Smart TVs Are Cheaper Than Ever, and It's Because They're Selling Your Data

Thanks to plummeting retail prices on televisions, it's possible to walk out of a store with a 55-inch or 65-inch display for under $500. These aren't bare-bones models, either. Smart TVs from manufacturers like Vizio and TCL offer cutting-edge 4K resolution and High Dynamic Range (HDR) capability. If you have the right video source from a streaming service or 4K DVD player, the image quality can be staggering.

Depending on the model and manufacturer, some of these budget-friendly televisions achieve their attractive price points by collecting and selling your data.

In a candid interview with the Verge in January 2019, Vizio chief technology officer Bill Baxter illustrated the business model. Baxter explained that the low profit margins of televisions meant that the company was more interested in covering the cost and then seeing revenue from consumers using the television.

"You make a little money here, a little money there," Baxter said. "You sell some movies, you sell some TV shows, you sell some ads, you know. It's not really that different than the Verge website."

Because these televisions are often connected to the internet, they're able to track usage—what kind of content you watch through a built-in streaming app like Roku, your location, and which ads you're paying attention to. Depending on the video service you're using, Vizio can also get a portion of sales from on-demand content like movies.

According to Baxter, Vizio's philosophy is that monetizing hardware in this manner keeps costs down for every consumer, even if they opt out of data collecting. Of course, viewers paying only halfhearted attention to the television's disclaimers during the initial set-up process may not realize the extent of the information they're agreeing to share by default.

Nor has the company always been so transparent. In 2017, Vizio settled a complaint with the Federal Trade Commission (FTC) that alleged they collected data from 10 million sets without the consent of the consumer, including IP addresses. The information was gathered through a feature called Smart Interactivity, which promoted itself as being able to help the consumer find content and customize advertising based on viewing habits. The complaint, filed by the FTC and the New Jersey Division of Consumer Affairs, was settled for $2.2 million. Vizio admitted no wrongdoing and said that no viewing data was paired with personal information.

Another data collection service, Samba TV, has relationships with manufacturers like Sony, Sharp, TCL, and Phillips. The consumer is urged to enable the software when a television is first plugged in to get content recommendations. If users opt in, Samba TV tracks virtually everything that appears onscreen, learning what shows viewers are watching, and then works with advertisers to target ads to other devices connected to the internet in the home. (A notable exception is Netflix, which has agreements with manufacturers that prohibit third-party tracking on their service.) In 2018, Samba TV said it was collecting information from 13.5 million televisions in the United States.

The moral? If you own a smart TV, it's probably in your best interests to examine the data acquisition policy and opt out through the menu system. If not, be aware that your television is no longer a passive display. It's watching you.