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Can the 'Internet of Things' Preserve Privacy?: Lawmakers

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As Silicon Valley rolls out the next wave of connected cars, smart beds, and even Internet-friendly toothbrushes, lawmakers on Capitol Hill are grappling with how to spur innovation while protecting consumer privacy and security.

Those bipartisan concerns were on display during Wednesday's Senate Commerce, Science and Transportation hearing on the "Internet of Things" –- a catch-all term for the emerging market of Internet-connected devices that can talk to one another, but that also collect and transmit user data.

With Samsung under scrutiny for smart TVs that can listen in on private conversations and recent reports showing that cars with Internet or other wireless connectivity –- which includes nearly all new vehicles on the market today -– are vulnerable to hackers, many senators were skeptical.

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“It’s a time of great opportunity with what we have, but at the same time, where is our privacy?” said Senator Bill Nelson (D-FL).

But with the annual global economic impact of "smart" devices expected to be in the trillions, others argued that increased regulation could put the breaks on an American advantage.

"These issues are real, but I encourage policymakers to resist the urge to jump headfirst into regulating this dynamic marketplace," said committee chairman John Thune (R-SD).

Tech experts in attendance agreed that while a lack of corporate transparency is a problem with new products that rely heavily on collecting data about customers, robust regulation could stunt an industry that has not quite figured out yet what it is and what people are ready to buy.

"That sort of speed is going to make it hard to set in stone any sort of rules that can govern that kind of innovation," said Adam Thierer, a senior research fellow with the Mercatus Center at George Mason University.

Thierer argued that recent Federal Trade Commission lawsuits show current consumer protection regulations already work.

"What policymakers can do is... to suggest efforts to educate consumers and make them aware of potential security and privacy risks and vulnerabilities,” he said.

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