When Google bought the smart home products maker Nest in January, many consumers reacted with sometimes sarcastic concern about the privacy and advertising implications of the acquisition.
"If your house is burning down, you’ll now get Gmail ads for fire extinguishers," tweeted Gawker's Sam Faulkner Biddle.
That was just one of many similar reactions, some expressing worry that it was a political plot on the part of the liberal tech elite to watch people in their homes.
Those fears were once again stoked this week when a letter from Google to the Securities and Exchange Commission was made public. Written in December of last year, the letter touches on Google's plans to expand its advertising platform to a variety of web-connected products.
"We expect the definition of 'mobile' to continue to evolve as more and more 'smart' devices gain traction in the market. For example, a few years from now, we and other companies could be serving ads and other content on refrigerators, car dashboards, thermostats, glasses, and watches, to name just a few possibilities," wrote Amie Thuener, Google's director of finance.
The letter is both unsurprising and revelatory. Companies have found a way to advertise across every communication medium ever built: why wouldn't consumer products in the home be any different? However, while the ad strategy may not be a shock to anyone, it was the first time Google spelled out its vision for ad delivery in the connected home:
Our expectation is that users will be using our services and viewing our ads on an increasingly wide diversity of devices in the future, and thus our advertising systems are becoming increasingly device-agnostic. Enhanced Campaigns was specifically designed to help advertisers become more efficient in a multi-device future; rather than writing unique desktop campaigns, handset campaigns, and tablet campaigns, etc., Enhanced Campaigns allows our advertisers to write one ad campaign, which we serve dynamically to the right user at the right time on whatever device makes the most sense. Because users will increasingly view ads and make purchase decisions on and across multiple devices, our view of revenue is similarly device-agnostic.
Naturally, the first thing everyone wanted to know was how this strategy would impact Google's relationship with Nest. Taking this language at face value, it would appear that Google is ready to serve advertisements to people across Nest's thermostats, smoke alarms and whatever other products it focuses on next.
Heck, it could even send notices to thermostat customers so they can keep up with any smoke detector recalls from Nest.
But both Google and Nest now say that speculation is false, and that they have no intention of serving advertisements to people with Nest products.
"We are in contact with the SEC to clarify the language in this 2013 filing, which does not reflect Google's product roadmap. Nest, which we acquired after this filing was made, does not have an ads-based model and has never had any such plans," wrote Google in a statement.
Nest CEO Tony Fadell released a similar statement to the press: “Nest is being run independently from the rest of Google, with a separate management team, brand and culture. For example, Nest has a paid-for business model, while Google has generally had an ad-supported business model. We have nothing against ads -- after all, Nest does lots of advertising. We just don’t think ads are right for the Nest user experience," he said.
Coincidentally, just before the story of Google's letter broke, Nest's Director of Energy Products Ben Bixby was speaking at the Demand Response Town Meeting in Washington, D.C., and was asked about privacy concerns.
"Nest does not share data with Google. Nest operates completely independently within Google," said Bixby, addressing a worried conference attendee.
Bixby went on to explain Nest's philosophy on customer information: "We are the servant; we are the custodian to that data. We work on your behalf and we don’t want to receive data about you without your permission. We don’t want to be the recipient," he explained.
Nest has made it very clear that it doesn't see direct ad delivery as a part of its business model. On the other hand, Google was very blunt about its plans to reach consumers where they are: driving their smart cars, getting food from their smart fridges, or checking the time on their smart watches. As Google explained to the SEC, it's only a matter of time.
"We do believe that the eventual disclosure of revenues generated from digital content/apps, and/or hardware will likely be meaningful, when they reach material levels," wrote Google's Thuener.