Privacy is a paramount concern in our digital era, shaped by rapid technological advances and the increasing digitization of everyday life. Recent high-profile events include a data breach of AT&T customer records, which affected 51 million current and former customers, and a recent breach of Wyze cameras that mixed user feeds. Additionally, smaller sporadic events such as reports of individual hacking cases of smart home devices have also created consumer anxiety around the security of connected devices and underscore the vulnerability of personal data in an interconnected world.
Parks Associates quarterly surveys of 8,000-10,000 US internet households show that more consumers are experiencing privacy and security issues, from 36% in 2018 to 54% in 2023. And this is having a significant impact on attitudes. From Q2 2021 to Q2 2023, consumer concern about hackers or others who have bad intentions online having access to their data jumped 21%. Consumer anxiety is not increasing just toward bad actors: there has been a slight increase in concern over tech companies accessing consumer data as well.
In response to these data and security events, both the tech industry and governments worldwide have taken steps to enhance data privacy and security. The General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA) in the United States represent significant legislative efforts to empower consumers and protect data, and the new Cyber Trust Mark certification ensures that smart home devices are secure.
On the industry side, the Connectivity Standards Alliance (CSA) has been working through its Matter standard to secure data transfer over networks and has recently introduced its own mark for device certification, which should help build consumer confidence. (For more information on the Matter standard, read the Parks Associates white paper Next-Generation Smart Home: Building for the Future.) Furthermore, tech companies have begun implementing more robust data encryption, offering two-factor authentication and conducting regular security audits. In this way, data security should be enhanced across multiple areas of vulnerability: communications protocols, hardware at the edge, and user accounts.
The most common (and fastest growing) security/privacy problems consumers experience are companies tracking their online activities or selling their personal data. Consumers are expected to give up some data in exchange for use of certain products or services, and they typically accept this practice, provided they are made aware of how their information will be used. Problems arise when consumers do not know where their information will ultimately land, which erodes their trust in both industry and government.
Additionally, data brokers, companies that collect and sell personal information, play a controversial role in the privacy landscape. They often operate in the shadows, amassing vast amounts of data without individuals' consent. The recent executive order to protect Americans' sensitive data is a pivotal move towards addressing how data brokers operate and use Americans’ data.
The consumer interest in data security also presents a revenue opportunity for smart home manufacturers. A growing majority of consumers are interested in data security services and are willing to pay for bundles that include cybersecurity protection. For smart home manufacturers, the need to monetize beyond device purchases means an opportunity to build in additional security, perhaps in partnership with ISPs to offer whole-home cybersecurity packages. If such revenue models are to work, consumers must be assured that manufacturers have done their due diligence to make their products as secure as possible first.
To learn more about the consumer view of privacy and data security, download our full Quantified Consumer report: https://www.parksassociates.com/products/consumer-electronics-devices/privacy-and-data-protection-for-connected-devices
