EUROPEAN COMMISSION Brussels, 20.1.2022 SWD(2022) 10 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Final report - Sector inquiry into consumer Internet of Things {COM(2022) 19 final}



Table of Contents GLOSSARY 6 1 INTRODUCTION 8 1.1 WIDER CONTEXT 8 1.2 REASONS FOR LAUNCHING THE SECTOR INQUIRY 8 1.3 THE PURPOSE OF THE SECTOR INQUIRY 10 1.4 DATA GATHERING AND ANALYSIS 11 1.4.1 Questionnaires to stakeholders 11 1.4.2 The public consultation and the final report on the sector inquiry 12 2 CHARACTERISTICS OF CONSUMER IOT PRODUCTS AND SERVICES 13 2.1 OVERVIEW 13 2.2 VOICE ASSISTANTS 13 2.2.1 Characteristics of voice assistants 13 2.2.2 User interaction 14 2.3 SMART HOME DEVICES 15 2.3.1 Characteristics of smart home devices 15 2.3.2 User interaction: Smart home user interfaces 15 2.4 WEARABLE DEVICES 16 2.4.1 Characteristics of wearable devices 16

2.4.2 User interaction: wearable devices and companion apps 17 2.5 CONSUMER IoT SERVICES 17 2.5.1 Characteristics of consumer IoT services 17 2.5.2 User interaction: Access requirements for consumer IoT services 18 2.6 INTERACTION BETWEEN CONSUMER IOT PRODUCTS AND SERVICES 18 2.6.1 Voice assistants and smart home devices 18 2.6.2 Voice assistants and wearable devices 20 2.6.3 Voice assistants and consumer IoT services 20 2.6.4 Consumer IoT services and smart home devices 21 2.6.5 Consumers IoT services and wearable devices 21 2.7 KEY FINDINGS 22 3 CHARACTERISTICS OF RESPONDENTS 23 3.1 OVERVIEW OF RESPONSES 23 3.2 MANUFACTURERS OF SMART HOME DEVICES 25 3.3 VOICE ASSISTANT PROVIDERS 27 3.4 WEARABLE DEVICE MANUFACTURERS 27 3.5 CONSUMER IoT SERVICE PROVIDERS 28 3.6 STANDARD-SETTING AND INDUSTRY ORGANISATIONS 30 3.7 KEY FINDINGS 31 4 MAIN FEATURES OF COMPETITION 32

4.1 OVERVIEW 32 4.2 MAIN PARAMETERS OF COMPETITION 32 4.3 BARRIERS TO ENTRY AND EXPANSION 39 4.4 THE LEADING COMPETITORS IN THE CONSUMER IOT SECTOR 41 4.5 ACQUISITIONS AND COMMERCIAL ARRANGEMENTS 42 4.6 FORWARD-LOOKING TRENDS 44 4.7 KEY FINDINGS 46 5 INTEROPERABILITY IN CONSUMER IOT ECOSYSTEMS 47 5.1 OVERVIEW 47 5.2 KEY ROLE OF CONSUMER IOT TECHNOLOGY PLATFORMS 47 5.3 OVERVIEW OF TECHNICAL INTEROPERABILITY IN THE CONSUMER IOT SECTOR 48 5.4 SMART HOME DEVICES 49 5.4.1 Connectivity 49 5.4.2 Management and control of smart home devices through first-party vs. third-party user interfaces 50 5.4.3 Smart home device operating systems 51 5.5 CONSUMER IOT SERVICES 51 5.5.1 Voice applications 52 5.5.2 Integration with third-party smart device operating systems 52 5.5.3 Exception for prominent consumer IoT service providers 52 5.6 WEARABLE DEVICES 53

5.6.1 Companion apps and mobile device operating systems 53 5.6.2 Wearable device operating systems 53 5.6.3 Voice assistants and consumer IoT services’ availability on wearable devices 53 5.7 CERTIFICATION PROCESSES 54 5.8 KEY FINDINGS 55 6 STANDARDS AND THE STANDARD-SETTING PROCESS 57 6.1 OVERVIEW 57 6.2 SDOS AND INDEPENDENT ALLIANCES 57 6.2.1 Most relevant formal SDOs for consumer IoT 58 6.2.2 Most relevant other SDOs, independent alliances and private partnerships 59 6.3 THE RELEVANT IPR POLICIES 63 6.4 THE ROLE OF STANDARDS AND PROTOCOLS VS. PROPRIETARY TECHNOLOGIES IN CONSUMER IOT 68 6.5 THE EXPECTED EVOLUTION OF STANDARDISATION IN THE NEAR FUTURE 71 6.6 KEY FINDINGS 72 7 DATA 73 7.1 OVERVIEW 73 7.2 USER-RELATED ASPECTS OF CONSUMER IOT DATA 73 7.2.1 How data is collected 74 7.2.2 Types of data collected 74 7.2.3 User access to data 78

7.2.4 Data portability 80 7.3 BUSINESS-RELATED ASPECTS OF CONSUMER IOT DATA 82 7.3.1 Data Formats and Processing 82 7.3.2 Data collection from and data sharing with third parties 86 7.3.3 Contractual provisions governing business-related aspects of consumer IoT data 88 7.3.4 Data use within IoT Companies 90 7.3.5 Data monetisation 93 7.4 KEY FINDINGS 95 8 CONCERNS RAISED DURING THE SECTOR INQUIRY 96 8.1 OVERVIEW 96 8.2 INTEROPERABILITY CONCERNS 96 8.2.1 Obstacles concerning access and integration of products on consumer IoT technology platforms 97 8.2.2 Limited functionalities on consumer IoT technology platforms for third-party products and services 100 8.3 STANDARDISATION RELATED CONCERNS 101 8.3.1 The high number of standardisation bodies and competing standards 101 8.3.2 The cost of standardisation – the leadership of large technology companies in standardisation 102 8.3.3 Differences between the rules of SDOs relating to membership and participation / lack of transparency regarding relevant SEPs 103 8.3.4 Diverging views in relation to FRAND licensing 104 8.3.5 Growing proprietary ecosystems vs standardisation 104 8.4 DATA RELATED CONCERNS 105

