Sorry, Big Brother Is Here to Stay

‘Smart’ home appliances are cheaper, better, and creepier. There’s only one company that might think different.

Remember when your television didn’t spy on you? Technologist and Glitch CEO Anil Dash suggested a while back that there must be some big market out there for “dumb” appliances:

Dash’s pitch is certainly appealing to those of us who don’t like giving up any notion of privacy, but unfortunately, the market for such retrograde appliances is a lot closer to zero dollars than a billion.

I’m going to explain why you don’t actually want dumb devices, why smart devices are cheap and creepy, and suggest that there’s one company that could get away with it.

There’s nothing to watch on a ‘dumb TV’

Let’s say you did have a brand new TV from DumbHome Co. What would you watch on it? VHS tapes? Over-the-air broadcasts? Hook up your vintage Super Nintendo?

If the way you watch television includes streaming (Netflix, Amazon Prime) then the services are spying on you, even if the television itself isn’t. Even Comcast can track usage data on your cable viewing.

Of course, televisions are trying hard to spy on you also, because you keep generating usage data that has dollar value to the television companies. The only surefire way to make your TV dumb is to turn off all of its internet connectivity, which ranges from difficult to impossible. But you still need to give it a signal from somewhere and the somewhere probably isn’t an old VCR.

Before the internet, consumer electronics (and appliance) economics were simple. Company X manufactured Thing Y, which cost them Z dollars to design, produce, and market.

As long as you, the customer, were willing to pay more than Z dollars to purchase Thing Y, the company was in the black, making money, popping champagne, fatcats in limos, etc.

There was an industry that was not like this, even back in the day: print media. Magazines and newspapers. They used a hybrid model. The consumer (you) would purchase the magazine or newspaper. But there were also advertisers, which would pay to have their advertisements included. Your subscription to the Boston Globe, or your doorstopper copy of Vogue from the newsstand, was not free but was subsidized by the advertisers.

The advertisers were paying to get access to your eyeballs. And your eyeballs were usefully categorized: If you were reading the Boston Globe, you almost certainly lived in or near Boston. (You probably consumed lobster and Dunkin Donuts, too.) That’s a demographic profile. Not a very precise one — a very broad picture — but still quite different to the demographic profile of the median purchaser of the Vogue (affluent, urban cosmopolitan, fashionable and/or in the fashion industry, interested in trends).

The internet’s primary business model is this, but supercharged. It enables advertising to be so precisely targeted that’s it’s actually personalized to you. That’s essentially how, say, Facebook makes money: Facebook knows a lot about you, based on what you tell it (expressed preferences) but also based on your behaviors (revealed preferences) both in their apps and across other sites and apps with which they have partnerships. This is also more or less how YouTube and Twitter and every other service that is free to you makes their money. Unlike a copy of the Boston Globe or Vogue, the marginal cost to serve an additional user of YouTube is (basically) zero, so the cost to you is zero. All that money — and there is a lot of it — comes from the advertising back end.

Your TV is so cheap only because it’s spying on you

Pictured here is an advertisement from 1992, offering you a 35-inch television. This was a very large and very fancy television. Maybe the largest one you could buy with a normal CRT (tube). It cost you almost $1,800 (that’s $3,400 in today’s dollars!), and was “sleek” at “only” 24 inches — two feet — deep. This was the sort of thing a quite affluent family would have.

Today, if I go to Best Buy’s website, I can pick up a 40" widescreen high-definition TV for 150 bucks. It is described as a “mid-size option” which is “nice for smaller bedrooms and offices.” It is 3.1 inches deep (lol) and is better than the vintage Mitsubishi in absolutely every way.

Except. The old television would not spy on you. It didn’t connect to your Wi-Fi because you didn’t have Wi-Fi. You plugged your cable box and your VCR and your Super Nintendo into it, and that was that.

The new TV is cheaper for multiple reasons. Mass-production LCD panel technology appeared in the 2000s and quickly killed CRTs because LCDs are far cheaper to produce and transport at scale.

But another reason why is because your TV today is subsidized in a way that it wasn’t 30 years ago. Your new TV runs a version of Android, or similar, and it has apps. It’s “smart,” it connects to the internet to do almost anything useful, and unless you are both diligent and trusting, it collects your usage data, and the company that makes the TV sells that data and/or uses it for advertisements.

