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June 14, 2021
The consumer IoT sector inquiry was launched on 16 July 2020 as part of the Commission’s digital strategy and followed an announcement in the Commission’s Communication on Shaping Europe’s Digital Future. During the inquiry, the Commission gathered information from over 200 companies of differing sizes operating in consumer IoT product and services markets across Europe, Asia and the United States.
The Preliminary Report covers: (i) characteristics of consumer IoT products and services; (ii) the competition features of consumer IoT markets; and (iii) the main areas of potential concern.
Characteristics of consumer IoT products and services: while the consumer IoT sector 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 of increasing availability and proliferation of voice assistants as user interfaces enabling interaction with different smart devices and consumer IoT services.
Competition features of consumer IoT markets: the majority of respondents indicated the cost of investment in technology and competition as the main barriers to entry or expansion in the sector. Technology investment costs are particularly high in the market for voice assistants. As for competition, a large number of respondents 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 and are the leading voice assistant companies, they determine the processes for integrating smart devices and services in a consumer IoT system.
Main areas of potential concerns: respondents raised concerns over certain exclusivity and tying practices in relation to voice assistants, as well as practices limiting the option of using different voice assistants on the same smart device. They set out a number of concerns in relation to the position of voice assistant and smart device operating systems providers as intermediaries between users and smart devices or consumer IoT services, which, combined with their key role in the generation and collection of data, allows them to control user relationships. They also raised concerns over the discoverability and visibility of their consumer IoT services. The extensive access to data that providers of smart device operating systems and voice assistants have includes information on user interactions with third-party smart devices and consumer IoT services, which not only gives them advantages over the development, and market position, of their purpose voice assistants, but also allows them to leverage more easily into adjacent markets. Further, the prevalence of proprietary technology, leading at times to the creation of “de facto standards”, together with technology fragmentation and a lack of common standards, raise concerns as to the lack of interoperability in the consumer IoT sector. In particular, a few providers of voice assistants and operating systems are said to unilaterally control interoperability and integration processes and to be capable of limiting functionalities of third-party smart devices and consumer IoT services, compared to their own.
The Preliminary Report is now open for public consultation until 1 September 2021.
The Commission aims to publish the Final Report in the first half of 2022. To access the Preliminary Report and consultation, click here.