German Kid Smartwatch Ban Opens Voice-Activated Privacy Debate

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By Jabeen Bhatti

Germany’s recent move to ban the sale of children’s smartwatches with built-in voice recognition technology may lead privacy regulators to adopt a ban for other such devices, privacy professionals told Bloomberg Law.

As voice-controlled assistants, such as Amazon.com Inc.'s Alexa, become commonplace, German privacy officials may seek to ban them or restrict how they are used. The global voice and speech recognition market is valued at nearly $6.2 billion in 2017 and is likely to reach $18.3 billion by 2023, according to an August report by competitive market research company MarketsAndMarkets Research Private Ltd.

“If something is said in your living room and that speech is recorded and passed along to data providers, it’s exactly the same as surveillance, Marit Hansen, data protection officer for the German state of Schleswig-Holstein, told Bloomberg Law.

As voice-controlled devices continue to grow, so too will data privacy concerns over devices that store voice commands and back up the data through a central server, Hansen said. German regulators are considering how to regulate such devices under German privacy law amendments set to take effect when the European Union’s new privacy regime, the General Data Protection Regulation takes effect in May 2018, she said.

Covert Technology

Germany’s Federal Network Agency, the nation’s regulatory office for telecommunications, Nov. 17 banned smartwatches able to communicate remotely via smartphone technology that are targeted toward children ages 5 to 12. The regulator cited privacy concerns because parents could, without the wearer’s knowledge, remotely trigger a “baby monitoring” function on the devices using a cellphone application.

Such telephony-connected devices that can be triggered without the user’s knowledge to listen in on his or her surroundings are forbidden under Germany’s Telecommunications Act, which outlaws the manufacturing, distribution, or possession of telecommunications equipment that mimics the form of another object but is used to conduct surveillance of private conversations.

“Via an app, parents can use such watches to secretly listen to a child’s environment,” Jochen Homann, president of Germany’s Federal Network Agency, said in a Nov. 17 statement, noting that the surveillance feature had been used to listen to teachers in the classroom.

The agency called on parents to destroy all children’s smartwatches with such surveillance features and provide proof of the destruction. Parents caught in possession of such devices by school officials, or others, could face a penalty of up to 25,000 euros ($29,313), according to agency.

Competitive Advantage

A nuanced approach to regulating smart toys and products marketed for children may be needed to balance privacy protection with consumer demand for new internet-connected devices, Carlo Piltz, a cybersecurity and data protection attorney with Reuschlaw law firm in Berlin, told Bloomberg Law.

The smart phone surveillance features ban, however, may ultimately profit companies by giving them a privacy competitive advantage.

Jan-Michael Wolff, president of children’s smartwatch manufacturer Anio GmBH, based in Bremen, Germany, told Bloomberg law that the Federal Network Agency informed his company in March of the plan to ban monitoring functions in children’s smartwatches, and acted immediately to deactivate the surveillance capabilities in his company’s products.

“We’re pleased with the ban and the fact that consumers in the future will look more closely at what they buy and hope they’ll decide on a German manufacturer” that complies with the nation’s stringent privacy protections, Wolff said. Consumers will now be more wary of less expensive devises manufactured in China and elsewhere that have dubious data protection standards, he said.

To contact the reporter on this story: Jabeen Bhatti in Berlin at correspondents@bloomberglaw.com

To contact the editor responsible for this story: Donald Aplin at daplin@bloomberglaw.com

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