The internet of things

Here, we provide an overview of the concepts underpinning the Internet of Things (IoT). We look at some of the emerging applications of this technology and the challenges its continuing adoption will create.

Already widespread, IoT is likely to become all-pervading in the months and years ahead.

As well as technical and operational implications, this will also create legal considerations for General Counsel as your company decides (knowingly or unwittingly) to buy, sell and/or use the IoT. It is increasingly important for you to know what it is, what it does and what it is likely to do so that you can think about the resulting legal implications for your business.

The Internet of Things: what it is and why it matters

Most people are used to the notion of computers, tablets and phones being permanently connected to the internet.

However, over the past decade, advances in wireless networking, machine learning, commodity sensors and embedded systems have extended this connectivity. Today, almost anything, from a toothbrush to a suspension bridge, can have an internet connection.

The internetworking of these devices is known as The Internet of Things (IoT). In this definition, ‘Things’ are physical devices embedded with electronics, sensors and actuators that enable them to collect and exchange data almost anywhere and at any time.

Experts suggest we look at IoT as an inextricable mixture of hardware, software, data and services that work together to allow direct integration of the physical world into computer based systems. They estimate that by 2020, the IoT will consist of almost 50 billion objects.

These are likely to comprise:

  • Smart grids, such as smart meters;
  • Smart homes that allow lighting, heating and other functions to be controlled over the internet;
  • Intelligent transportation, such as self-driving trucks and cars; and
  • Smart cities.

In a recent report, the Boston Consulting Group predicts that the overall market for IoT hardware, software and data analytics will be worth over $250bn by 2020.

Current uses for IoT

As with any new technology, innovative ideas and creative technology companies are likely to drive the adoption of IoT in the coming years.

Consumer products such as fitness bands and connected household appliances have generated much of the media buzz around IoT to date. However, the potential for business usage is far more significant. And, while the interconnection of embedded devices is expected to usher in automation in almost every aspect of an organisation’s activity eventually, it’s already making an impact in these six sectors:

  • Environmental monitoring. Scientists are using wireless sensors such as electronic clams in coastal waters to boost environmental protection by monitoring air, water and soil quality and to detect dangerous pathogens. The sensors are also monitoring wildlife and their habitats and providing early warning systems for natural phenomenon, including earthquakes and tsunamis, to assist emergency services;
  • Infrastructure management. In civil engineering, IoT plays a role in monitoring and controlling large-scale infrastructure such as bridges, railways and windfarms. This is largely focused on optimising normal operational capacity, detecting events or changes in structural integrity and scheduling maintenance and repair operations with multiple service providers;
  • Energy management. Utilities are making increasing use of smart sensing and actuation systems as they develop and roll out the Smart Grid. This will see IoT make its way into all forms of energy-consuming devices to enable, in conjunction with smart meters, dynamic load balancing on the local and national grid;
  • Manufacturing. IoT intelligent systems enable manufacturers to optimise their supply chain networks and production processes in real time by connecting machinery, sensors and control systems. In this sophisticated environment, IoT encompasses automated control, plant optimisation and safety management. It also extends to asset management via predictive maintenance, statistical evaluation of finished goods and metrics for maximising reliability;
  • Medical and healthcare. Applications in remote health monitoring and emergency notification systems are widespread. Physicians deploy everything from basic blood pressure and heart rate monitors to specialised implants such as pacemakers. In the US, some hospitals are even deploying smart beds, which monitor and assist patients who want to be mobile without the intervention of nurses; and
  • Transportation and logistics. Entire transportation systems, including the vehicle, the infrastructure, and the driver or user, are becoming increasingly reliant on IoT ecosystems. Dynamic interaction between these components enables inter- and intra-vehicular communication, smart traffic control, smart parking, electronic toll collection, logistic and fleet management, vehicle control and safety and road assistance.

Challenges to wider adoption

Though IoT clearly offers great benefits for organisations and individuals, its widespread adoption will involve challenges. Among them are:

  • Interoperability. To be effective, IoT systems will need to communicate with one another and to integrate their data in meaningful ways. At the moment, interoperability is restricted as there are many competing approaches using open and proprietary standards. The newly-developed Dotdot universal communications language endorsed by the main standards setting body in this arena may be a solution to this problem;
  • Analytics capability. IoT will generate a torrent of data. To be able to benefit from this data, organisations will need to develop and deploy analytical software that extracts actionable insights. Furthermore, in many cases, the algorithms embedded in this software will have to analyse data streams in real time, a task many traditional analytical tools are not designed for;
  • Cybersecurity. There’s an inherent trade-off between interconnectedness and security. As many of the objects now connected to networks have relatively little inbuilt security, they represent potential points of vulnerability for malicious hackers to target. The consequences of disrupting IoT systems on an oil rig or in a hospital could be life threatening. The same interconnectedness that creates operational efficiency and effectiveness also exposes more of an organisation’s operations to cyber risks. Furthermore, increasing interfaces between organisations and consumers will create greater challenges for corporate networks; and
  • Privacy and data security. Companies will face increasing calls to clarify their procedures and the security and contractual protections that they have in place around collecting, storing and sharing the data that flows from their IoT devices. Breaches of data privacy may lead to significant backlashes in consumer and corporate contexts as well as having potentially business threatening regulatory and reputational consequences.


Just as it has revolutionised the way we interact with each other and with organisations, The Internet of Things (IoT) is now doing the same with the way we use physical objects. From a humble door lock to a supermodern bridge, IoT has a wide range of consumer and business-to-business applications. It also brings challenges. Of most concern to in-house lawyers will be the increased risk of cyber attacks and the added complexity to data privacy and protection compliance procedures, IP control, allocation for risk between contracting parties and in many other areas.