European Commission starts competition investigation into market for IoT devices

The European Commission has launched a market investigation into IoT devices in order to identify and counter potential market-disrupting problems in advance. The Commission wants to prevent separate IoT ecosystems from emerging in the future.

For the study, the European Commission sent 400 questionnaires to IoT companies in Europe, Asia and America. These are companies that sell smart home devices, wearables and voice assistants, as well as companies that offer services through these devices. The Commission asks these companies about the products they sell and how the IoT market works.

In addition, companies are asked how they collect, use and commercialize data. The final questions are about how the products and services work together and what potential problems there could be that make compatibility between devices difficult.

The European Commission is starting this investigation because it says that competition in digital markets can be ‘fragile’. The body is afraid that large companies will abuse their power and that a monopoly situation will arise. “As we have seen before”, the Commission writes, without giving examples. Data plays a key role in this; The Commission writes that there is a risk that large companies will misuse the data from IoT devices to strengthen their market position.

The body specifically fears a situation in which customers are directed by a company to products from that same company. What exactly the European Commission means by this is unclear. The Committee is probably referring to, for example, an app store of a company, in which the company gives its own apps a preferential position within the app store over other apps.

Another possible problem that the Commission fears is that devices will soon be unable to communicate with each other. Devices from different companies must be able to communicate with each other as far as the organ is concerned, to prevent consumers from being tied to an ecosystem. Currently, according to the Commission, consumers do not have to worry when buying a smart speaker that the device will not work together with, for example, the smart lighting in their home. The Commission wants this to continue to be possible in the future and therefore emphasizes the importance of interoperable compatibility.

The European Commission wants to compile a preliminary report next spring with the answers to the questionnaires. The public can respond to this again. The body hopes the report can help identify where companies may have broken competition rules. At the same time, the report says it can support the Commission in formulating and developing new legislation around IoT devices. The investigation also acts as a warning signal to powerful firms, according to the European Commission.

The European Commission has in the past disapproved of the ‘gatekeeper roles’ given to certain tech companies. For example, the body recently started an investigation into Apple, which may have violated competition rules with the App Store and Apple Pay. Google is also the target of an EC investigation. For example, companies would have been asked whether the acquisition of Fitbit raises competition and privacy concerns.