European Commission launches sector inquiry into the consumer Internet of Things

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The European Commission has launched an antitrust competition inquiry into the sector of Internet of Things (IoT) for consumer-related products and services in the European Union. The sector inquiry will focus on consumer-related 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. These include smart home appliances and wearable devices. Knowledge about the market gained through the inquiry will contribute to the Commission’s enforcement of competition law in this sector.

Despite the relatively early stage of development of the sector for the IoT for consumer-related products and services in the EU, the Commission says that there are indications that certain company practices may structurally distort competition. In particular, there are indications relating to restrictions of data access and interoperability, as well as certain forms of self-preferencing and practices linked to the use of proprietary standards. IoT ecosystems are often characterised by strong network effects and economies of scale, which might lead to the fast emergence of dominant digital ecosystems and gatekeepers and might present tipping risks. Therefore, through this competition sector inquiry, the Commission will gather market information to better understand the nature, prevalence and effects of these potential competition issues, and to assess them in light of EU antitrust rules.

The sector inquiry will cover 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, washing machines, smart TVs, smart speakers and lighting systems. The sector inquiry will also collect information about the services available via smart devices, such as music and video streaming services, and about the voice assistants used to access them.

If, after analysing the results, the Commission identifies specific competition concerns, it might open case investigations to ensure compliance with EU rules on restrictive business practices and abuse of dominant market positions (Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU)).

In the coming weeks, the Commission will send requests for information to a range of players active in the IoT sector for consumer-related products and services throughout the EU. The companies concerned may include, for example, smart device manufacturers, software developers and related service providers. Under EU antitrust rules the Commission can require companies and trade associations to supply information, documents or statements as part of a sector inquiry.

The Commission expects to publish a preliminary report on the replies for consultation in the spring of 2021. The final report would follow in the summer of 2022. To read the Commission’s press release in full, click here.