OnStar, the automaker's unit that administers the in-vehicle electronics communication system, has changed its "terms and conditions" to allow the company to monitor driver data even after people stopped subscribing to the service, and said they would sell the data to third parties.
Customers would have had to opt out of that process. Now, the automaker will ask customers if they want to opt-in to the tracking.
"We realize that our proposed amendments did not satisfy our subscribers," OnStar President Linda Marshall said. "This is why we are leaving the decision in our customers' hands. We listened, we responded and we hope to maintain the trust of our more than 6 million customers."
The automaker's OnStar system is installed in most of GM's cars. It's a satellite-based system that delivers "telematics" services: providing everything from the ability to unlock locked keys in the car via satellite to monitoring air-bag deployment to contact first responders, as well as traffic updates and more.
Last week, OnStar made a change to its "Terms and Conditions" that stipulated it could track unsubscribed customers in order to sell data more effectively. GM typically offers buyers of GM's cars a trial period, with a pay option kicking in later for packages that start at $18.95 per month. Many customers do not continue to subscribe once the free trial period is over.
GM, facing a Congressional inquiry over the new policy, reversed its position after first defending it. Privacy is becoming a hot-button issue with companies like Facebook attempting to sell consumer data whenever possible. Facebook on Wednesday admitted it had been tracking subscribers even after they logged off.
Senator Charles "Chuck" Schumer (D-NY) who often takes up consumer issues, called for a full investigation into OnStar's original plan.
"By tracking drivers even after they've canceled their service, OnStar is attempting one of the most brazen invasions of privacy in recent memory," said Schumer. "I urge OnStar to abandon this policy and for (the Federal Trade Commission) to immediately launch a full investigation to determine whether the company's actions constitute an unfair trade practice."
One of the sticky issues GM would have been dealing with if it went ahead was grappling with the fact that GM is still approximately one-third owned by the Federal government. GM management is anxious for the government to sell its stake, dating back GM's 2009 bankruptcy and bailout by the taxpayer. But with GM's stock tanking to well below its 2010 offering price, the taxpayer would take a major hit if the government sold the stock now.
Taking a hard line against Senators that stood up for GM's bailout while the government still owns one-third of the company could have been awkward.