Regulators struggle to keep up as companies bring Internet to more products

Bloomberg NewsJanuary 13, 2014 

— The futuristic world of self-driving cars, eyeglasses that email and trash cans that call for pickup is running into the old-fashioned pace of doing business in Washington.

Companies from Google to BMW are racing into this so-called Internet of Things. The Department of Transportation and the Federal Trade Commission are moving more deliberately, concerned that devices may be vulnerable to hacking, lead to misuse of personal data, or even cause physical harm to their owners.

“If we’re thinking this genie can be put back in the bottle, we’re fooling ourselves,” Robert Enderle, principal technology analyst for the Enderle Group in San Jose, Calif., said in an interview.

The Internet of Things refers to technology such as robotic vehicles, computing glasses and watches, and home appliances with Web connections. It’s being featured this week at the North American International Auto Show in Detroit, after generating buzz at last week’s International Consumer Electronics show in Las Vegas.

The market for wireless, Internet-connected devices could create between $2.7 trillion and $6.2 trillion of economic value annually by 2025, according to the McKinsey Global Institute.

Cisco Systems predicts about 25 billion devices will be connected by 2015 – up from 12.5 billion in 2010.

Regulators and lawmakers need to write rules that clearly explain what companies are permitted to do and detail penalties for violations, a task hindered by revelations about the extent of U.S. spying programs, Enderle said.

Rules need to specify how data generated by gadgets is used and whether companies will face legal liability for security breaches, said Michael Chui, a partner with the McKinsey Global Institute.

“It’s impossible to not have data generated about you in the world today,” he said. “Regulators have to many times balance innovation with managing various types of risk.”

The BMW and Audi driverless car technology displayed in Las Vegas last week come on the heels of Google having clocked about 500,000 miles using the Lexus RX 450h to test self-driving technology.

While California, Florida and Nevada have authorized state agencies to establish standards for autonomous cars, the National Highway Traffic Safety Administration hasn’t. It has said it will decide this year whether to propose new rules, conduct additional research, or do both.

“We’re encouraged by the new automated vehicle technologies being developed and implemented today but want to ensure that motor vehicle safety is considered in the development of these advances,” NHTSA Administrator David Strickland said in an emailed statement.

The Transportation Department is also weighing distracted driver rules as automakers such as Ford add entertainment and navigation systems that do everything from find music to match a driver’s mood to ordering a pizza.

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