Value of Information and Cost of Privacy in the Internet of Things

Will the Internet of Things happen? Clearly, the hardware and software components comprising the Internet of Things are technologically feasible, but the sweeping adoption we envision might not take place. The success of technological innovations depends on the creation of a business model that both customers and providers perceive as beneficial. As the recently abandoned Google Glass project shows, privacy concerns can kill an otherwise technologically feasible product. On the other hand, the example of Twitter illustrates that very popular products might fail to make money. Both academic researchers and businesses are becoming increasingly aware that we need to reason about the economic and social implications of provided value and privacy in a rigorous, quantitative way. In this article we call these quantities value of information, which appears to both the service providers and the customers, and cost of privacy, which normally is only relevant to the customers. We describe the importance of assessing these values in the context of the Internet of Things, possible directions of their formalization, their relationships to other problems, and related areas as well as future directions of the field.