Consumer Internet of Things sector rapidly grows

Photo: EPA Margrethe Vestager

The Commission published today the preliminary results of its competition sector inquiry into markets for consumer Internet of Things (IoT) related products and services in the EU. The report confirms the rapid growth of these markets, but also identifies potential concerns put forward by the respondents to the sector inquiry, the EP press service reported.

“When we launched this sector inquiry, we were concerned that there might be a risk of gatekeepers emerging in this sector. We were worried that they could use their power to harm competition, to the detriment of developing businesses and consumers. From the first results published today, it appears that many in the sector share our concerns. And fair competition is needed to make the most of the great potential of the Internet of Things for consumers in their daily lives,” Executive VP Margrethe Vestager said.

The consumer IoT sector inquiry was launched on 16 July 2020 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 US.

The Preliminary Report indicates that, while the consumer IoT is a relatively new area, it is growing rapidly and becoming more and more a part of our everyday lives. In addition, there is a trend towards increasing availability and proliferation of voice assistants as user interfaces enabling interaction with different smart devices and consumer IoT services.

The majority of respondents to the sector inquiry indicate the cost of technology investment and the competitive situation as the main barriers to entry or expansion in the sector. According to the replies, technology investment costs are particularly high in the market for voice assistants.

With respect to the competitive situation, a large number of respondents has 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). 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.

The report sets out a number of potential concerns raised by respondents in respect of 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. This position, combined with their key role in the generation and collection of data, would allow them to control user relationships. In this context, respondents have also raised concerns in relation to the discoverability and visibility of their consumer IoT services.

The report on the findings of the sector inquiry will now be subject to a public consultation for a period of twelve weeks, until 1 September 2020. All interested parties will be able to comment on the findings of the sector inquiry, submit additional information or raise further areas of concern.

The Commission aims to publish the Final Report in the first half of 2022.

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