8.5 CONCERNS IN RELATION TO PRE-INSTALLATION, DEFAULT-SETTINGS AND PROMINENCE 107 8.5.1 Pre-installation and default settings for voice assistants 107 8.5.2 Pre-installation and default-setting of consumer IoT services 107 8.5.3 Prominence of consumer IoT services and voice assistants 110 8.6 EXCLUSIVITY, TYING AND CONCURRENCY CONCERNS 112 8.6.1 Exclusivity requirements 112 8.6.2 Concurrent use of voice assistants 112 8.6.3 Tying 112 8.7 DISINTERMEDIATION 112 8.7.1 Controlling the user relationship and user experience 113 8.7.2 Controlling the access to consumer IoT services and related data 114 8.7.3 Controlling technical performance and related processes 115 8.8 CONTRACTUAL ISSUES 116 8.9 KEY FINDINGS 116 8.9.1 Pre-installation, default-setting and prominence 116 8.9.2 Exclusivity, concurrency and tying concerns in relation to voice assistants 116 8.9.3 Data 117 8.9.4 Standardisation and interoperability 117 8.9.5 Disintermediation 118





GLOSSARY This glossary contains a list of terms used in the report and defines them for the specific purpose of the report only. The report’s terminology is without prejudice to the terminology used in any other document and any legal or factual qualifications set out therein. CONSUMER INTERNET OF THINGS (IOT) SECTOR: encompasses various services, devices and technologies that support the interaction of consumers with connected devices (“things”), which collect and exchange data over the internet. CONSUMER IOT ECOSYSTEM: a network of connected and interdependent technologies that work together around a consumer IoT technology platform providing services and functionalities to the user. CONSUMER IOT SERVICES: services that consumers can access via a SMART DEVICE, through a VOICE ASSISTANT and/or through other smart home user interfaces. These services may be grouped into categories that include, but are not necessarily limited to, health and fitness services, creative content services (e.g. music streaming services, video-on-demand platforms), online information services, search engines, online intermediation services (e.g. marketplace, food delivery service, car-sharing service) and shopping services. CONSUMER IOT TECHNOLOGY PLATFORM: underlying technological solution for integrating consumer IoT services and SMART DEVICES in a connected system. For the purpose of this report, technology platforms refer in particular to VOICE ASSISTANTS and SMART DEVICE OPERATING SYSTEMS. Consumer IoT players develop specific applications to make their services and devices compatible with CONSUMER IOT TECHNOLOGY PLATFORMS. PROPRIETARY TECHNOLOGY (OR “CLOSED STANDARDS”): refers to technology developed by one vendor, which retains control over access to its technology. SMART DEVICES: wireless electronic consumer Internet of Things devices, such as wearable devices, smart speakers and other smart home devices, capable of connecting to other devices or networks, exchanging data with them and operating to some extent interactively and autonomously. This definition does not include smart mobile devices (i.e. smartphones and tablets). SMART DEVICE OPERATING SYSTEM: a piece of software that manages smart device hardware and software resources of a SMART DEVICES, and provides common services for applications running on it. SMART HOME APPLICATION: application that enables the user to connect, control and/or monitor one or more smart home devices remotely. STANDARDS: technology resulting from collaborative standardisation processes involving various vendors and stakeholders. USER INTERFACE: device or device application (e.g. SMART HOME APPLICATIONs, mobile devices, dedicated touch-screens, remote controls, VOICE ASSISTANTs or wearable devices) that forms the user-facing entry point through which SMART DEVICES are accessed and controlled by the user. VOICE APPLICATIONS: software designed for a specific VOICE ASSISTANT that supports commands by users to connect with SMART DEVICES, to execute actions or tasks, or to engage with CONSUMER IOT SERVICES that consumers access via that VOICE ASSISTANT. VOICE APPLICATIONS written for Amazon Alexa are called “skills” and for Google Assistant “actions”. VOICE ASSISTANTS: a voice-activated piece of software that can process voice commands and return relevant information or perform certain functions as requested by the users.



