Ford Eyes Use of Customers’ Personal Data to Boost Profits

Ford’s CEO sees the tech company model as key to the company’s next chapter.

UPDATE

Ford Motor Company is known for making cars and trucks; but the future for the iconic automaker might look a little more like Facebook than an assembly line.

As it struggles with hemorrhaging earnings in markets outside of North America, industry-watchers are speculating that Ford is looking to a new source of income: The data it can collect from its 100 million customers.

Sure, connected cars are a reality; “infotainment” systems and mobile apps are deep repositories of lifestyle information for many car-makers – Ford included. But Ford’s CEO recently suggested that the data collected by the company’s financial services arm also represents a valuable, low-overhead asset.

“We have 100 million people in vehicles today that are sitting in Ford blue-oval vehicles,” said Ford CEO Jim Hackett during a Freakonomics Radio podcast. “The issue in the vehicle, see, is: We already know and have data on our customers. By the way, we protect this securely; they trust us. We know what people make. How do we know that? It’s because they borrow money from us. And when you ask somebody what they make, we know where they work, you know. We know if they’re married. We know how long they’ve lived in their house because these are all on the credit applications. We’ve never ever been challenged on how we use that. And that’s the leverage we got here with the data.”

The comments, which were amplified by several auto-industry sources and the Detroit Free Press, sparked alarm in the Twitterverse. Against the backdrop of privacy disasters at Facebook and other stalwarts of the internet economy, the fear for many is that Ford sees selling access to consumers based on their lifestyle as a way forward.

“Every OEM has data like this, how do you feel about *your* data being used this way?” tweeted one marketing pro.

“I heard it yesterday, and was appalled,” tweeted another. “No concern whatsoever for privacy and no reflection on whether or not this is a GOOD thing. Talked about linking with personal medical data while in the vehicle. No thought to ethical considerations. Another Zuckerberg. Disturbing.”

Is Ford considering selling consumer data as a revenue stream? Hackett stopped short of saying that — and indeed, the data could instead simply be useful to the company internally, as a way to increase the value (and profit) of its other businesses.

With sales of vehicles flagging worldwide, the company is finding itself running out of financial freeway, so to speak. And even in the U.S., its strongest market, Ford is seeing little vehicular success of late beyond sales of its trucks and SUVs). Accordingly, the automaker is wisely taking steps to be more fully integrated into people’s lives, by expanding into ancillary businesses that at first would seem to run counter to its mission.

For instance, it recently announced the acquisition of Spin, which is an electric scooter company. This continues an interest in “personal mobility” that has developed over the last two years; in 2016 for instance Ford decided to partner with Motivate, which is a bike-share company that runs the CitiBike program in New York City and other locations. It also invested in Chariot, which is a shuttle-bus service in San Francisco that works much like Lyft or Uber – routes are crowdsourced via a smartphone app.

The company said that it wants to tap into the growing pool of people that are “going green” and adopting healthier lifestyles by using alternate modes of travel for short distances. After all, almost 46 percent of Americans’ vehicle trips are three miles or less, according to the National Household Travel Survey.

“Spin adds an exciting new offering to Ford’s mobility portfolio as we try to help our customers get places more easily, more quickly and less expensively,” Sunny Madra, the vice president of the company’s Ford X division, said in a press statement. “As more people consider scooters to be a viable mobility option, now is the right time for Ford to work closely with Spin’s highly experienced and dedicated team to help expand their service to more cities.”

While the company talks up the altruistic aspects of these moves, the opportunity for collecting personal information may be where the real play is — perhaps not for sharing with third parties, but for better informing the rest of its business.

“[Spin] is a deal that makes sense because [Ford] will acquire data,” Ivan Drury, an industry analyst at Edmunds.com, told NPR. “Acquiring and knowing how people are utilizing other modes of transportation in addition to the ones that they already have.”

Hackett himself confirmed that assessment back in 2016, while discussing Motivate, which continues to expand to new markets.

“What we’re doing differently in San Francisco that isn’t done in New York is we put telemetry on that bike,” he said at an investor conference. “Telemetry is a form of communication, so now the bike is pinging data to us. Listen, here’s the deal. The opportunity is not bikes. That’s not why Ford’s in it. The opportunity is data, and the data is super valuable because it tells us these invisible paths that people are taking in this complex city in terms of how they want to get around. And there’s something else cool about it because we can take that data and we can connect it in ways that our new shuttle is going to connect to the cloud as well.”

It may make a lot of sense for Ford (and other automakers) to go in the data-broker direction to combat the financial headwinds stemming from the deeply cash-intensive vehicular design and production business, but a Ford spokesperson told Threatpost that this isn’t part of the plan.

“In the podcast…Jim Hackett was painting a picture of the future possibilities of data use given the long-term relationship and trust we have with our customers,” she said. “Specifically, it is important to know we do not sell or monetize information from customer credit applications. We take seriously our obligations related to how we use this information. With regard to all data use, we are committed to protecting customer privacy and we do that by ensuring transparency and appropriate consent in the collection and use of all customer data.”

What is clear however is that many consumers are uncomfortable with Ford acting more like a tech company than an automaker. Kevin Bankston, director of privacy think-tank New America, on Monday tweeted about Ford’s interest in personal data, with a posting that quickly went viral.

“Ford’s CEO just said on NPR that the future of profitability for the company is all the data from its 100 million vehicles (and the people in them) they’ll be able to monetize,” he tweeted. “Capitalism & surveillance capitalism are becoming increasingly indistinguishable (and frightening).”

After that tweet was liked and retweeted thousands of times, he noted, “Hey @Ford, you should note just how viral my previous tweet has gone. I don’t have a huge following or anything. There’s just a whole lotta drivers uncomfortable with this direction. They already paid for their cars with $$$, they don’t also want to pay with their privacy.”

This story was updated at 5:25 p.m. EST with comments from Ford’s spokesperson.

 

 

 

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