1 1 2 3 4 5 6 7 FEDERAL TRADE COMMISSION 8 INTERNET OF THINGS WORKSHOP 9 10 11 NOVEMBER 19, 2013 12 13 14 15 16 17 Federal Trade Commission 18 601 New Jersey Avenue, N.W., Conference Center 19 Washington, DC 20 21 22 Reported By: Stephanie Gilley 23 24 25 2 1 FEDERAL TRADE COMMISSION 2 I N D E X 3 4 Session Page 5 Welcome, Karen Jagielski 3 6 Opening Remarks, Edith Ramirez 6 7 Paper Session 1: "What is the Internet 15 8 of Things?" 9 Paper Session 2: Contextual Privacy 35 10 Panel One: The Smart Home 52 11 Keynote Speaker, Vint Cerf 118 12 Remarks, Maureen Ohlhausen 154 13 Panel Two: Connected Health and Fitness 164 14 Panel Three: Connected Cars 235 15 Panel Four: Privacy and Security in a 292 16 Connected World 17 Closing Remarks, Jessica Rich 365 18 19 20 21 22 23 24 25 3 1 W E L C O M E 2 MS. JAGIELSKI: Good morning. I'm Karen 3 Jagielski and I'd like to welcome you to the FTC 4 workshop on the Internet of Things. And I have to 5 note that it is the 150th anniversary of Lincoln's 6 Gettysburg Address. 7 So I have to go through a few housekeeping 8 details. Anyone that goes outside the building -- 9 and I have to read this, because it's specific 10 language. Anyone that goes outside the building 11 without an FTC badge will be required to go through 12 the magnetometer and x-ray machine prior to reentry 13 into the conference center. 14 In the event of a fire or evacuation of the 15 building, please leave the building in an orderly 16 fashion. Once outside the building, you need to 17 orient yourself to New Jersey Avenue, which is this 18 street right here. Across from the FTC is the 19 Georgetown Law Center. Look to the front sidewalk, 20 that is our rallying point. Everyone will rally by 21 floors and you need to check in with me or another 22 one of the workshop organizers, who I will now ask 23 to stand up so that you can recognize them. 24 Hopefully they are in the room. Okay. And so you 25 need to check-in with us. 4 1 In the event that it is safer to remain 2 inside, you will be told where to go inside the 3 building. If you spot suspicious activity, please 4 alert security. 5 This event will be photographed, 6 videotaped, webcast, and otherwise recorded. By 7 participating in this event, you are agreeing that 8 your image and anything you say or submit may be 9 posted indefinitely at FTC.gov or on one of the 10 Commission's publically available social media 11 sites. 12 We would ask people to take seats, rather 13 than standing, as it is against fire code, and that 14 people not place their belongings on the seats next 15 to them. Please also turn your cell to vibrate or 16 off while in the room. 17 Question cards are available in the 18 hallway, immediately outside of the conference room, 19 on the table with FTC materials. If you have a 20 question, fill out your card, raise your hand, and 21 someone will come get it. 22 For those of you participating by webcast, 23 you can tweet your question to #FTCIOT, email it to 24 [email protected], or post it to the FTC's Facebook page in 25 the workshop status thread. Please understand that 5 1 we may not be able to get to all of the questions. 2 So without further ado, I would like to 3 introduce Edith Ramirez, Chairwoman of the FTC. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6 1 OPENING REMARKS 2 MS. RAMIREZ: Thank you, Karen. I want to 3 say good morning to everyone and welcome you all to 4 the Federal Trade Commission's Internet of Things 5 workshop. 6 Before I start, I just want to extend my 7 appreciation and gratitude to the FTC staff who 8 organized this workshop and also to all of the 9 speakers who are going to be joining us today in 10 lending their expertise and experience in this very 11 interesting topic. So thank you again and thank all 12 of you for being here early this morning. 13 The Internet of Things has already entered 14 the daily lives of many consumers. We can now rely 15 on home security systems that show us who is at the 16 front door on a screen on our tablets, even if we 17 are across the country. We wear wireless medical 18 and fitness devices that share our blood glucose 19 readings with our doctors or tweet our race time to 20 our followers. Sensors in our plants can send us a 21 message to remind us that they need watering. 22 But we are on the cusp of even more 23 change. Today's workshop examines the next 24 technological leap when many, if not most, everyday 25 physical objects will be able to communicate with 7 1 other objects, as well as with ourselves. Almost 2 anything to which a sensor can be attached can 3 become a node in a ubiquitous network, continuously 4 transmitting data in real time. It's estimated 5 there are already 3.5 billion such sensors and some 6 experts expect the number to increase to trillions 7 within the next decade. 8 Now, it is still early when it comes to 9 the Internet of Things, but it is clear that change 10 is afoot. Five years ago, for the first time, more 11 things than people connected to the internet. By 12 2020, an estimated 90 percent of consumer cars will 13 have some sort of vehicle platform, up from 10 14 percent today. And it is estimated that, by 2015, 15 there will be 25 billion things hooked up to the 16 internet. By 2020, we are told the number will rise 17 to 50 billion. 18 The Internet of Things is poised to 19 transform manufacturing, business, and agriculture. 20 Much of this can occur without collecting data about 21 individuals, but in the consumer market smart 22 devices will track our health, help us remotely 23 monitor an aging family member, reduce our monthly 24 utility bills, and alert us that we are out of milk. 25 The benefits to consumers will, no doubt, 8 1 be great but these benefits come with undeniable 2 privacy risks. The very technology that allows you 3 to stream your favorite movie or send for help when 4 your car breaks down can also collect, transmit, and 5 compile information about your actions. 6 As I see it, the expansion of the Internet 7 of Things presents three main challenges to consumer 8 privacy. First, it facilitates the collection of 9 vastly greater amounts of consumer data. Second, it 10 opens that data to uses that are unexpected by 11 consumers, and third it puts the security of that 12 data at greater risk. I'd like to offer my 13 perspective on each of these challenges and I know 14 that others are going to be addressing them 15 throughout the course of the day as well. 16 Let me turn to the ubiquitous collection 17 of consumer data that the Internet of Things will enable. 18 We are told to expect that, in the not too distant 19 future, many if not most aspects of our everyday 20 lives will be digitally observed and stored. The 21 enormous data trove that will result will contain a 22 wealth of revealing bits of information that, when 23 patched together, may present a deeply personal and 24 startlingly complete picture of each of us --our 25 health, our religious preferences, our financial 9 1 circumstances, and our family and friends. Our 2 personal profiles will be parsed, augmented, and 3 shared as they travel through an interconnected 4 mosaic of commerce. 5 As one tech writer has explained, in very 6 technical terms, "The Internet of Things will mean 7 really, really big data." Well, with really big 8 data comes really big responsibility. It is up to 9 the companies that take part in this ecosystem to 10 embrace their role as stewards of the consumer data 11 they collect and use. That means adherence to the 12 three core best practices espoused by the FTC: 13 privacy by design, simplified consumer choice, and 14 transparency. 15 First, privacy by design. Companies 16 developing new products should build in consumer 17 privacy protections from the very outset. Privacy 18 should be integral to the innovation process with 19 privacy hard-coded in. Companies should also 20 consider how to shift the burden of privacy 21 protection off of the shoulders of consumers. 22 For example, are there defaults or other 23 design features that can help prevent consumers from 24 sharing personal data in an unwanted manner? 25 Privacy tools and settings should be as easy to use 10 1 as the underlying product or service. 2 The second central principle is simplified 3 consumer choice. Taking context into account, the 4 companies that take part in the Internet of Things 5 should give consumers control over their data.