1INTRODUCTION 1.1WIDER CONTEXT (1)On 16 July 2020, the Commission launched a sector inquiry into consumer Internet of Things (IoT) in the EU. The sector inquiry, which is carried out on the basis of the EU competition rules, pursuant to Article 17 of Regulation 1/2003, focuses on gathering information on companies active in various areas of the consumer IoT sector. (2)The sector inquiry fits within the broader context of the Commission’s digital priorities and ongoing policy and legislative initiatives that also concern the area of IoT. In recent years, the Commission has adopted a set of policy actions to accelerate the take-up of IoT in the EU, including launching the Alliance for Internet of Things Innovation (AIOTI) in March 2015, to support the creation of an innovative and industry-driven European IoT sector. This was followed in April 2016 by the publication of the European Commission staff working document "Advancing the Internet of Things in Europe", which sets out the EU’s IoT vision, and by the “European data economy” initiative, launched in January 2017, which proposes policy and legal solutions aimed at contributing to the creation of a European single market for IoT. Looking ahead, the findings of the sector inquiry will feed into the ongoing legislative debate on the Digital Markets Act (DMA).

1.2REASONS FOR LAUNCHING THE SECTOR INQUIRY (3)The consumer IoT sector has grown rapidly in recent years and is forecast to continue to do so in the next decade. Worldwide consumer IoT revenue is predicted to increase from approximately EUR 107.2 billion in 2019 to approximately EUR 408.7 billion by 2030. It is expected that there will be more than 8 billion consumer internet and media devices worldwide by 2030, making this area by far the most common use case of the IoT as a whole. Moreover, the number of voice assistants in use worldwide is expected to double between 2020 and 2024, from 4.2 billion to 8.4 billion. (4)In the EU as well, the use of consumer IoT products is increasingly becoming part of everyday life for citizens. The use of connected audio and video entertainment devices in particular has become relatively widespread: in 2020, for example, 51% of individuals in the EU reported to Eurostat that they used the internet on a smart TV, games console, home audio system, or smart speaker.Smart wearable devices are also becoming a feature of Europeans’ lives. In 2020, 19% of individuals in the EU used a smart watch, fitness band, connected goggles or headset, safety tracker, smart clothing, accessories, or shoes. Moreover, 11% of Europeans surveyed in 2020 used a voice assistant. (5)The use of other smart device types is still quite low: in 2020, only 10% of individuals in the EU used a smart thermostat, utility meter, lighting solution or other smart solution for energy management in their home and even fewer used smart security solutions (5% of individuals) and/or smart home appliances such as cleaning or kitchen appliances (5% of individuals). Nonetheless, revenue for the smart home segment (encompassing smart entertainment systems, appliances, heating, lighting systems and security systems) in Europe is forecast to more than double between 2020 and 2025 (from approximately EUR 17 billion to approximately EUR 38.5 billion). (6)At the same time, there are also indications that consumers are wary of the risks posed by this technology. In 2020, 13% of individuals in the EU cited concerns about the privacy and protection of personal data generated by IoT devices or systems as their reason for not using IoT personally or in their household. There are also concerns about the interoperability of consumer IoT products, with 5% of individuals citing a lack of compatibility with other devices or systems as their reason for not using IoT. (7)National Competition Authorities are also taking an interest in the consumer IoT sector. In 2020, the German Competition Authority carried out a sector inquiry, under consumer protection law, into smart TVs, including a focus on their data collection and processing capability. In 2019, the French Competition Authority contributed to a joint study on voice assistants and connected speakers. (8)While the consumer IoT sector is still developing, there are indeed indications of company behaviour that may be conducive to distortions of competition in this sector. Such practices could lead to raising barriers to entry and innovation, dependency on third-party proprietary technology for competitors and consumer lock-in. 1.3THE PURPOSE OF THE SECTOR INQUIRY (9)Sector inquiries are investigations that the Commission decides to carry out in sectors of the economy or in relation to particular types of agreements across various sectors where there are indications that competition may be restricted or distorted within the internal market. A sector inquiry is a fact-finding exercise, a systematic investigatory tool, which can inform or complement future decision-making and potential investigations. Its aim is not to target individual companies. However, the results of a sector inquiry may point to potentially anti-competitive practices and the Commission may decide to open case-specific investigations under Articles 101 and 102 Treaty on the Functioning of the European Union after the conclusion of the sector inquiry. (10)The purpose of this sector inquiry is to gain a better understanding of the consumer IoT environment, the competitive landscape, and developing trends in this developing sector. It focuses specifically on the consumer aspect of the consumer IoT sector. Where it focuses on products or services sold to business-to-business (B2B) customers, it does so only to the extent that such products or services are subsequently integrated into consumer-oriented offers. (11)Industrial IoT is not within the scope of the sector inquiry. Industrial and consumer IoT are distinct sectors with specific characteristics. One of the special characteristics of consumer IoT is that the type of data collected by smart devices typically includes personal data. Consequently, the development of this sector can be expected to have a significant impact both directly on consumers and on society as a whole. For this reason, the sector inquiry focuses on consumer IoT. (12)Similarly, connected cars are not subject to the sector inquiry because of their distinctive regulatory and factual characteristics. 