Who owns connected car data?

Get ready for the biggest change to driving in the history of the automobile. Transportation and information are converging, at a rate much faster than anyone imagined possible even just a few years ago.

Every major automaker is grappling with the shift. General Motors has made a big bet on high-speed wireless connectivity throughout its vehicle fleet. Luxury carmakers such as BMW and Audi are rapidly enhancing the ability of the their cars to be as digitally enabled as smartphones. And Google and Apple are aggressively experimenting with both software and hardware, through Android Auto, self-driving cars, and Apple Car Play.

Here’s just one example of how serious this business is for the auto industry. At the 2015 New York Auto Show, Ford CEO Mark Fields held a talk with a small group of reporters in which he outlined a brave new future for the car maker.

At the center of it was innovation — and data.

“We’re at an inflection point in the auto industry,” he said. “We’re thinking of ourselves as a mobility company and an auto company.”

Driving that inflection is data and analytics — what Fields called “Ford Smart Mobility.”

To hear a major auto executive articulate these ideas was music to the ears of the so-called advanced mobility community, which collectively has been anticipating a convergence of transportation and computing power for over a decade. That anticipation was largely confined to academic theorizing and modeling, if not downright speculation — until cars became more wired.

Data is the Glue

Data is the glue that binds up numerous automotive innovations, from self-driving or “autonomous” vehicles to connected cars. Roll the clock back just a few decades and you’ll see a world in which cars collected data discretely, in rudimentary onboard computers. The only place where data was freely flowing through cars was in the radio. This was all a huge shift from the days when cars contained no data to speak of — when they were in fact a rolling way to escape the information systems of the mid-20th century: printed newspapers, daily mail delivery, face-to-face meetings.

That’s all changed radically in the past five years, as cars have become a crucial node in the incipient Internet of Things.

Cars have gotten smart in a hurry. This has raised two major issues, one positive, one maybe not so positive.

This first involves the technologically self-aware vehicle. Dumb cars don’t communicate with each other. My Buick from the 1980s had no idea where my father’s Honda from the 1990s was located on the road. Two stupid machines roamed the landscape in their own bubbles of glass and steel. Fast forward a few decades and most of the technologies are in place for every new car to know where ever other new car is on a given freeway.

The second entails the ownership of the data that the vehicles are generating, storing, and sharing. The issues are deceptively thorny. If the car is leased or financed, does the driver “own” the information or share it? Does the car maker that created the data-management systems own the information? Will automakers and software developers be compelled to pay drivers for data access?

Who owns the data?

In a recent study by McKinsey & Co., titled “Competing for the connected customer – perspectives on the opportunities created by car connectivity and automation,” the consulting firm reported that customers might be far less concerned with data ownership than the automakers think they are.

According to the study’s authors:

Against many expectations, personal data privacy does not seem to be a major roadblock to customer acceptance. Already today, a large majority of consumers very consciously share their personal data with their smartphone software manufacturer; only a quarter of customers categorically refuse to let OEMs use their driving data. That said, consumer privacy will remain a focal point of interest for consumers themselves as well as most likely for regulators. Thus, car manufacturers and suppliers should continue to take this issue very seriously and offer the appropriate safeguards.

The transformation of the automobile from symbol of freedom to a node in a data network may ironically be far more challenging for the people who run car companies than for those who buy their products.

Russell Reynolds Associates, an executive search firm, released a study analyzing the effect that the technological disruptions will have on the careers of established leaders at car makers. “We believe today’s car guys need to evolve into tomorrow’s mobility leaders,” the report argued.

“[T]he coming paradigm shift is likely to stretch the industry’s current leaders,” it continued. “To build new skills and perspectives quickly, we recommend hiring from industries that already have undergone a significant disruption, such as the mobile phone industry ….”

The first truly smart car has already arrived: the Tesla Model S. It can send information in real time about its systems back the Tesla headquarters in Northern California and can be updated so frequently over-the-air that some owners feel that they go to sleep with an old car and wake up with a new one. Teslas can also communicate with the company’s Supercharger network and, when properly equipped, achieve semi-autonomous driving.

It’s a glimpse of things to come.

Economics are the bottom line

But we still have a long way to go before data and analytics coverage fully with smart cars and the connected highway. In 2013, Automotive News reported on the skepticism that exists about vehicles that are effectively driven not by humans but by cloud computing.

At the Telematics Update Vehicle-to-Vehicle and Vehicle-to-Infrastructure for Auto Safety conference held in Michigan that year, panelists stressed that “no company or agency has adequate funds to pay for the infrastructure needed to support the technology and begin mass implementation.”

Furthermore, “if you can’t convince people that they need vehicle-to-vehicle technology, the technology won’t be worth it,” Automotive News reported.

Ultimately, it will probably have to be government investment on the infrastructure side and customers on the vehicle side who fully enable what many experts and observers of the auto industry thinks is an inevitable marriage of big data and our most important form of transportation.

And the US government, for one, may get there before car buyers begin demanding greater connectivity.

Mark Rosekind, who runs the the National Highway Traffic Safety Administration (NHTSA) said at a conference earlier this year that the government has strong motivation to encourage big data to get even bigger.

“NHTSA is not interested in erecting roadblocks to safety innovations,” he said. We want to encourage that.”

This article is published in collaboration with Business Insider. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Matthew DeBord is Business Insider’s Transportation Editor.

Image: Cars queue during traffic jam on the city highway A100 at rush hour in Berlin. REUTERS/Fabrizio Bensch.