Your TV is like a copy of Vogue that knows way more about you than a magazine does. Television maker Vizio revealed in its first public earnings report recent that it makes nearly as much money from ads and data as it does from TVs.

Your TV has ears (a microphone) and voice activation. Your TV has an internet connection. Everything you watch, and some of what you say, is captured and shipped back to the company that makes your TV. This is what Anil Dash is trying to avoid.

Zawinski’s Law, for appliances

Dot-com era Netscape programmer Jamie Zawinski coined something he called the Law of Software Envelopment, which says in part that “Every program attempts to expand until it can read mail.”

There’s a similar dynamic here: Every internet-connected device will eventually collect and report data about you to its creator.

Your cool new Wi-Fi-enabled light bulbs may not be doing this right now, maybe because it’s not a priority for whoever makes them. But make no mistake: Any device that connects to your Wi-Fi and can also talk to its own servers, get little software updates, and report information back.

A light bulb with an embedded computer can deduce some things about you based on your use of it (and what else is on your home network!). This data can be linked up to other data in the dark web of advertising profiles and thus is worth real dollars. So the incentive will always be there to spy on you, and eventually, it will become irresistible.

Even companies that talk up privacy are always just one acquisition or a Terms-of-Service update away from changing their position on devices you’ve already bought and come to rely on.

Short of better regulation around user privacy — sorely needed but plainly not coming any time soon — you’re stuck with a latent privacy hole.

Back to Dash’s conjecture

So is Dash really talking about dumb TVs and dumb home devices? Of course not. You can already get dumb appliances.

We’ve already talked about how a smart TV can be made dumb by unplugging it from the internet completely. Ace Hardware will sell you a thermostat for $30 that I guarantee you will not spy on you. Your local corner store has full-privacy light bulbs in several wattages. And if you want to try to make billions selling “dumb” doorbells, well, good luck.

These aren’t going anywhere. What Dash is talking about, really, is dumb-smart stuff. He wants the advantages of an Amazon Echo, or a Ring Doorbell, or an August lock — all modern features and tech and app connectivity — but without the massive privacy violation.

The problem is that the incentives all run the wrong way, as we’ve seen. Even companies that want to orient around privacy — like Dash’s hypothetical DumbHome Co — are at risk of being acquired by someone bigger and then changing their policy. See Google’s integration with Nest for some of the pitfalls.

To have this sort of thing work, you need a devices company whose (a) business model doesn’t incentivize user data harvesting, (b) is established enough to have a trustworthy brand and (c) is already too big to be an acquisition target. There’s only one company like this.

The only player who could credibly do this is Apple

Apple makes money from lots of things, but primarily they are a sort of old-fashioned hardware sales company. They don’t sell (much) advertising and are in any case incentivized to create experiences that please the end user foremost.

Since the launch of the iPod (2001), Apple has been investing in mass-market consumer devices, and since at least the dawn of the iPhone (2007), user privacy and security have been an explicit product differentiator for them.

They also produce mass-market, high-design consumer devices that have both high margin and relatively low cost of goods due to economies of scale. Apple is ideally positioned to sell smart devices that can compete in the marketplace and aren’t really interested in spying on you.

The Apple TV is, in some ways, already such a product. The apps hosted on it will do their own data collection, but the best way to get a modern “dumb” TV is to plug an Apple TV into a nice LCD television that’s not connected to the internet.

Were Apple to come to market with a line of other home automation devices based around their HomeKit platform, privacy would be of course only one of the selling points. And that would be a billion(s)-dollar business.

In the famous 1984 Macintosh ad, “Big Brother” was IBM. But the Orwellian character is just as much about surveillance as dull ubiquity. Apple could keep making good on that 40-year-old promise. Whether it’s interesting or strategic to the top (polished) brass in Cupertino is a different question.

But meanwhile, Dash should avoid an investment in any new startup that claims to be a unicorn selling dumb appliances. And he can always grab one of those glorious golden-era CRT televisions near him, used.

I write about history, technology, design, and San Francisco. My email address is bzotto at Gmail dot com.