CEO defends Nest's un-Googley, ad-free business

The maker of Net-connected thermostats and smoke detectors isn't like its parent company Google when it comes to making money, says Nest CEO and founder Tony Fadell.

The second-gen Nest Learning Thermostat
The second-gen Nest Learning Thermostat Lindsey Turrentine/CNET

Google already denied that it has plans to sell ads on its thermostats, but Nest CEO Tony Fadell went out of his way Wednesday night to separate his subsidiary's money-making methods from those of its parent company.

Google makes the vast majority of its money by selling ads, an approach that critics lambast because it means the company has a financial incentive to pry into user behavior to supply better ads. Nest doesn't work that way, but Fadell was apparently concerned the message wasn't getting through. He took to Twitter to say Nest is separate and makes money simply by selling products to consumers.

"Nest has a paid-for business model, while Google has generally had an ads-supported business model," Fadell tweeted. "We have nothing against ads, after all Nest does lots of advertising. We just don't think ads are right for the Nest user experience," he said.

Nest sells Internet-connected thermostats and air-quality sensors designed to make it easier to control the household environment, for example with smartphone apps for alerts and settings. Google acquired Nest for $3.2 billion in February.

Nest Labs CEO and founder Tony Fadell
Nest Labs CEO and founder Tony Fadell Stephen Shankland/CNET

Google itself spawned the new debate with a 2013 filing to regulators published on Tuesday that said, "a few years from now, we and other companies could be serving ads and other content on refrigerators, car dashboards, thermostats, glasses, and watches, to name just a few possibilities." On Wednesday, Google said the letter "does not reflect Google's product roadmap" and said Nest "does not have an ads-based model and has never had any such plans." Google has contacted the SEC to "clarify" the 2013 filing.

Critics of Google's advertising-supported business had pounced on the letter.

"You are the product with this creepy company," concluded Jim Dalrymple at The Loop, an Apple blog, meaning that Google users are the products being sold to advertisers. Daring Fireball blog author John Gruber added, "What a depressing, oppressive view of the future."

Nest evidently didn't want to be tarred with that brush.

"Nest is being run independently from the rest of Google, with a separate management team, brand, and culture," Fadell said.

Fadell also had another public-relations fire to put out Wednesday when the US Consumer Products Safety Commission issued a recall notice for the Nest Protect, an effort it said it made to bring an earlier problem to the notice of more people. "The CPSC press release issued today refers to the same corrective action referenced in our April Safety Notice," Fadell tweeted about the recall.

People can address the issue by connecting the Nest Protect to the Internet for a software update that disables the problematic feature. That feature let people hush the smoke alarms with a gesture for small problems like burning toast, but it also could potentially silence the Nest Protect when there's a real problem.

 

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