John Matherly operates what you might call the search engine for the Internet of Things. It's called Shodan, and it lets you probe the net for all sorts of online devices, from refrigerators and swimming-pool control panels to webcams—lots and lots of webcams.

It's a fascinating tool that opens a window into an unexpectedly enormous world of networked devices. But Matherly will tell you that what you see through Shodan only hints that the potential of what we call the Internet of Things. The aim isn't to simply connect myriad devices to the internet. The aim is to fill our homes with devices that also connect to each other, working together to make our lives easier. "The whole vision is to remove steps that you take everyday. You drive near your garage, and it opens. You walk in, and the temperature will adjust to something you're comfortable with," he says. "And that requires devices that can talk to each other."

The trouble is: today's connected devices don't really interact this way. "We're still in the stage where every vendor has their own proprietary standard and few can agree on anything," Matherly says. "As such, devices from different vendors aren't able to talk to each other, and if you want a fully automated house, you need to perform a lot of patchwork to get things working properly."

>You can arrange for LIFX lightbulbs to flash red when the Nest fire alarms detect elevated smoke or carbon dioxide levels.

But, in recent days, Google and Nest have taken two big steps toward this vision of the smart home. Late Friday, Nest—the home automation company Google acquired for $3.2 billion in January—announced its acquisition of Dropcam, a startup that sells internet-connected security cameras. In a brief blog post, Nest founder Matt Rogers hinted that his company would somehow integrate these cameras with Nest's thermostats and fire alarms. Then, late Monday, the company unveiled an application programming interface, or API, that lets outside developers connect software and hardware into the Nest devices.

"Any connected product or service can connect to us," says Greg Hu, who oversees Nest's developer program. "We wanted to make the API as flexible as possible."

These are significant announcements, given that Nest and Dropcam are two of the most prominent devices in this burgeoning market. But the wildcard is the involvement of Google, a company that already collects so much personal data from the world's internet users and could collect even more through Nest and Dropcam. Many see Nest's expansion as a threat to privacy, even as they praise the design of the company's hardware and software.

Gilad Meiri—the CEO of a Neura, a startup that seeks to connect you to all sorts of internet devices—calls Nest and Dropcam "the best devices out there." Even Patrick Wardle, the director of research at security outfit Synack that recently found a well-known security vulnerability in Dropcam, highly recommends the wonderfully slick and simple device.1 And the Nest API program already has allowed its devices to interact with third-party hardware. According to the company, you can, for example, set a Jawbone UP24 wristband to notify the Nest thermostat when you wake up, so it can adjust the temperature in your home. Or you can have LIFX lightbulbs flash red when your Nest fire alarm detects elevated smoke or carbon dioxide levels.

"This API program is about more than just basic control," Hu says. "It is more about customer experiences and making them better in the home."

For Matherly, the program could provide the fabric needed to connect the smart home in more seamless ways—even though it's not an open standard, per se. The key is that Nest has such a high profile. The company's API could become a de facto operating system for extremely broad range of devices. "You don't need standardization," Matherly says. "You need to have the userbase that makes integrating with the API an attractive business proposition. The Nest is arguably the most successful smart home product. Businesses will want to interact with the Nest API as an additional selling point."

But then there are the ties to Google, whose business is built on using online data to target advertisements across PCs, tablets, and phones. The prospect of the web giant tapping into your home devices—which could provide an even broader window into your personal life—doesn't sit well with many who know this world, including Meiri. "What Google knows how to do best is take data and monetize it. Now, there's potential to do this kind of thing with an IP camera," he says. "I do think that privacy is more and more of a concern."

When Nest announced its acquisition of Dropcam, it reiterated that its privacy policy ensured that Dropcam data "won't be shared with anyone (including Google) without a customer's permission." But when we spoke with Meiri in the wake of the $550 million deal, he predicted it was only a matter of time before Google started encouraging users to provide such data—something many people don't think twice about. And, indeed, in announcing its API program, Nest said that Google soon will offer tools that interact with Nest devices and ask users to share data. In August, for instance, the Google Now service will dovetail with the Nest thermostat to automatically change the temperature of your home when it knows you're about to arrive.

Adi Kamdar, an activist with the Electronic Frontier Foundation, warns against this kind of thing. "This poses some clear privacy issues," he says. "When we start seeing a pressure to share information with Google, that it pressure to give them a lot more information about you than they already have and it's a lot more information than you necessarily need to give them. Ultimately, what you're buying as a security solution or an energy solution that could become a source of information for things like advertising."

The threat is two-fold. First, because it controls such an enormous amount of data about the world's people, Google becomes a "honey pot" for the NSA and other entities that can go beyond retrieving information via subpoena and National Security Letter and actually hack into Google's systems, as recent revelations from NSA whistleblower Edward Snowden have shown. And second, you can never be sure how Google will use your personal data. As Meiri points out, Google has already said, in a letter to SEC, that it plans on delivering ads to thermostats and other connected devices.

>'Ultimately, what you're buying as a security solution or an energy solution that could become a source of information for things like advertising.'

That said, Nest is adamant that "ads are not part of our strategy." And Hu tells us that the company has taken special precautions to ensure customers know what data they're sharing with third parties, including Google. "We require developers to provide a justification for a particular permission," he says. "The belief here is that this a level of transparency that's greater than what you get with most other services out there."

Like Meiri and Kamdar, Matherly says people should worry about Google's move into the home. And if anyone understands the privacy risks of connected devices, it's Matherly, whose Shodan search engine lets anyone search for internet cameras people have exposed to the world at large—sometimes unknowingly—providing a strangely intimate view of their private lives. But he also says that people won't be concerned by Google's move into the home. If they like what the Dropcam cameras and Nest thermostats do for them, they'll continue to buy and use the devices, regardless of any privacy issues. Historically, he says, privacy and security haven't "affected the purchasing decisions of the average user."

This remains true even after the Snowden revelations. At the very least, people will weigh the benefits of the expanding Nest platform against the potential loss of privacy. And, as Matherly will happily tell you, those benefits could be quite large.

1Correction 18:30 EST 06/24/14: An earlier version of this story referred to Patrick Wardle as the CEO of Synack. He is the director of research.