The U.S. Federal Trade Commission (FTC) is suspending its investigation into Nest for its decision to discontinue support for the Revolv smart home hub.
In a letter to the Google-owned Nest, the FTC writes, “Upon review of this matter and confidential information Nest provided during our investigation, we have decided not to recommend enforcement action at this time.” The official letter details the process and reasoning behind the recommendation.
The investigation was centered on advertising practices and consumer confidence. Nest (owned by Google at the time) acquired Revolv Inc. in October 2014 and stopped selling the Revolv devices shortly after. Essentially, the FTC needed to determine if Google and Nest violated federal law by shutting down a device that many consumers relied on.
According to the official statement, “The FTC staff was concerned that reasonable consumers would not expect the Revolv hubs to become unusable due to Revolv Inc.’s actions, and that unilaterally rendering the devices inoperable would cause unjustified, substantial consumer injury that consumers themselves could not reasonably avoid.”
The official statement was written by Mary Engle, associate director for advertising practices at the FTC. According to Engle, two factors helped the FTC reach this conclusion: the limited number of hubs sold and Nest’s decision to alert and refund customers who relied on the hub.
Even though the FTC will not be formally recommending charges in this case, the regulator had strong words for other smart home makers thinking of following a similar route. It also reminded Nest that the investigation could be re-opened due to public interest in the case.
“Our decision not to pursue enforcement action should not be construed as a determination that a violation did not occur,” says Engle in the official statement.
Following the decision, the FTC released a blog post titled “What happens when the sun sets on a smart product that serves as an advisory for Internet of Things (IoT) manufacturers.” The post discusses broader issues about the IoT market and what happens when an IoT product is taken out of circulation abruptly.
The FTC statements on the broader IoT and connected home market means that manufacturers will need to tread lightly and think before discontinuing any connected devices that homebuyers rely on for home control.
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