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One Reason to Fear the Internet of Things

Written by Jason Stutman
Posted December 16, 2014

No doubt you've heard the buzz-phrases “Internet of Things” (IoT) and “smart home” by now.

Everything from our thermostats to security systems to kitchen appliances will soon be connected to the web — with the supposed purpose of making the world a much better place to live.

Many technology journalists, myself included, have painted a rosy picture of this connected world. Our homes will be more energy efficient, our fridges will draw up our grocery lists, and our coffee will start brewing when our smartphone alarm goes off.

The ultimate appeal of the IoT is one of automation and convenience, and for the most part, we can feel confident that's what it will bring.

However, there are a few hidden dangers lurking in the smart home, one of which I want to touch on briefly today.

Invasive Marketing

There have been various concerns about the connected home recently, mostly surrounding fears of hackers controlling your appliances or the government keeping tabs on what you're up to.

The truth is the likelihood of these things occurring is incredibly low, and these should be the least of our concerns. No one cares what the temperature of your house is, and sophisticated hackers are far more interested in your bank account information than the expiration date on your milk.

What should worry you, though, are the actual companies behind these products — more specifically, how corporations could potentially use smart home products to prey on you as a consumer.

To explain what I mean, I'd like to introduce what I consider the single worst product of 2014: the Keurig 2.0 Home Brewing System.

keurig 2.0 brewing system

At first glance, the Keurig 2.0 is actually a pretty good-looking machine. I'm not an avid coffee drinker myself, but I wouldn't mind having it on my countertop, even if only for aesthetics.

In all actuality, though, the Keurig 2.0 is a devil machine that represents all that's wrong with corporate America. I know, that's pretty harsh for a home brewing system, but hear me out for a moment...

Worst Product 2014

“Oops! This pack wasn't designed for this brewer. Please try one of the hundreds of packs with the Keurig logo.”

This is an actual error message that will appear if you try to brew anything other that Keurig coffee in your Keurig 2.0 coffee machine.

That's right: You cannot use newer versions of Keurig brewers unless you have a coffee pod authorized by Keurig Green Mountain (NASDAQ: GMCR).

This is the kind of marketing that disrupts the free market.

It's the kind that limits consumer choice.

And it's a strategy that could become pervasive in all of our homes if we're not careful.

Now, to be clear, Keurig isn't a connected device and doesn't keep an online database of approved coffee pods. It uses a specific kind of ink on its labels that can be detected by the brewing system.

However, this is the first time in history a company has used digital rights management (DRM) to control a physical appliance. The model could easily carry over into connected smart devices in the future.

Here's a mix of (mostly) fictitious scenarios to further expand on the idea:

  • General Electric (NYSE: GE) partners with Proctor and Gamble (NYSE: PE) to promote the use of Tide detergent. Your washer does not work unless you swipe a barcode found on authorized Tide detergents.
  • Google (NASDAQ: GOOG) partners with your local utility to promote the Nest energy-saving thermostat. Customers who don't install a smart thermostat will receive a penalty charge on their monthly bill (we've already seen this happen with smart meters).
  • Coca-Cola (NYSE: KO) puts one-time-use RFID chips in its cups. You cannot get a refill unless you purchase the rights to do so (the company has already filed a related patent).
  • Microsoft's (NASDAQ: MSFT) Xbox One listens to your conversations and attempts to sell you products accordingly. It also requires you to drink a verification can of Mountain Dew to enable online play.

As excited as I am about what the future will bring, one thing I'm not looking forward to is the corporate invasion of our homes. Sure, it's already apparent with commercials on our televisions and mobile devices, but can we at least leave our kitchens be?

I don't know about you, but I don't want to hear a Snapple ad every time I drink some iced tea in my own home, and I don't want a promotion from my dry cleaner if I don't fold my laundry right away.

The Internet of Things is going to happen no matter what, but as consumers, we do still have the opportunity to turn down devices with invasive marketing tactics.

Personally, I won't be buying any appliances with DRM restrictions like the Keurig 2.0.

Until next time,

  JS Sig

Jason Stutman

follow basic @JasonStutman on Twitter

Jason Stutman is Wealth Daily's senior technology analyst and editor of investment advisory newsletters Technology and Opportunity and Topline Trader. His strategy for building winning portfolios is simple: Buy the disruptor, sell the disrupted.

Covering the broad sector of technology and occasionally dabbling in the political sphere, Jason has written hundreds of articles spanning topics from consumer electronics and development stage biotechnology to political forecasting and social commentary.

Outside the office Jason is a lover of science fiction and the outdoors. He writes through the lens of a futurist, free market advocate, and fiscal conservative. Jason currently hails from Baltimore, Maryland, with roots in the great state of New York.

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