HomeInsightsEuropean Commission publishes final report on consumer Internet of Things sector inquiry

The Commission has published the findings of its competition sector inquiry into the consumer Internet of Things (IoT). The final report and its accompanying staff working document identify potential competition concerns in the rapidly growing markets for IoT related products and services in the EU.

The documents present the Commission’s findings, following consultation on the preliminary report published in June 2021.

The final report covers the following points, also covered in the preliminary report:

  1. characteristics of consumer IoT products and services: the findings indicate that the consumer IoT market is growing rapidly and becoming more and more a part of our everyday lives; 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;
  2. competition features in the markets for consumer IoT products and services: one of the main barriers to entry or expansion in the sector is the cost of technology, which is particularly high in the market for voice assistants; competition is another barrier: many stakeholders reported difficulties in competing with vertically integrated companies that have built their own ecosystems within and beyond the consumer IoT sector (e.g. Google, Amazon or Apple); these players provide the most common smart and mobile device operating systems as well as the leading voice assistants, meaning that they determine the processes for integrating smart devices and services in a consumer IoT system;
  3. main areas of concern: (i) exclusivity and tying practices in relation to voice assistants, as well as practices limiting the prospect of using different voice assistants on the same smart device; (ii) the position of voice assistants and smart device operating systems as intermediaries between users and smart devices or consumer IoT services which, combined with their key role in the generation and collection of data, allows them to control user relationships; stakeholders also raised concerns in relation to the discoverability and visibility of their consumer IoT services; (iii) voice assistant providers’ extensive access to data, including information on user interaction with third-party smart devices and consumer IoT services, allows them to improve their market position and to leverage more easily into adjacent markets; and (iv) lack of interoperability in the sector due to the prevalence of proprietary technology, leading to the creation of “de facto standards”; some voice assistant providers and operating systems unilaterally control interoperability and integration processes and can limit the functionality of third-party smart devices and consumer IoT services, compared to their own.

The information collected by the inquiry will guide the Commission’s future enforcement and regulatory activity. The Commission says that any subsequent competition enforcement measure will be based on a case-by-case assessment. Further, the conclusions of the report will inform the Commission’s further work in implementing its digital strategy, e.g., the Commission’s Digital Markets Act proposal.

The Commission also says that sector inquiries such as this one can prompt companies to review their commercial practices and notes Amazon’s recent revision of some of the business-to-business conditions applicable to its automatic and smart product reordering services. To read the Commission’s press release in full and for a link to the final report, click here.