The Momenta Pulse Check series highlights recent developments in the Digital Industry. Pulse Checks are designed to help you keep track of the ever-changing and rapidly growing global Digital Industry. Our weekly Pulse Checks delve into one of four categories: Digital Industry, Emerging Technology, Talent and Ventures. In this week’s Pulse Check, we have highlighted recent developments pertaining to Digital Industry.
SEPTEMBER 2019
With the cooling of the weather, focus turns to serious endeavors as pastoral summer frolics fade into memories. Markets continue to shrug off threats of impending slowdowns, despite growing signs that the record economic expansion in the U.S. may be on its final legs. There has been little progress on a deal in the U.S.-China trade war, with only a threatened tariff hike delayed as a measure of good will – or a negotiating olive branch. The protracted dispute has caused many Chinese manufacturers and suppliers to seek alternate routes to market via third countries such as Vietnam – but markets have largely discounted any potential disruption for now.
In Digital Industry, security remains top of mind – with legislative efforts to lock down risks creating large bills that may come due. Information security remains top of mind for buyers and investors in September, as appetite for new offerings remains robust for high growth technology companies such as Ping Identity, DataDog and CloudFlare which came public this past month.
A recent collaboration between Northeastern University and Imperial College London examined 81 popular smart TVs, streaming dongles, smart speakers, and video doorbells made by vendors including Google, Roku, and Amazon and found that the majority of the devices collected and shared information - including IP addresses, device specs, usage and location data. This data is often shared with third parties without the knowledge or consent of consumers. The potential exposure of private data with connected products creates massive potential risks that legislators are just now starting to get their arms around – with laws in California leading the way.
California’s Senate Bill 327 goes into effect January 1, 2020 and requires that all connected devices sold in the state— no matter where they are made — incorporate "a reasonable security feature or features" that appropriately protect the user of the product and the user's data from unauthorized access, modification, or disclosure. Under the law, single hard-coded passwords are not allowed, and each device must either have a unique passcode or require the user to generate a new passcode before using the device for the first time. This is creating challenges for vendors in the state to get compliant.
The Internet of Things (IoT) Cybersecurity Improvement Act of 2019 resulted from a bipartisan effort to help reduce risks from the plethora of connected devices and services coming on line. However the Congressional Budget Office (CBO) which scored the report said that implementing the Act would cost $35 million over the 2019-2024 period, and an additional $11 million in 2020 to develop the IoT guidelines and standards mandated in the legislation. With costs like that attached to potential legislation as a market driver there is no doubt why cyber security vendors are valued so richly.
It’s critical for businesses of all sizes to get a handle on security risks – both physical and cyber – as the threat landscape continues to become more challenging. The recent attacks on Saudi Arabian oil production highlight potential vulnerabilities of the world’s energy supply, and raise the spectrum of concerted cyber attacks against critical infrastructure as well.
With billions of devices and connections coming online every year – there’s a commensurate increase in the number of potential vulnerabilities and attack vectors against Digital Industry. While the bad guys never sleep, there’s some comfort knowing that innovators continue to explore new technologies and solutions. We explore the dynamics of the market in our next webinar.
Momenta Partners encompasses leading Strategic Advisory, Talent, and Venture practices. We’re the guiding hand behind leading industrials’ IoT strategies, over 200 IoT leadership placements, and 25+ young IoT disruptors. Schedule a free consultation to learn more about our Connected Industry practice.