European Commission completes sector inquiry into the Consumer Internet of Things

January 27, 2022

The consumer Internet of Things includes consumer products and services that are connected to a network and can be controlled at a distance, for example via a voice assistant or mobile device. The European Commission believed that there were indications of company behaviour that may structurally distort competition in and for this sector. Therefore, the Commission carried out a competition sector inquiry to better understand the nature, prevalence and effects of these potential competition issues, and to assess them in light of EU antitrust rules.

On 9 June 2021 the Commission set out its initial findings pending public consultation. Following the consultation, it has now adopted its final report.

The findings of the sector inquiry confirm the rapid growth of the consumer IoT markets, but also identify potential concerns put forward by the respondents to the sector inquiry as well as in the submissions to the public consultation.

The final results of the sector inquiry highlight the following potential concerns:

  • Exclusivity and tying concerns in relation to voice assistants, as well as practices limiting the possibility to use different voice assistants on the same smart device.
  • Concerns regarding the role of the leading providers of voice assistants and smart device operating systems as intermediaries between the user and smart devices or consumer IoT services, including concerns on the pre-installation, default-setting and prominent placement of consumer IoT services on smart devices or in relation to voice assistants.
  • Data, including the access to and accumulation of large amounts of data by voice assistant providers, which allegedly enables them not only to control the data flows and user relationships but also to leverage into adjacent markets.
  • Lack of interoperability due to technology fragmentation, lack of common standards and the prevalence of proprietary technology, as well as the control over interoperability and integration processes by a few providers of voice assistants and operating systems.
  • Where the concerns identified appear to be the result of potentially anti-competitive practices, the Commission may decide to open case-specific investigations under Articles 101 and 102 TFEU. Any competition enforcement measure stemming from the sector inquiry would have to be based on a case-by-case assessment.

The results of the sector inquiry will also inform the Commission’s further work in implementing its digital strategy. The findings of the sector inquiry are also feeding into the ongoing legislative debate on the scope of the Digital Markets Act. Moreover, the Commission says that sector inquiries like this one may prompt companies to review their commercial practices. In this context, the Commission notes Amazon’s recent revision of some of the business-to-business conditions for its automatic and smart product reordering services.