General Motors executives moved quickly to reassure investors on Tuesday, confirming that a $12.75 million privacy settlement with the state of California will have no material impact on the automaker’s highly profitable strategy of harvesting and selling its customers' driving data.
General Motors executives moved quickly to reassure investors on Tuesday, confirming that a $12.75 million privacy settlement with the state of California will have no material impact on the automaker’s highly profitable strategy of harvesting and selling its customers' driving data.
The settlement, announced by California Attorney General Rob Bonta, resolves an investigation into GM’s practice of secretly tracking drivers' locations, speeds, and braking habits through its OnStar system, then selling that telemetry to data brokers like LexisNexis and various insurance companies. While state prosecutors framed the eight-figure penalty as a stern warning to the automotive industry, Wall Street analysts praised the fine as a remarkably cheap bulk licensing rate.
When you amortize a twelve-million-dollar penalty across millions of connected vehicles, the regulatory overhead of selling our customers' hard-braking data to insurance companies remains well within our target margin.
Shares of the Detroit-based automaker ticked up slightly following the announcement, as institutional investors recognized the settlement as a mere cost of goods sold. Market analysts noted that $12.75 million represents roughly the amount of revenue GM generates globally in under an hour, cementing the penalty as an exceptionally efficient capital expenditure for its burgeoning surveillance division.
In a memo to the accounting department, the automaker confirmed the payment will be categorized under routine software licensing and data acquisition costs, rather than legal liabilities. The company also announced plans to roll out mandatory over-the-air updates to ensure that any future privacy violations are captured in even higher resolution.
Bonta’s office issued a press release celebrating the agreement as a landmark victory that holds the corporation accountable. Meanwhile, GM’s latest quarterly earnings guidance advised shareholders to expect similar nominal regulatory fees in other states as the company aggressively expands its core business of building heavy, data-gathering rolling servers that occasionally transport human beings from point A to point B.