The European Commission has launched an antitrust enquiry into consumer IoT products and services, saying market knowledge gained from the enquiry would contribute to its enforcement of competition law in the sector within the European Union.
Specifically, the EC said the enquiry would 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.
The enquiry 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.
The EC lists devices to be covered as including wearable devices (eg 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.
EC executive vice-president Margrethe Vestager, who is in charge of competition policy, said large amounts of user data appeared to be the key for success in the sector. “So we have to make sure that market players are not using their control over such data to distort competition, or otherwise close off these markets for competitors.”
A $A44 billion market
She told a press conference announcing the enquiry that Europe had about 108 million smart home devices at the end of 2019 and the number was forecast to reach 184 million devices by 2023. She said the value of the smart home market was expected to almost double in the next four years to more than 27 billion Euros ($A44b).
The EC said there were already signs that certain company practices could 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.
“Internet of Things 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.”
The EC’s initiative comes five years after the OECD, in its Digital Economy Outlook 2015, put the spotlight firmly on IoT as a key ’emerging issue’ and urged member governments to address IoT issues by taking numerous IoT related policy initiatives.
If the enquiry leads to the EC having concerns about competition it could 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).
The Commission will send requests for information to a range of players active in the market for consumer-related IoT products and services throughout the EU.
400 companies to be queried
Vestager said: “In all, we’re sending questionnaires to about 400 companies, big and small, based in Europe, Asia and America. We’re asking about the products they sell, and how the markets for those products work.
“We’re asking about data – how it’s collected, how it’s used, and how companies make money from the data they collect. And we’re asking about how these products and services work together, and about possible problems with making them interoperable.”
The EC expects to publish a preliminary report on the replies for consultation in the northern spring of 2021,and a final report in the northern summer of 2022. There is a website for the enquiry.
