How the Internet of Things Limits Consumer Choice

In theory, the Internet of Things—the connected network of tiny computers inside home appliances, household objects, even clothing—promises to make your life easier and your work more efficient. These computers will communicate with each other and the Internet in homes and public spaces, collecting data about their environment and making changes based on the information they receive. In theory, connected sensors will anticipate your needs, saving you time, money, and energy.

Except when the companies that make these connected objects act in a way that runs counter to  the consumer’s best interests—as the technology company Philips did recently with its smart ambient-lighting system, Hue, which consists of a central controller that can remotely communicate with light bulbs. In mid-December, the company pushed out a software update that made the system incompatible with some other manufacturers’ light bulbs, including bulbs that had previously been supported.

The complaints began rolling in almost immediately. The Hue system was supposed to be compatible with an industry standard called ZigBee, but the bulbs that Philips cut off were ZigBee compliant. Philips backed down and restored compatibility a few days later.

But the story of the Hue debacle—the story of a company using copy-protection technology to lock out competitors—isn’t a new one. Plenty of companies set up proprietary standards to ensure that their customers don't use someone else's products with theirs. Keurig, for example, puts codes on their single-cup coffee pods, and engineers their coffee makers to work only with those codes. HP has done the same thing with its printers and ink cartridges.

To stop competitors just reverse-engineering the proprietary standard and making compatible peripherals (for example, another coffee manufacturer putting Keurig’s codes on their own pods), these companies rely on a 1998 law called the Digital Millennium Copyright Act (DCMA). The law was originally passed to prevent people from pirating music and movies; while it hasn't done a lot of good in that regard (as anyone who uses BitTorrent can attest), it has done a lot to inhibit security and compatibility research.

Specifically, the DMCA includes an anti-circumvention provision, which prohibits companies from circumventing “technological protection measures” that “effectively control access” to copyrighted works. That means it’s illegal for someone to create a Hue-compatible lightbulb without Philips’ permission, a K-cup-compatible coffee pod without Keurigs’, or an HP-printer compatible cartridge without HP’s.

By now, we’re used to this in the computer world. In the 1990s, Microsoft used a strategy it called “embrace, extend, extinguish,” in which it gradually added proprietary capabilities to products that already adhered to widely used standards. Some more recent examples: Amazon’s e-book format doesn’t work on other companies’ readers, music purchased from Apple’s iTunes store doesn't work with other music players, and every game console has its own proprietary game-cartridge format.

Because companies can enforce anti-competitive behavior this way, there’s a litany of things that just don’t exist, even though they would make life easier for consumers in significant ways. You can’t have custom software for your cochlear implant, or your programmable thermostat, or your computer-enabled Barbie doll. An auto-repair shop can’t design a better diagnostic system that interfaces with a car’s computers. And John Deere has claimed that it owns the software on all of its tractors, meaning the farmers that purchase them are prohibited from repairing or modifying their property.

As the Internet of Things becomes more prevalent, so too will this kind of anti-competitive behavior—which undercuts the purpose of having smart objects in the first place. We’ll want our light bulbs to communicate with a central controller, regardless of manufacturer. We’ll want our clothes to communicate with our washing machines and our cars to communicate with traffic signs.

We can’t have this when companies can cut off compatible products, or use the law to prevent competitors from reverse-engineering their products to ensure compatibility across brands. For the Internet of Things to provide any value, what we need is a world that looks like the automotive industry, where you can go to a store and buy replacement parts made by a wide variety of different manufacturers. Instead, the Internet of Things is on track to become a battleground of competing standards, as companies try to build monopolies by locking each other out.