On Thursday 20 January, the European Commission published the findings of its competition sector enquiry into the consumer Internet of Things (IoT).
The Commission’s final report (https://bit.ly/3Af8ji6 ), and its accompanying staff working document (https://bit.ly/3KolrX7 ), identify potential competition concerns in the rapidly growing markets for IoT related products and services in the European Union.
According to Margrethe Vestager, Executive Vice-President for Competition Policy, the consumer Internet of Things sector “is a market with high barriers to entry, few vertically integrated players and concerns about access to data, interoperability or exclusivity practices”.
The published documents confirm the preliminary report’s conclusions published in June 2021 (see EUROPE 12737/22).
Characteristics of consumer IoT products and services. The findings of the sector enquiry indicate that consumer IoT for is growing rapidly and is becoming more and more a part of the daily lives of Europeans. In addition, there is a trend towards the increasing availability of voice assistants as user interfaces that enable interaction with other smart devices and consumer IoT services.
Competition in the markets. Most of the stakeholders who participated in the sector survey indicate that one of the main barriers to entry or expansion in the sector is the cost of technology investment, which is particularly high in the voice assistant market.
The competitive situation is another important barrier to entry, as a large number of stakeholders have reported difficulties in competing with vertically integrated companies that have built their own ecosystems within and beyond the consumer IoT sector, such as Google, Amazon or Apple. As these players provide the most common smart and mobile device operating systems as well as the leading voice assistants, they determine the processes for integrating smart devices and services in a consumer IoT system.
Main areas of potential concerns. Stakeholders have raised concerns regarding the following areas: - the existence of certain exclusivity and tying practices in relation to voice assistants; - the position of voice assistants and smart device operating systems as intermediaries between users, on one side, and smart devices or consumer IoT services on the other side; - extensive access to data, including information on user interactions with third-party smart devices and consumer IoT services by providers of voice assistants; - the lack of interoperability in the consumer IoT sector due to the prevalence of proprietary technology.
The information collected in the context of the sector inquiry on the consumer IoT will provide guidance to the Commission's future enforcement and regulatory activity. In addition, the conclusions deriving from the sector inquiry will inform the Commission’s further work in implementing its digital strategy. The findings of this sector inquiry will also contribute to the ongoing legislative debate on the Commission’s proposal for the Digital Markets Act (see other news). (Original version in French by Lionel Changeur)