Skip to main content
Publication

European Commission: Sector Inquiry on the Consumer Internet of Things

Locations

Germany

On 16 July 2020, the European Commission ("Commission") launched a sector inquiry into the consumer-related Internet of Things ("IoT"). The term IoT refers to the totality of everyday objects that communicate via the Internet with their users as well as with each other in order to receive commands or pass on information. This includes, for example, intelligent household appliances, language assistants or even "wearables" such as smartwatches.

Content of the sector inquiry

The companies who will receive a so-called "formal" request for information will be asked inter alia to indicate what kind of personal data is collected by smart home appliances and how it is subsequently used. The companies are also asked to explain how they use the data to make money.
The Commission also intends to understand in detail how it is possible to ensure that equipment from different manufacturers is compatible with each other and to what extent the companies communicate with each other for this purpose.
The companies contacted by the Commission should also indicate the obstacles they encounter when launching new products on the market, in particular with regard to intellectual property, (in-)compatibility of their products with those of other manufacturers and the availability of data.

Objective of the sector inquiry

The Commission intends to identify potential competition problems in the consumer-related IoT with the help of the inquiry, so that it can react in a timely manner to ensure competition in this area. In the event that competition infringements are identified, procedures will be initiated to ensure compliance with EU competition rules.

Background

The investigation has to be regarded in the context of the question raised by the European Commission whether the increasing use of IoT devices, especially language assistants such as Amazon's Alexa or Apple's Siri, is accompanied by the risk that the manufacturers of these products will develop into "gatekeepers" for digital services. Gatekeepers are companies that occupy a key position with which they can significantly influence the access of other market participants to resources such as competitively relevant data.
The Commission also fears that companies could abuse their position to favour in-house offerings: a voice assistant could, for example, offer primarily services such as music or film streaming services from its parent company to its users. Practices related to the use of proprietary standards at the expense of weaker competitors could also constitute such self-preference.

Comment

The sector inquiry is another important element of the Commission's digital strategy. It enables the Commission to assess the competitiveness of the relevant market and to detect potential infringements of competition law. In the past, sector inquiries have served the Commission both to initiate proceedings against individual companies and to take regulatory action. The first results are to be published in spring 2021.
It is advisable to answer the questionnaires carefully. Under Article 23 of Regulation (EC) 1/2003, the Commission may impose sanctions on undertakings which supply incorrect or misleading answers to a request for information.

Links

Press release of the European Commission of 16 July 2020

Statement of the EU Commissioner for Competition

Commission Decision of 16 July 2020 to open an investigation

Commission presentation: Internet of Things

 

Sign up to our email digest

Click to subscribe or manage your email preferences.

SUBSCRIBE