Paranoia or privacy? Some people are pledging to return their Nest thermostat now that Google is buying the company that makes the popular “smart home” device for US$3.2 billion (NZ$3.8 billion) in cash.

Their reasoning: Buying Nest Labs could help Google hoover up a whole lot more of our personal information to slice and dice for advertisers.

Google already understands everything about our online behaviour - and that knowledge is what it sells to advertisers.

But Google has far less insight into our habits and preferences when we are not staring at the screen of a personal computer or mobile device.

Enter the Internet of Things, wireless devices that collect data in the home and can be controlled with a smartphone. Many people believe this represents the next big growth phase of the Internet.

Nest makes Internet-connected devices for the home such as thermostats and smoke alarms. It has a host of products planned to make your home more “conscious” by connecting it to the Internet.

Google says it will abide by Nest’s privacy policy, which limits how customer information can be used.

And Nest co-founder Matt Rogers said in a blog post on Monday: “Our privacy policy clearly limits the use of customer information to providing and improving Nest’s products and services. We’ve always taken privacy seriously, and this will not change.”

But even anonymised data on Nest users would give Google an invaluable glimpse into our daily lives.

And that information could potentially be paired with online movements, making the world’s most powerful search engine that much more powerful for its ability to ever-more-precisely target advertising.

Tweeted Ryan Block, vice president of product at AOL: “With Nest’s built-in sensors now Google knows when you’re home, what rooms you’re in, and when you’re out. Just FYI.”

Concern over privacy may not be the prevailing sentiment about Google’s deal to buy Nest Labs. But privacy advocates say consumers who are worried about the Nest Labs acquisition are not overreacting.

People should be wary of how much intelligence Google will be able to suck up and analyse once it completes the purchase of Nest Labs, said Jeffrey Chester, executive director of the Center for Digital Democracy.

“Consumers should insist Google start making their mortgage or rent payments, given all the data the company plans to sweep up from everyone’s homes,” Chester said. “A few billion is digital chump change for the key to unlock more of our personal information. By linking together our mobile, video, search, while driving, in-store and now at-home data, Google wants to become an invisible but all-seeing new member of the family.”

Marc Rotenberg, another frequent critic of Google, said he planned to return his Nest thermostat now that Google is buying the company.

“Being a genuine geek, that was no simple decision,” said Rotenberg, president of the Electronic Privacy Information Center.

But, he said, he didn’t feel as if he had much choice. “Google doesn’t respect boundaries,” he said.

A key concern for Rotenberg: Google’s move to merge its privacy policies and consolidate data from users across more than 60 services, including video-sharing service YouTube.

At the time Google said it was looking to make its privacy policy clearer to users and to improve its services.

But privacy advocates in the US and European regulators have complained that Google has not been forthcoming about what it does with all of that personal data, especially when that information is collected from different services to target advertising.

“Now with the Internet of Things emerging, there is every reason to believe that Google will use Nest data for marketing and deeper profiling of consumers,” Rotenberg said.

He’s not the only one who is nervous about a universe powered by Google devices.

After renting for more than a decade, David Chartier, a freelance technology writer from Chicago, bought his first home in October. He says he couldn’t wait to make his house “smart,” so one of his first purchases was a Nest thermostat. He said he has really appreciated having a “smart” thermostat that warms up the house in anticipation of his return home, particularly during record low temperatures that have frozen Chicago.

“The Nest is an incredible product,” Chartier said. “I looked at a lot of other thermostats, and it doesn’t seem like there is anything out there like it right now.”

But with Google buying Nest Labs, he has begun to shop again for alternatives.

“For me, it’s that growing sentiment that there is so much data that Google is collecting that it is getting uncomfortable,” Chartier, 33, said.

What really troubles Chartier? Google keeps changing what it can do with his data, he said.

“We sign up for one or more services, and the (terms of service) to which we agree state Google will do X, Y and Z with the information we hand over. Then down the road it adds A, B and C, which were never part of the original deal or even scope of possibilities,” Chartier said. “A year later it tosses on D, E and F, to which you must agree if you are going to continue using these services that now contain increasingly important portions of your work and personal data.

“It’s this kind of perpetual changing of the rules and expectations, an arguable disrespect for the user that’s beginning to grind people’s gears,” he said.