Pub. 57 2016-2017 Issue 1

36  NADA RESPONSE — CONTINUED FROM PAGE 34 First, ridesharing is not and cannot be linear because peak demand for rides will always frustrate peak supply. 79 Second, the autonomous vehicle ridesharing model is at heart, a more convenient, customized mass transit model, not a competitor to private vehicle ownership. 80 While this model will certainly have appeal to some, even if it were to become more cost- effective on a per-mile basis, the overwhelming majority of consumers will not wish to sacrifice flexibility and convenience for shared autonomous mobility. For the Commission, issues of privacy, consumer protection, and potential deception should be the focus in the context of ridesharing. Many ridesharing companies today rely heavily on the ability to gather, compile, and leverage very sensi- tive personal information about their customers (including information about those customers when they are not using the ridesharing service). Indeed, many ridesharing companies are generally considered to be more “data” companies than transportation companies. 81 Reasonable limitations, consumer consent, and consumer protectionwith respect to this incredibly sensitive information is critical. In addition, many ridesharing business models rely on so-called “dynamic” pricing models that are difficult to predict, adequately disclose, or rely on as a consumer.While there is nothing inherently problematic with such models, to the extent that consumers seek to rely on such ridesharing services as their primary transportation option, the opportunity for unfair or deceptive treatment increases greatly. The cybersecurity and privacy issues presented by autono- mous vehicles and ridesharing are of paramount impor- tance. Overall, we would urge the Commission to continue to focus its efforts on the truly crucial issues that underpin all of these promising new technologies: cybersecurity and privacy. 82 With other regulators (including NHTSA, the Department of Homeland Security, and DOT) focused on the technical aspects of cybersecurity, the Commission should continue to work with manufacturers, suppliers, software companies, and dealers to protect consumers by ensuring that privacy and security are at the forefront of all they do. 83 Vehicles and related systems need to be designed with privacy and security first, and executed with security as the top priority. We would also urge the Commission to work with other regulators at the federal and state level to establish clear rules regarding li- ability and consumer protection now, before they are needed. A security problemor a loss of faith in the vital privacy protec- tions in a connected, autonomous vehicle would present both an existential threat to a manufacturer and an impediment to consumer acceptance of these new technologies. Moreover, the cybersecurity bar must be a high one. These issues must be addressed now, and consumers must have reason to trust these systems before they are adopted. The dealership franchise model has a positive effect on “innovation.” Finally, we take issuewith the suggestionsmade by some of the speakers during panel four at the Workshop that the state laws restricting vertical integration in the auto- motive retail distribution system somehow stifle the ability to “innovate.” In particular, Professor Scott Morton’s suggestion that the state franchise laws are akin to a state law “outlawing internet movie downloads and requiring consumers to visit a video shop and rent a video if they want to watch a movie,” TR. IV; 14, is the flimsiest of straw men. Any consumer in this country can go online and purchase a new car from a dealer today. No state franchise law limits or restricts any ridesharing businessmodel or autonomous driving technology. As outlined above, these laws simply regulate the ownership structure of the retail outlet and the relationship of that outlet to the manufacturer. So what are the specific innovations that the franchise model allegedly stifles? According to Professor Scott Morton, they are: (a) “remote updates of software”; (b) “just in time manu- facturing”; and (c) alternate means for consumers to “to test 79 A lot of people will want cars during rush hour; very few will want them in the dead of night. 80 Indeed, the policy questions with ridesharing will likely center not on how it will compete with private ownership, but on how it will compete with public transportation (and whether large-scale public transportation projects should continue to be funded). 81 See, e.g., http://www.forbes.com/sites/ronhirson/2015/03/23/uber-the-big-data-company/. The same can be said for non-manufacturing, “data” companies who seek to become auto manufacturers. Why would such a company wish to manufacture a car? Presumably because of the value of capturing and controlling the sensitive data emanating from, and related to, that car. The privacy issues arising from such a business model are immense and should also be an area of increased focus by the Commission. 82 See Keynote Remarks of Commissioner Terrell McSweeny at the Connected Cars USA Conference 2016 where she stated that “the Federal Trade Commission’s role in all of this [is] . . . to include protecting consumer privacy – and, ultimately, their data security.” She went on to state that “[s]ince becoming an FTC Commissioner, I have become a frequent visitor to the various hacker conferences where car hacking has been prominently featured. Some have dismissed these exploits as stunts. But I think it would be wiser to treat these revelations as an important wake-up call to the auto industry.” See https://www.ftc.gov/system/files/documents/public_statements/913813/ mcsweeny_-_connected_cars_usa_2016_2- 4-16.pdf at 2-3. 83 While “connected” vehicles were not discussed in any detail on the panel, we believe that the privacy and security issues with connected vehicles will require concerted regulatory and technological efforts over the coming years, and should also be at the center of the Commission’s efforts.  NADA RESPONSE — CONTINUED ON PAGE 39