LG Smart TVs are dumb
(Or, corporate entitlement run amok.)
According to a UK blogger, LG Smart TVs not only offer “smart” features, but also track your viewing habits extremely closely by submitting events back to LG and to LG's advertising affiliates.
Under his diagnosis, the TV sends an event to LG that identifies the specific TV
every time the viewer changes channels (containing the name of the channel being watched)
whenever a USB device is inserted (containing the names of files stored on the USB stick)
The page comments additionally suggest that the TV sends back information whenever the menu is opened, as well.
This information is used to provide targeted advertising, likely to offset the operational cost of the TV's “intelligent” features. Consumer protections around personal data and tracking have traditionally been very weak, so it's not entirely surprising that LG would choose to extract revenue this way instead of raising the price of the product to cover the operational costs and instead of offering the intelligent features as a subscription service, but this is extremely disappointing.
How is this harmful?
LG uses this information to sell targeted advertising, extracting value for itself out from the presence of other peoples' eyeballs. We've collectively chosen to accept that content producers -- website owners, for example -- can sell advertising as a way to augment their income from the content they produce. However, LG is not a content producer; while you can choose to leave a website that uses invasive ad tracking, LG's position is more analogous to that of the web browser itself: they get to watch the customer's habits no matter what they choose to watch.
There is a material difference between advertising targeted by time slot and by the content distributors (television networks) on their own behalf, which has been part of television nearly from its inception, and the kind of personally-invasive and cross-channel targeted advertising LG is engaging in. LG's ability to correlate viewing habits across every channel and across non-public media the user watches places them in a position where they may well derive more information about the people watching TV than those peoples' own spouses or parents would be trusted with. We've already seen this kind of comprehensive statistical modelling go wrong; Target's advertising folks landed in hot water last year after their purchase-habit-derived models revealed information about a customer that she didn't even have about herself.
LG is also taking zero care to ensure that the private information it's silently extracting from viewers is not diseminated further. The TV sends viewing information - channel names, file names from USB sticks, and so on - over the internet in plain text, allowing anyone on the network path between the TV and LG to intercept it and use it for their own ends. This kind of information is incredibly useful for targeted fraud, and I'm sure the NSA is thrilled to have such a useful source of personally-identifying and habit-revealing data available for free, too.
Icing on the cake
The TV's settings menu contains an item entitled “Collection of watching info” which can be turned to “On” (the default, even if the customer rejects the end-user license agreement on the television and disables the “intelligent” features) or “Off.” It would be reasonable to expect that this option would stop the TV from communicating viewing habits to the internet; however, the setting appears to do very little. The article shows packet captures of the TV submitting viewing information to LG with the setting in either position.
The setting also has no help text to guide customers to understanding what it actually does or to clarify expectations around it.
LG's stance is morally indefensible
From the blog post, LG's representative claims that viewers “agree” to this monitoring when they accept the TV's end-user license agreement, and that it's up to the retailer to inform the user of the contents of the license agreement. However:
LG does not ensure that retailers tell potential buyers about the end-user license conditions; they claim it's up to the retailer's individual discretion.
There's no incentive for retailers to tell customers about the license agreement, as the agreement is between LG and the customer, not between the retailer and the customer. Stopping each sale to talk about license terms is likely to reduce the number of sales, too.
It would be impractical for retailers to inform customers of every license for every product they sell, as there are unique licenses for nearly every piece of software and for most computer-enabled products (i.e., most of them). Retailers do not habitually employ contract lawyers to accurately guide customers through the license agreements.
LG's own packaging makes the license agreement effectively unviewable without committing the money to buy a TV. It's only presented on the TV itself after it's installed and turned on (which often voids the customer's ability to return it to the retailer), and in retailer-specific parts of LG's own website, which isn't practically available while the customer is standing in a shop considering which TV to buy.
It is not reasonable to expect customers to assume their TV will track viewing habits publicly. This is not a behaviour that TVs have had over their multi-decade existence, and it's disingenuous for LG to act like the customer “should have known” in any sense that the LG TV acts in this way.
LG is hiding behind the modern culture of unfair post-sale contracts to impose a novel, deeply-invasive program of customer monitoring for their own benefit, relying on corporate law to protect themselves from consumer reprisals. This cannot be allowed to continue; vote with your dollars.