The Internet of Things (Part 1): A Brief Introduction for Lawyers
Tuesday, November 18, 2014

Is the Internet of Things the next big thing? From the cloud to Big Data to software robots, it seems there is always a new buzzword for emerging technologies. According to Gartner, the Internet of Things (IoT) is the buzzword of the moment, as it recently reached the peak of the “Hype Cycle.” In the first post of this two-part series, we take a quick look at (1) the meaning of the IoT, (2) what analysts are saying about its future, and (3) some key legal issues related to the IoT.

What is the Internet of Things?

A universally accepted definition of the IoT does not yet exist. Perform a simple web search and you will find many variations on what the IoT encompasses. One particularly helpful definition comes from McKinsey Global Institute, which defines what it calls the “Internet of All Things” as, “Linking machinery, equipment, and other physical assets with networked sensors and actuators to capture data and manage performance, enabling machines to collaborate and even act on new information independently.”

From this definition, we can break down a high-level view of the IoT as follows:

  • A network connection

  • Between physical objects, such as machines and equipment

  • That are collecting, storing, and analyzing data; communicating with each other; and possibly performing some action based on that data

  • Without the need for human intervention

Examples of the IoT include home automation solutions, vehicle-to-vehicle technology, remote health monitoring, smart appliances, and smart utility grids. Although some of these examples are either currently in use or in development, the future looks to bring many variations and applications of the IoT.

Analysts Predict Huge Growth for the Internet of Things

Experts and analysts tend to agree that the IoT will have a prominent place in the future of businesses and consumers. A recent survey of experts found that the IoT will experience widespread growth and impact by 2025, with influence in nearly every aspect of daily life. Research suggests that approximately 14 billion devices will be connected by the end of 2022 and the annual economic impact of the IoT has the potential to reach $2.7 trillion to $6.2 trillion by 2025.

Focusing on the near future, analysts predict that in 2015, the attention will shift from the IoT’s underlying hardware aspects to the software platforms and cloud services used to connect the physical “things” and analyze the generated data.

Legal Issues Related to the Internet of Things

With this high-level view of the IoT and its expected growth in mind, certain issues will bear watching as lawmakers and regulators begin to take action.

Key issues to watch include privacy, security, ownership of data (including the use of aggregated data), and responsibility and legal liability for when a “thing” fails. Keep a lookout for future posts on these issues and other developments related to the IoT.

In the second part of this series, we will examine a current, real-world application of the IoT.

 

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