1.4DATA GATHERING AND ANALYSIS 1.4.1Questionnaires to stakeholders (13)The sector inquiry has been conducted on the basis of requests for information pursuant to Article 17 of Regulation 1/2003 ("questionnaires"). In July 2020, different questionnaires were sent to companies active in four consumer IoT segments in the EU; (i) the manufacture of smart home devices; (ii) the provision of voice assistants; (iii) the provision of consumer IoT services; and (iv) the manufacture of wearable devices. A fifth questionnaire was sent to standard-setting and industry organisations. The type and number of questions varied across the five questionnaires. (14)The questionnaires were sent to a selection of companies active in the consumer IoT sector. Relevant addressees were identified by desk research. (15)While the selection of addressees was not intended to correspond to a statistically representative sample of the EU consumer IoT sector, the selection covers a variety of consumer IoT products and services and represents different types of companies in terms of size, activities and range of products offered (see Chapter 3 on characteristics of respondents). (16)Companies active in more than one consumer IoT segment received several of the four different questionnaires. (17)The responses to these questionnaires constituted the main source of information for the sector inquiry, complemented by the input received through the public consultation on the preliminary report (See 1.4.2.). Nothing in this report should be read or construed as an endorsement of the practices reported, nor as an assessment of their compatibility with applicable Union or national law, including the EU General Data Protection Regulation, (GDPR). (18)The data collected and presented in this report summarise the qualitative information obtained from the responses. They should not be read as statistically relevant figures in the strict sense.

(19)Similarly, the market dynamics, products and services referred to in this report describe the situation as it was at the time when the respondents provided their replies to the questionnaires and submitted their comments to the public consultation on the preliminary report, that is, respectively in the second half of 2020 and the summer of 2021. (20)Throughout this report, proportions are calculated based on the number of respondents who replied to the relevant question, unless specified differently. (21)The sector inquiry focuses on topics of particular potential interest in examining possible competition issues in the consumer IoT sector. The different questionnaires sent included questions on the following: a.The characteristics of respondents’ consumer IoT products and services in order to gain an overview of the sector. b.The main features of competition in the consumer IoT sector, including potential barriers to entry and the role of various business strategies. c.The role of standards in the consumer IoT sector, including the importance of standards and standard-setting organisations (access conditions and competition among standards). d.The interaction between devices, services and voice assistants in the consumer IoT sector. This includes questions on interoperability, pre-installation and default settings, exclusivity and other preferential treatment; and e.The role of data in terms of the consumer IoT sector. This includes questions on the collection of data, how it flows between parties, how it is used and potentially monetised by companies, and the interoperability and portability of data. (22)The questionnaire sent to standard-setting and industry organisations focused on point c. above. 1.4.2The public consultation and the final report on the sector inquiry (23)On 9 June 2021, the Commission published a preliminary report, which presented the Commission’s preliminary findings. (24)The publication of the preliminary report was followed by a public consultation open to all interested stakeholders. The public consultation ended on 1 September 2021. Altogether, the Commission received 26 submissions to the public consultation. These submissions welcomed the publication of the preliminary report and generally agreed with the main conclusions drawn in relation to the current and main challenges of the consumer IoT sector in the EU. (25)The input received through the public consultation on the preliminary report has complemented the preliminary findings to complete the Commission’s evaluation in the consumer IoT sector. (26)The adoption of a final report from the Commission to the Council and the European Parliament completes the sector inquiry. This staff working document accompanies the final report and summarises the main findings of the sector inquiry. 2CHARACTERISTICS OF CONSUMER IOT PRODUCTS AND SERVICES 2.1OVERVIEW (27)The following paragraphs describe the main characteristics of the different consumer IoT segments on the basis of replies submitted by the respondents of the sector inquiry and in the submissions to the public consultation on the preliminary report. This chapter also includes a description of how consumer IoT services, devices and voice assistants interact with one another. 2.2VOICE ASSISTANTS 2.2.1Characteristics of voice assistants

