The consumer internet of things has caught the attention of regulators - last week we wrote that the UK government is consulting on improving cybersecurity in consumer devices.

Now the European Commission has launched an antitrust inquiry into the Internet of Things sector for consumer-related products and services in the EU. It defines IoT broadly, and the inquiry will focus on consumer-related products and services that are connected to a network and can be controlled at a distance.  This includes smart watches or fitness trackers as well as connected consumer devices used in the smart home context, such as fridges, washing machines, smart TVs, smart speakers and lighting systems. 

The inquiry 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 Commission says that knowledge about the market gained through the inquiry will contribute to its ability to enforce competition law in this sector. The consumer IoT sector is still at a relatively early stage of development, but despite that, the Commission says that there are indications that certain company practices may structurally distort competition. In particular, there are issues regarding restrictions of data access and interoperability, as well as certain forms of self-preferencing and practices linked to the use of proprietary standards. IoT 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.

Therefore, the Commission plans to use the inquiry to collect market information to better understand the nature, prevalence and effects of these potential competition issues, and to assess them in light of EU antitrust rules.

If, after analysing the results, the Commission identifies specific competition concerns, it may open case investigations to ensure compliance with EU rules on restrictive business practices and abuse of dominant market positions in Articles 101 and 102 TFEU.

The inquiry is set against the background of the Commission's digital strategy, especially initiatives related to AI, data and digital platforms. 

The Commission says that it is going to request information from a range of organisations active in the Internet of Things for consumer-related products and services throughout the EU. Once it has analysed the responses, it plans to publish a preliminary report for consultation in the spring of 2021, with the final report due in the summer of 2022.