The Commission launched the inquiry into the sector of Internet of Things for consumer-related products and services in the European Union on 16 July 2020 (see the press release) on the basis of European Union ("EU") competition rules, in particular Article 17 of Regulation 1/2003. It is part of the Commission’s digital strategy and follows an announcement in the Commission’s Communication on Shaping Europe’s digital future.
The decision initiating the sector inquiry is available in three languages, EN - FR - DE.
The consumer Internet of Things comprises 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. There are indications of company behaviour that may structurally distort competition in and for this sector. Therefore, the Commission gathered market information through its 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.
As part of the sector inquiry, the Commission requested information from a variety of players active in the Internet of Things for consumer-related products and services throughout the EU. This included companies active in the manufacture of products such as wearable devices (e.g. smart watches or fitness trackers) and connected consumer devices used in the smart home context (such as fridges, smart TVs, and lighting systems). Requests for information were also sent to companies active in the provision of services available via smart devices, such as music and video streaming services, and the provision of voice assistants used to access such services. A separate questionnaire was sent to industry and standard-setting organisations.
During the inquiry, the Commission has gathered evidence from over 200 companies operating in the consumer Internet of Things and has gathered around 1000 agreements provided by the companies.
On 9 June 2021 the Commission published a Preliminary Report on the consumer Internet of Things sector inquiry, setting out its initial findings. The Preliminary Report provides an overview of the main competition-relevant market trends identified in the consumer Internet of Things sector inquiry and points to possible competition concerns.
A public consultation following the publication of the Preliminary Report, wherein stakeholders were able to comment on the preliminary findings of the sector inquiry, submit additional information or raise further issues, ran until 1 September 2021.
On 20 January 2022, the Commission adopted the final report on the consumer IoT sector inquiry (available in all the languages of the European Union) and published the accompanying staff working document. These documents set out the main findings of the consumer IoT sector inquiry taking into account the views and comments submitted by stakeholders during the public consultation.
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 also inform the Commission’s further work in implementing its digital strategy. The findings of the sector inquiry are in particular feeding into the ongoing legislative debate on the scope of the Digital Markets Act (“DMA”).
 European Commission. Proposal for a Regulation of the European Parliament and of the Council on contestable and fair markets in the digital sector (Digital Markets Act) (COM/2020/842 final). European Commission, Brussels, 15 December 2020.
For any further information, please contact COMP-SI@ec.europa.eu.