European Commission publishes initial findings of inquiry into consumer Internet of Things
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I am a partner in our Competition & EU Law team in London with over 18 years' experience at the cutting edge of UK and EU competition law and policy having worked at regulators, competition authorities, in academia and private practice, with a particular focus on regulated sectors such as payment systems as well as sport, retail, consumer, financial, technology and communications markets more widely.
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On 9 June 2021, the European Commission released its preliminary report presenting its key findings of its competition sector inquiry into markets for consumer Internet of Things (IoT) related products and services in the EU. This report was published following a sector inquiry launched in July 2020 as part of the Commission’s digital strategy. The findings are now subject to a public consultation, closing on 1 September 2021. The Commission’s analysis will also feed into its future enforcement and regulatory action.
Key Findings
The use of consumer IoT products are increasingly becoming part of everyday life and the sector is expected to grow significantly in the coming years.
The aim of the inquiry was to gain a better understanding of the consumer IoT sector, its competitive landscape, developing trends and potential competition issues.
The Commission’s initial concerns with the sector were that there might be a risk of gatekeepers emerging, who could use their power to harm competition, to the detriment of developing businesses and consumers. The Commission found many stakeholders shared its concerns.
The main findings of the report cover: (i) the characteristics of consumer IoT products and services; (ii) the features of competition in these markets; and (iii) the main areas of potential concerns raised by respondents regarding the current and future state of the sector.
Respondents to the inquiry highlighted the following potential concerns:
- The cost of technology investment and the competitive situation are the main barriers to entry or expansion in the consumer IoT sector;
- Exclusivity, concurrency and tying in relation to voice assistants could raise potential competition concerns if they prevent other competing voice assistants from being used on the same smart device;
- Pre-installation, default-setting and prominence practices can determine the discoverability, visibility and findability of consumer IoT services on smart devices or in relation to voice assistants;
- Certain providers of smart device operating systems and voice assistants seem to have extensive access to data, e.g. allowing the leading voice assistant providers to accumulate large amounts of data, enabling them to control the data flows and user relationships and leverage into adjacent markets;
- Lack of interoperability in the consumer IoT sector due to the prevalence of propriety technology leading to the creation of ‘de facto’ standards; and
- The role of the leading providers of voice assistants and smart device operating systems as intermediaries between the user and the smart devices or consumer IoT services that are controllable and accessible through the voice assistant and/or operating system, combined with their key role in the generation and collection of data, would allow them to control user relationships.
Next steps
The Final Report will likely be published around the first half of 2022. Further information can be found in the Commission’s press release, and the full report can be found here.
