In brief:Ford CEO Jim Hackett says that he wants to turn the car company into a data company that spies on its customers. How can anybody be that tone deaf in 2018? And how valuable is Ford’s data, anyway?
To survivors of the first dotpocalypse (circa 2001), the phrase, “we’re going to monetize our data” ranks alongside the other great lies in the world like, “the check is in the mail,” and, “no, those pants don’t make your butt look big” (there are also some dirty ones that I won’t repeat here– ask me at a bar sometime).
Back in the early aughts, “we’re going to monetize our data” was code for, “we don’t have a revenue model and are desperate to con advertisers out of some cash so we don’t have to go get real jobs.” At the time, the data wasn’t worth much because advertisers hadn’t yet figured out that the internet was Hoovering up unprecedented levels of human attention.
It was, therefore, surreal to hear Ford CEO Jim Hackett talk about turning the car company into a data company ina recent Freakonomics Radio interview:
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; 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’ve got here with the data.
Ina subsequent NPR article, Edmunds.com analyst Ivan Drury linked this to Ford’s recent acquisition of scooter company, Spin:
Another reason fueling Ford’s purchase of Spin goes back to the way tech companies make money: collecting personal information, Drury says.
“This is a deal that makes sense because [Ford] will acquire data,” he says. “Acquiring and knowing how people are utilizing other modes of transportation in addition to the ones that they already have.”
For example, Drury envisions a world where Ford learns that a Chevy Malibu driver takes a Spin scooter, now owned by Ford, three blocks every Wednesday. Whatever Ford learns about users, “that is where it becomes even more powerful,” he says.
Aside from profound dotpocalypsedéjà vu in which I imagine a choir of robe-wearing baritone monks chanting, “no revenue model, no revenue model,” Ford’s positioning itself as a data company is remarkable for two reasons:
Reason #1:It is profoundly tone deaf to talk about total surveillance of one’s customers at a moment when the EU’s new General Data Protection Regulation (GDPR) are redefining and vastly narrowing what information corporations can collect and when Facebook’s fortunes are waning because of its irresponsible work with companies like Cambridge Analytica and its at-best-amoral-at-worst-malevolent disregard for the privacy of its users.*
Hackett just sounds creepy as he talks about taking advantage of his customers misplaced trust, somewhere between a teenager with a crush and an outright stalker. At a moment where he is trying to position himself as a future-focused and strategic CEO, instead he looks retrograde.
Reason #2:As we have seen in the Future of Transportation Project, car ownership has peaked and is in decline. For Americans, transportation decisions are shifting from high-consideration purchases (car) to low-consideration transactions (rides). The loan-application data set that Hackett plans to use will therefore only atrophy, making a proposed data business a short-term win at best.
Many companies are targeting 2020 and 2021 as the years in which they’ll roll out self-driving Get-a-Ride Services (GARS). Pace William Gibson, that future will arrive but it won’t be very evenly distributed. Let’s set the half-life of Ford’s data at five years, meaning that by 2023 the utility of the data coming off Ford vehicles will have atrophied by 50%, and then it will lose another 50% by 2028, and so on.**
Ford may wellteam-up with Volkswagen to develop self-driving technology, but that doesn’t mean it will have a monopoly on the data coming off 100 million users, who are more likely to play the field than settle on one transportation-on-demand company.
Even if we were to set the half-life farther out, how valuable is the data?
The Ford data set Hackett describes pales in comparison to what the big tech companies already know about their users (see this alarming infographic for details). At its most valuable and pervasive, for the concerns of advertisers vehicle data is still a small subset of the kinds of data that Facebook and Google and Verizon and others have on their customers.
Hackett’s overconfidence in the value of the data contrail coming off Ford vehicles comes from his using the wrong consideration set. Here is the relevant passage from the Freakonomics interview:
We have 100 million people in vehicles today, that are sitting in Ford blue-oval vehicles. That’s the case for monetizing opportunity versus an upstart who maybe has, I don’t know, what, they got 120,000 or 200,000 vehicles in place now. Just compare the two stacks: which one would you like to have the data from?
Hackett is comparing the number of vehicles Ford has on the road to the number of vehicles Tesla has on the road, but that number pales in comparison to the number of smartphones sitting in pockets and bags the world over.
Just in 2017, Apple sold 217 million iPhones; various companies sold 1.5 billion Android phones (both numbers per Statista).
Even if you own a car, which you won’t for much longer, you don’t spend all that much time in it. In contrast, people bring their phones with themeverywhere: many people even sleep with their phones. Moreover, Facebook, Google and other tech companies track users across devices, linking up smartphone data with laptop data and so on. Automotive data is not compelling by comparison.
Ford, like all automakers, is indeed undergoing profound Darwinian pressure as it diversifies and evolves from a pure-play car company into–as former Ford CEO Mark Fields dubbed it before they fired him–a mobility company.*** With its rich history of innovation and logistical expertise, nobody should count Ford out.
But that doesn’t make it a data company.
* To be scrupulously fair, the Hackett interview and the Spin acquisition both happened before the remarkable New York Times piece about how Facebook mishandled Russian interference with the 2016 election, although come on… that’s merely the straw that led the camel to call the orthopedic surgeon.
** This generously presumes that Ford can get data out of all the 100 million vehicles it currently has on the road, which may not be the case.
*** Ford is also a finance company; see Phoebe Wall Howard’s insightful recent Detroit Free Press piece for details.