The EC published a report concerning IoT, identifying potential competitions in the rapidly growing markets for IoT related products and services in the EU.
The report was published by the European Commission (EC), taking into account the comments and feedback received regarding the public consultation on the preliminary report of June 2021. The comments include inputs from stakeholders such as leading consumer Internet of Thing (IoT) players, smart device manufacturers, creative content service providers, associations, and telecommunication operators.
Executive Vice-President Margrethe Vestager, in charge of competition policy, mentioned: “The consumer Internet of Things sector is increasingly becoming part of our everyday life. The final findings of our sector inquiry confirm concerns identified in the preliminary report. This is a market with high barriers to entry, few vertically integrated players and concerns about access to data, interoperability or exclusivity practices, amongst others. We are confident that the sector inquiry’s findings will provide guidance on the Commission’s future enforcement and regulatory activity. We are also hopeful that it will stimulate companies to pro-actively address those concerns.” The report is divided into three major topics (i) the characteristics of consumer IoT products and services, (ii) the features of competition in these markets, (iii) the main areas of potential concern raised by the stakeholder in relation to the current functioning of consumer IoT markets as well as to their outlook.
The first topic evaluated that the consumer IoT is continuously growing and becoming an important part of the everyday lives. Furthermore, there is an increasing amount of voice assistants as user interfaces, which enable interaction with other smart devices and consumer IoT services. The second topic can be answered based on stakeholders opinions, who participated in the public consultation. They indicated that one of the main barriers to entry into the sector is the cost of technology investment, which is particularly high in the market for voice assistants. Another important barrier to entry is the competitive situation. Many stakeholders have reported difficulties in competing with vertically integrated companies that have built their own ecosystems within and beyond the consumer IoT sector, e.g. Google and Amazon.
The third point defines the main areas of potential concerns. The asked stakeholders raised different concerns: The first focuses on exclusivity and tying practices in relation to voice assistants. The second on the position of voice assistants and smart device operating systems as intermediaries between users and consumer IoT services. This position in combination with the key role in the collection of data would allow providers to control user relationships. A further worry is extensive access to data by IoT service providers. Stakeholders are afraid that the accumulation of large amounts of data could allow providers to improve their market position and to leverage more easily into adjacent markets. The last concern addresses the lack of interoperability in the consumer IoT sector. This happens due to the prevalence of proprietary technology, leading to the creation of ‘standards’. Moreover, some providers of voice assistants and operating systems are said to unilaterally control interoperability and seem to be capable of limiting functionalities of third-party consumer IoT services.
The report gives guidance to the Commission’s future enforcement and regulatory activity. The conclusions deriving from the sector inquiry will support the EC in implementing its digital strategy (see SwissCore article) In particular, it will contribute to the ongoing legislative debate on the Digital Markets Act.