(28)Voice assistants are voice-activated pieces of software that can perform a variety of tasks, acting both as a platform for voice applications and a user interface. The results of the sector inquiry indicate that voice assistants represent the fastest developing interface for users to access the web, to use and control smart devices and access consumer IoT services. (29)From the respondents’ replies, it emerges that there are currently four voice assistants widely used in the EU, namely Amazon’s Alexa, Samsung’s Bixby, Google’s Google Assistant and Apple’s Siri. Apple was the first to launch its voice assistant in the EU in 2011, followed by Alexa and Google Assistant in 2016, and Bixby in 2018. However, many respondents indicate that the uptake of voice assistants really took place when Amazon launched its first smart speaker Amazon Echo in 2014, followed by Google launching its smart speaker Google Home in 2016 and Apple its HomePod in 2018. Today Google Assistant, Alexa and Siri are seen as the leading voice assistants in the consumer IoT sector. (30)These voice assistants are general-purpose voice assistants, as they enable users to access a broad range of features. For example, they can be used for: ·Playing music and videos, or listening to the radio, news, podcasts or audiobooks on the smart device itself or on other devices (for example on headphones, smart speakers, or smart TVs); ·Controlling smart home devices (for example lights, switches, outlets and thermostats), smart displays, and smart clocks; ·Providing information (for example news, sports scores, recipes, and weather); ·Helping in planning and executing daily routines (for example booking a taxi ride, setting or assigning reminders or creating calendar events). (31)Other voice assistants are considered specialised voice assistants. They are usually provided by consumer IoT service providers or smart home device manufacturers and have limited functionalities, mainly relating to the service provider’s or device manufacturer’s own services and/or devices. These include, for example, Orange’s voice assistant Djingo, the main function of which is to provide access to Orange’s services (TV, music, smart home, telephony or radio) or Microsoft’s Cortana, which is a feature of Microsoft’s M365 productivity solutions. (32)Google Assistant and Siri are currently the voice assistants available in most languages (around 20 to 30 languages each with a few additional dialects supported), followed by Alexa (15 languages) and Bixby (8 languages), whereas the specialised voice assistants are typically available in only one or two languages. This is because specialised voice assistants usually target a specific Member State or a particular group of users (for example, the subscribers of the specific service provider). For example, Orange’s voice assistant is only available in French, whilst Magenta, Deutsche Telekom’s voice assistant, is only available in German. Telefónica’s voice assistant, Aura, is available in Spanish, English and German, but the user is not able to switch between the languages. The precise number of languages in which a voice assistant is available may also differ according to smart device type. 2.2.2User interaction (33)For most voice assistants, the interaction of the voice assistant with the user takes place through the following phases: (i) activation by the user; (ii) instruction by the user; (iii) processing by the voice assistant; and (iv) trigger and response by the voice assistant. (34)More precisely, as a first step, the user activates or “wakes up” the voice assistant. This part of the interaction usually takes place locally on the smart device. Depending on the type of smart device as well as the voice assistant brand, the user can activate the voice assistance functionality in different ways. For example, in the case of smart speakers, this is done by saying an activation word (also called “hotword” or “wake word”) such as “Hey Siri”, “OK Google” or “Hi Bixby” directly to the device. On some other devices, such as smartphones and remote controls, before saying the activation word, the user is required to touch the screen or press a button. (35)As a second step, the voice assistant collects the voice command. In practice this means that the user gives a precise instruction or command to the voice assistant (to execute a task such as switching on lights, playing music, setting a timer, compiling a shopping list or sending a message) or asks a question (to receive information such as the weather forecast or the time of day). (36)As a third step, the voice assistant generally processes the command in two stages. The first stage is understanding the request. Unless the intent is recognised with certainty and the instruction is processed locally, the speech recognition is performed by cloud-based technology. The second stage is to identify the available responses. Once the voice assistant understands the user’s voice query, it identifies different options to fulfil the user’s request (for example providing information on the weather, dimming the lights). With slight differences depending on the underlying technology, the available responses are ranked by the voice assistant on the basis of various parameters: the relevance and availability of the response, predicted user satisfaction, suitability of the response for the type of device concerned and alignment with the user’s current activity. (37)As a final step, the voice assistant responds by: (i) letting the user know that it does not understand the request; (ii) triggering an action or retrieving the information identified as appropriate; or (iii) responding that it has identified the most appropriate option or a list of options. 2.3SMART HOME DEVICES 2.3.1Characteristics of smart home devices (38)Smart home devices encompass a very large group of devices that can be grouped in the following main product categories: smart home appliances; smart home entertainment devices; comfort and lighting devices, and security devices. (39)The smart home appliances category includes all kinds of smart household appliances, ranging from large appliances such as refrigerators, washing machines and ovens, to small appliances such as microwaves, coffee machines, vacuum cleaners and mowing robots. (40)Smart home entertainment products include (multi-room) entertainment systems such as sound systems, smart TVs and receivers, streaming devices (for example the Amazon Fire TV stick and Google Chromecast) and smart speakers.

