The European Commission Launches Sector Inquiry on the Consumer Internet of Things

Background

Last month, the European Commission launched a new sector inquiry into the Internet of Things (IoT) for consumer-based products and services in the EU. The term IoT encompasses smart devices which are capable of connecting with one and other including devices such as smart-watches, household appliances and mobile phones. The purpose of the enquiry is to consider potential antitrust and competition law issues arising out of the IoT sector and particular focus will be paid to consumer based IoT products. 

What are the European Commission looking for?

The Statement by Executive Vice-President Margrethe Vestager on the launch of a Sector Inquiry on the Consumer Internet of Things details a number of areas of concern.

1.    Use of data 

“Data is the oil of the 21st century” was the phrase coined by Joe Kaeser, CEO of Siemens and it is clear that large amounts of data, including personal data, are key to the success and value of the IoT sector. The European Commission is concerned that consumer usage data could be used to obtain market dominance by companies in the sector who can obtain an unfair advantage by using historical data to develop and market new products. The European Commission is therefore requesting information from IoT companies about how their smart devices collect, use, share and store data. Although the European Commission has made no express link between this part of the inquiry and the fine levied against Google by the local data protection regulator in France, CNIL, it does appear that the European Commission considers the findings of that case worthy of further consideration for the rest of the sector too. 

2.    Monopoly by operability 

The European Commission has expressed concern that a lack of interoperability between rival companies will allow them to monopolise certain markets. Margrethe Vestager puts it in the launch statement: “Interoperability is one of the keys to open and competitive markets in the digital age. For us to get the most out of the IoT, our smart devices need to communicate. So if the devices from different companies don't work together, then consumers may be locked in to just one provider.” The European Commission is requesting technical information about the interoperability between devices from different companies. 

3.    Sector partnerships 

In addition to the European Commission’s concerns about a lack of interoperability between devices in the IoT, the European Commission is also concerned that contractual partnerships between companies in the IoT sector could distort competition where, for example, companies are entering into referral agreements with other companies which limits the consumers access to competition for similar products and services. The European Commission will request contractual information about partnerships between IoT companies. 

When will the European Commissions results be published? 

The European Commission is currently in the process of sending out requests for information to hundreds of companies in the IoT sector. The European Commission is expected to publish its final report in Summer 2022. 

Learn more…

You can read the Statement by Executive Vice-President Margrethe Vestager on the launch of a Sector Inquiry on the Consumer Internet of Things here