Dutch drivers might have wondered how it was that speed traps were always in just the right place to catch speeders. It turned out to be simple enough: if they owned a TomTom, their in-car satnav was spying on them, and the aggregated data about cars’ speed was being sold via the government to the police — who used it to set the traps.
The company, which is Europe’s largest satnav manufacturer, was forced this week into an embarrassing apology as the revelation emerged alongside its first-quarter financial earnings, which showed weak demand and let it to forecast growing sales from “service revenues” – including, it said, selling data to governments.
In a public apology (repeated in a video on YouTube), TomTom’s chief executive Harold Goddijn said the company sold the anonymous data believing it would be used to improve safety or relieve traffic bottlenecks.
“We never foresaw this kind of use and many of our clients are not happy about it,” he wrote, and promised licensing agreements would “prevent this type of use in the future.”
Normally the aggregated data would be used to tell subscribers to TomTom services how to route around traffic conditions and give improved estimates of journey time. The sale of data to the government was intended to help it understand causes of congestion and accidents.
But the police had a simpler idea for how to use the data to offset the cost of buying it, and followed that as well.
Angry reaction
The timing of the admission comes just after a wave of concern over data collected by smartphones and passed back to the companies controlling them, such as Apple, Google and Microsoft. Apple admitted on Wednesday that the iPhone records location data about cellphone masts and Wi-Fi networks, but not individuals, and said its retention of the data for many months was due to a software flaw that would be remedied. Google and Microsoft says that users are asked to opt in to the anonymised use of location data.
The Dutch national newspaper Algemeen Dagblad reported that police had obtained the TomTom information from the government and used it to set targeted speed traps, prompting angry reactions from users.
TomTom’s predicament is that the market for satnav devices has begun to slow and even shrink, meaning that it cannot rely on hardware sales to keep sales growing. It said this week that it expects the market for personal navigation devices, or PNDs, to shrink by 15% in 2011, amid poor consumer demand and competition from smartphones and, more recently, from tablet computers.
That in turn means that at some point it will have to rely more on software and services revenue rather than more profitable and revenue-generating hardware — which analysts see as its key “crossover point” that lies somewhere in its future.
Around half of TomTom’s sales now come from vehicle makers who incorporate its products into their cars — and from services including companies and governments paying for map and traffic information.
TomTom is still recovering after falling into debt problems with its €2-billion acquisition of digital mapmaker Tele Atlas in 2008; it had to issue shares to stave off bankruptcy. Now its market is being eaten by new devices. – guardian.co.uk