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European Commission encourages industry action on consumer Internet of Things

The European Commission (EC) sector inquiry final report and accompanying staff working document set out the EC’s antitrust concerns in the markets for consumer Internet of Things (IoT) related products and services in the EU.

In the context of high barriers to entry and a few vertically integrated players, the EC’s main areas of potential concern include:

  • Certain exclusivity and tying practices in relation to voice assistants, as well as practices limiting the use of different voice assistants on the same smart device
  • The control of user relationships by voice assistants and smart device operating systems given their intermediary position between users and smart devices / consumer IoT services and their key data-generation and collection role
  • The extensive access to and accumulation of data, including information on user interactions with third-party smart devices and consumer IoT services, by providers of voice assistants, allegedly enabling them to leverage into adjacent markets
  • The lack of interoperability in the consumer IoT sector due to technology fragmentation and the prevalence of proprietary technology, leading at times to the creation of “de facto standards”

All the information collected will undoubtedly feed into the EC’s digital regulatory activity and strategy, including the scope of the proposed Digital Markets Act regime.

And, while the EC has not formally opened any related antitrust investigations, saying they “would have to be based on a case-by-case assessment”, the inquiry will guide any future enforcement.

Commenting on the report, Commissioner Vestager also notes that the EC is “hopeful that it will stimulate companies to pro-actively address those concerns”. Market players are on notice to review their commercial practices to ensure compliance with antitrust law.