(41)Comfort and lighting devices include, for instance, smart light sources such as smart bulbs, sensors and actuators such as door and window sensors, shutters, smart clocks, thermostats, air conditioning and radiator controllers. (42)Security devices encompass all devices aimed at detecting or preventing burglaries, or notifying household hazards. These include, for instance, garage door controls, smart locks, smart security cameras and smoke detectors. 2.3.2User interaction: Smart home user interfaces (43)In order to enable the connection to the smart home device, the user is usually required to complete registration on the manufacturer’s smart home application. Through the application, which functions as a user interface, the user can configure, set up, and manage the connected device. The manufacturers indicate that their smart home applications are generally available for various operating systems in order to allow consumers to connect to the smart home device from various types of devices. They can typically be accessed via mobile device app stores (in particular the Google Play store and Apple App Store), as well as via a web browser. The smart home application can be used to pair new devices, view the status of the device and control or automate the device remotely. (44)There are many different user interfaces for controlling smart home devices and all manufacturers of smart home devices offer several options. The most common user interfaces available to users are smart mobile devices and the respective smart home applications, voice assistants, touch screens, keypads, remote controls, smart buttons, smart switches, PCs and laptops. (45)Across all types of smart home devices and based on the total number of the monthly active users (MAUs), smart home applications emerge as the most popular user interface. However, the popularity of user interfaces also depends on the smart home device type. For example, voice assistants are the most popular user interface for smart speakers, while remote controls are the most popular user interface for smart TVs. (46)Most smart home devices can be controlled via the manufacturer’s own user interface(s). However, almost all manufacturers of smart home devices also allow third-party user interfaces to connect to and control their smart home devices. Interaction through third-party user interfaces has gained traction in the smart home environment as a way to facilitate interoperability in heterogeneous environments with multiple brands. (47)For example, the majority of smart home manufacturers have developed integration with leading general-purpose voice assistants, namely Google Assistant, Alexa and Siri. 2.4WEARABLE DEVICES 2.4.1Characteristics of wearable devices (48)Wearable devices are electronic devices that can be worn and which can send and receive data wirelessly via a network. Such devices generally include sensors and are powered by an operating system. Wearable devices include products such as ear-worn devices (earphones, headphones, earbuds) and wrist-worn devices (smart watches, fitness trackers, sport watches) as well as other wearable items (for example smart clothes and shoes, smart glasses, head-mounted displays, virtual reality headsets). (49)Wearable devices offer numerous functions to users (for example heart-rate monitoring, activity tracking, navigation, making phone calls) and can often interoperate with and function as user interfaces for smart devices. Voice assistants are also often integrated into wearable devices (most frequently, earphones, earbuds and smart watches). 2.4.2User interaction: wearable devices and companion apps (50)The vast majority of respondents’ wearable devices can be used, at least for basic functions, without the users having to carry around their smart mobile device in addition to the wearable device. For instance, on fitness trackers, speed tracking and heart rate tracking are often active even if the wearable device is used independently of a smart mobile device. (51)However, given the limited connectivity and reduced storage and processing capacity of wearable devices, connecting them to smart mobile devices unlocks a number of additional features and it is usually highly recommended by wearable device manufacturers. The connection between the wearable device and the smart mobile device is supported by a specific companion app. A companion app is a software application enabling a user, among other functionalities, to extend the mobile device’s display onto the wearable device, to relay user interactions from the wearable device to the smart mobile device and to update the wearable device as needed. (52)More specifically, depending on the wearable device type and brand, some of the health and fitness metrics tracked through the wearable device can be viewed and used exclusively on the wearable device, whilst some can only be viewed and accessed via the companion app on the smart mobile device. For example, the companion app is often able to analyse metrics in the long term, providing more detailed information in terms of historic data and training progress. Sometimes it also includes data that has been added manually. The metrics which can usually be viewed on the device itself are more limited and typically include current activity time, calories burnt, heart rate, distance, number of steps, speed, blood oxygen level and similar metrics. 2.5CONSUMER IoT SERVICES 2.5.1Characteristics of consumer IoT services (53)Consumer IoT services are defined for the purposes of this sector inquiry as services that consumers can access via a smart device, through a voice assistant and/or through other user interfaces. They encompass a wide range of services, including for example creative content services, information and search services, health and fitness services, intermediation services (for example marketplaces, car-sharing services), comfort and lighting, security and shopping services. (54)Most of these services are accessible also outside the consumer IoT sector, for instance, via laptops and PCs or smart mobile devices. However, the consumer IoT sector provides new ways to access these services (for example using voice commands) and integrate them in new ways with various smart home and/or wearable devices. For instance, users are able to program different scenarios, such as morning routines, which can involve several smart devices and services working together: the wearable device’s sleep monitoring function can be connected to the alarm clock function, which in turn can be connected to the smart home lights or thermostat as well as the coffee machine or the smart speaker providing the news.

