The European Commission has published the preliminary results of its sector inquiry on IoT devices for consumers

The European Commission has published the preliminary results of its competition sector inquiry into markets for IoT-related products and services for consumers in the EU. The preliminary report covers the following topics: (1) the characteristics of consumer IoT products and services, (2) the features of competition in these markets, and (3) the potential concern in this context. 

The report details that the consumer IoT area is flourishing and highlights the increasing availability and proliferation of voice assistants as user interfaces. The report argues that the high cost of technology investment combined with the current situation prevents the sector’s expansion. The report states that many companies reported difficulties competing with vertically integrated companies that have built their ecosystems within and beyond the consumer IoT sector (e.g., Google, Amazon, or Apple). Therefore, these companies determine the processes for integrating smart devices and services in a consumer IoT system. 

According to the report, the main concerns are as follows: (1) Creating exclusivity and tying practices concerning voice assistants and practices limiting the possibility of using different voice assistants on the same smart device. (2). The position of voice assistants and smart device operating systems as intermediaries between users, smart devices, and consumer IoT services would allow them to control user relationships. (3) Providers of smart device operating systems and voice assistants seem to have extensive access to data. The access to and accumulation of data gives them advantages about their general-purpose voice assistants’ improvement and market position. This would also allow them to leverage into adjacent markets easily. And (4) lack of interoperability in the consumer IoT sector. In particular, a few providers of voice assistants and operating systems are said to control interoperability and integration processes unilaterally and to be capable of limiting functionalities of third-party smart devices and consumer IoT services compared to their own. 

The preliminary report on the findings of the sector inquiry will now be subject to public consultation until 1 September 2021, and the Commission aims to publish the final report in the first half of 2022. The information collected will guide the Commission’s future enforcement and regulatory activity. Any competition enforcement measure following the sector inquiry would have to be based on a case-by-case assessment. The findings of this sector inquiry can also contribute to the ongoing legislative debate on the Commission’s proposal for the Digital Markets Act. The consumer IoT sector inquiry was launched as part of the Commission’s digital strategy and following an announcement in the Commission’s Communication on Shaping Europe’s digital future. During the inquiry, the Commission has gathered information from over 200 companies of different sizes, operating in consumer IoT product and services markets and based across Europe, Asia, and the United States. Furthermore, these companies have shared with the Commission more than 1000 agreements. This information forms the basis of the report.