially people from the security community who are used to breaking things like Windows and PCs and things like that, they don’t really have experience with embedded devices, are astounded at the lack of security that they have typically. […] They had simple vulnerabilities that anyone in the security community who looked at it would be able to break. And it doesn’t take a lot of technical expertise to do that. And I think the real reason why these exist, why we have these problems in embedded devices is there is no financial incentive to companies to make their devices secure. […] And these are simple things that people may not think of, and may not think through, but they can be very difficult to go back and change, especially in embedded products. Because updating the software, updating the firmware, is not necessarily trivial in many cases.”
  • On the everyday IoT consumer:  “Unfortunately, I don’t think that trying to educate users will get us where we need to be. You know, the mantra for years in computer security has been educate the user, educate the user. Well, guess what? We’ve had security problems for decades. That clearly isn’t working. Users don’t understand the technologies they are dealing with. I hear the term, people always say, people are so technologically — you know, they understand all this technology. No, they don’t. They have a phone with pictures on it and they point at the pictures. That is not understanding technology.”

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