(55)The majority of the respondents’ consumer IoT services are currently available on third-party smart devices and voice assistants. The services in question are generally accessible on both Apple’s operating system (iOS) and Google’s operating system (Android), as well as via Alexa and Google Assistant, while fewer are also accessible via Siri, Bixby, and other voice assistants. 2.5.2User interaction: Access requirements for consumer IoT services (56)About half of the providers of consumer IoT services indicate that users need to register before using their consumer IoT services. Subscription fees may also be charged, sometimes only in relation to a premium service or offer. Respondents have mentioned other registration requirements, including optional registration or minimum-age requirements. (57)In order to access certain consumer IoT services on some smart home devices, the user is required to link the smart home account with the consumer IoT service account or a voice assistant account. 2.6INTERACTION BETWEEN CONSUMER IOT PRODUCTS AND SERVICES 2.6.1Voice assistants and smart home devices (58)Voice assistants are becoming key entry points to the smart home, in the sense that they allow companies to establish interoperability and to build a smart home environment based on products from different manufacturers. Almost all of the respondents’ smart home devices can be controlled by a voice assistant, with Alexa and Google Assistant by far the most popular voice assistants chosen by the responding smart home device manufacturers for this purpose. The replies to the Commission’s questionnaires and the submissions to the public consultation on the preliminary report indicate that voice assistants are still used less frequently as a smart home user interface compared to smart home applications. However, several respondents stress that voice assistants have only recently been added as a user interface for their devices. (59)In their submissions to the public consultation, Amazon and Google underline the fact that, currently, the importance of voice assistants is limited compared to other interfaces (in particular smart mobile devices). At the same time, Google also submits that, “Google Assistant currently works with over 50,000 smart home devices from more than 10,000 popular brands, and we are adding new brands all the time.” Similarly, according to an Amazon statement from January 2020, “there are now hundreds of millions of Alexa-enabled devices in customers’ hands and customers interact with Alexa billions of times each week. Customers rely on Alexa to control smart home devices hundreds of millions of times each week”. (60)The majority of the voice assistant providers say that the largest part of their MAUs use the voice assistant on the providers’ own smart devices rather than on third-party smart devices and, in some instances, exclusively on their own smart devices. (61)Voice assistants can interoperate with smart devices by being directly built into the devices themselves, by controlling the smart devices through an application, or by connecting to them via so-called “works with” solutions. In a “works with” scenario, the voice assistant runs on a separate device, usually a smart mobile device or a smart speaker, which carries a microphone and via which the voice assistant can be activated. (62)More than a third of the manufacturers of smart home devices have a voice assistant built into at least one of their devices and these devices are mostly smart speakers and smart TVs. All providers of voice assistants that manufacture smart home devices have their own voice assistant built into their devices. On most of these devices, the first-party voice assistant is the only voice assistant built into the device. Moreover, only two of the general-purpose voice assistants, namely Alexa and Google Assistant, are built into third-party smart home devices. Siri and Bixby are only built into Apple and Samsung’s smart devices respectively. (63)Through built-in integration, users can access all of the functions supported by the third-party voice assistant directly from the manufacturer’s smart home device, including control of other smart home devices and access to third-party consumer IoT services. (64)Around two thirds of the manufacturers provide the possibility to connect to and control their smart home devices using more than one voice assistant. In most cases, this is achieved via a “works with” solution. This is because only a few smart home devices have more than one voice assistant built into the device. Instead, many manufacturers of smart speakers, for example, market different smart speaker models – one for each of the general-purpose voice assistants that are available on third-party devices, namely Google Assistant and Alexa. (65)There are two categories of smart home devices that have more than one voice assistant built-in. A first category are smart home devices that have two or more general-purpose voice assistants built-in, that is, Alexa and/or Google Assistant and/or Bixby. Although the user is able to switch between those voice assistants by changing the settings, concurrent use of voice assistants - that is, switching between the voice assistants interchangeably by, for example, using different activation words - is reportedly not possible on any of the smart home devices in question. (66)A second category are smart home devices that have Alexa built-in, in addition to the device manufacturer’s own specialised voice assistant. For example, Deutsche Telekom’s smart speaker has Alexa built-in in addition to Deutsche Telekom’s own voice assistant Magenta. In some cases, these voice assistants can be used concurrently. 