Google Buys Nest: We Might Be Screwed

By Rob Enderle January 15, 2014

This week, Google bought Nest, a firm that showcased you could take Apple design and user interface ideas and apply them successfully to home automation and security products.  Nest builds what are arguably the best premium connected thermostats.   These are amazing products but this purchase isn’t about the present, but about the future and, in the future, Google wants to know exactly what you do at home.   Here are some of the issues to consider.

Can Google Hold Nest

When you pay billions for a company, the key people in that company get a ton of money.   A certain number of them will then either become distracted by that money and hard to motivate or decide they really don’t need to work anymore.   That means some percentage of the skills you thought you bought, may evaporate.   This is often a huge problem with small acquisitions that have big price tags -  the skill set is so adversely impacted by the money that they wander off.  

Strangely this may actually be a good thing for us.

Google’s Goal

Google’s business is effectively providing cheap tools to users in exchange for user information which they sell to advertisers.   They also provide access to users for advertisers, but the big value, critical to targeted ads, is user information.  With that information they can improve the conversion rate, the amount of sales generated by any ad campaign, and this is effectively Google’s Golden Goose and it has made them a ton of money.   So why home automation and security?

Sensors in Home

Google tried to get information out of homes by scanning WiFi networks but they ran afoul of government agencies and folks who really didn’t want their homes scanned.    To get around this, Google needs to sell Wi-Fi devices that have sensors on them.  This will not only provide the Wi-Fi information they are currently blocked from having, but also provide a high level of detail about what you do in your home.   As they expand the sensors fire prevention products should be able to increasingly analyze what kind of smoke they are sensing.  Legal/illegal, cigar/cigarette, and possibly even food types reporting your interests and behavior.  This should expand into security where entry/exit information is captured along with what room of the house you are occupying.   Tied to products like Chrome TV, Chromebooks, and Android they’ll even know pretty much everything you are doing as well.   

On the home automation front, sensor information will fill gaps so analytics can determine what they can’t capture directly.  Like the number of people in the house, movement patterns, who you are having for dinner – and tie it back to the information you have placed into social media to get a better idea of what you and your family does at home.  In fact, in a few short years they should know more about what you do than you do.  

Benefits

Now this isn’t to say there are benefits.  The result should be lower energy bills, more effective fire and security systems, and even better programing on top of better targeted ads.   Stuff should actually work better and this will certainly help Google’s robots to function more effectively in the home just as Google’s self-driving cars will get vastly better the more connected they are and the more Google knows about where you go and why.   

Risks

This is an inordinate amount of information and coupled with the security cameras will provide Google, or a government, with an unprecedented opportunity to use that information improperly.  If they aren’t secure it also provides a central location where criminals can find out things like how valuable the stuff is in your home, when you are away or asleep, and whether or not you are armed.    The security cameras that are coming will provide all of that and more.

Now let’s say you are a person in power that Google wants to influence.   They’ll have information about what you do down to an unprecedented level and about your close and extended family as well.   Things legal in some States aren’t legal in others and even legal behavior could be used as a threat to influence political or legal outcomes.   

Power corrupts and this is an extraordinary amount of power that is going to one company without a great deal of oversight.  

Wrapping Up: 

While some of us believe that Google has been influencing elections, that belief so far, is mostly based on unreliable information.   No smoking gun yet.   But as Google’s power and penetration into the home increase, the power will lead them to make decisions that will have them consider, with bias, choices between doing what is right and doing what they have the power to do.   People don’t make these decisions well - which is why I believe this recent acquisition should concern you. 

As noted above, they are likely to lose much of the core of Nest because of the amount of money they paid for it.   This is why their inability to hold onto the people may actually be good news.   If few buy the Google Nest products, the outcome I’m projecting won’t happen.   Our future freedom may depend on Google screwing this one up.  And, fortunately, the odds favor that outcome. 




Edited by Stefania Viscusi

President and Principal Analyst, Enderle Group

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