2.6.2Voice assistants and wearable devices (67)Around two thirds of the manufacturers of wearable devices have a voice assistant available on at least one of their devices. More than half of these respondents mention Google Assistant and less than a third mention Alexa. It appears that none of the respondents have more than one voice assistant available on their wearable devices. Google Assistant is included automatically on all wearable devices that use Google’s operating system Wear OS. Siri is available on Apple Watch but not on third-party wearable devices. 2.6.3Voice assistants and consumer IoT services (68)Although access to consumer IoT services via smart mobile devices is the most frequent way to access consumer IoT services, access via a voice assistant is another means to access services that is frequently indicated by the respondents.This is especially the case for certain types of smart devices such as smart speakers. Overall, almost half of the respondents’ consumer IoT services are currently accessible via voice assistants and of these, around two thirds are accessible via more than one voice assistant. (69)According to the replies, Google Assistant and Alexa are the most popular choices to enable voice assistant access to the respondents’ consumer IoT services.There are thousands of consumer IoT services available via each of these voice assistants.

(70)The majority of consumer IoT service providers build integrations with voice assistants by developing voice applications. These voice applications are known as “skills” for Alexa, “actions” for Google Assistant, “shortcuts” for Siri and “capsules” for Samsung’s Bixby. (71)The leading voice assistant providers are themselves also providers of various consumer IoT services, accessible via the providers’ own voice assistants. In some cases, these services can also be accessed via third-party voice assistants. Among the services provided by the voice assistant providers, the most frequently offered are online information and search services, online creative content services, and online shopping services. 2.6.4Consumer IoT services and smart home devices (72)Most consumer IoT services available through the respondents’ smart home devices can be accessed via a mobile device application and/or a voice assistant. On some devices, such as smart TVs, the services can be integrated directly into the device or downloaded via the device’s app store. (73)The number of consumer IoT services accessible via each smart home device depends largely on the type of device. For example, smart home appliances such as light bulbs, thermostats or switches typically only provide access to comfort and lighting services. Security devices provide access to a range of consumer IoT services related to security, such as alarms, camera surveillance etc. Smart speakers and smart TVs seem to give access to the widest selection of consumer IoT services, ranging from creative content services, intermediation services, information services, and search services, to shopping services. (74)In the context of the public consultation on the preliminary report, one stakeholder submitted that usage of its consumer IoT services via smart home devices currently accounts for a limited portion of usage compared to other channels, such as web browsers and mobile apps. (75)A specific type of service relevant to certain types of smart home devices, such as smart dishwashers, smart printers or smart coffee machines, are automatic product re-ordering services, which allow users to automatically re-order consumables (such as dishwasher tabs, ink cartridges or coffee beans) when their supply levels run low. The choice of product brands offered to the user is typically decided by the service provider. (76)Similarly, some smart home devices make consumer IoT services available that can suggest purchases to users, or create shopping lists based on profiling of the user. Such purchasing suggestions are usually made by the consumer IoT service provider and are mostly based on previous purchases or other past behaviour of the user. 2.6.5Consumers IoT services and wearable devices (77)Some of the consumer IoT service providers indicate that their services are also available on wearable devices and may be accessed either via a smart mobile device, a voice assistant or by being installed as an application directly on the wearable device. (78)In fact, almost half of respondents indicate that one or more of their wearable devices enable users to download and install applications. The most common applications available via the respondents’ wearable devices fall within the following categories: fitness applications, timers, alarms, reminders, calendars, music and podcast players, weather, maps and navigation, watch faces and sleep-related applications. (79)Three out of four manufacturers of wearable devices are themselves active in the provision of consumer IoT services, and of these, the vast majority declare that one or more of their consumer IoT services is accessible via their own and/or third-party wearable devices. 2.7KEY FINDINGS The findings of the sector inquiry indicate that an increasing number of devices and services are becoming “smart”, so that users have the possibility to access a progressively wider range of interconnected devices and services in and outside their homes. As the overall accessibility of the different smart devices and consumer IoT services depends on the user interface used, the consumer’s daily routines become shaped around the choice of such interface. In this respect, general-purpose voice assistants play an increasingly important role because they allow for the connection of all of the components, including various brands of smart devices and consumer IoT services, in a single, integrated environment. A limited number of general-purpose voice assistants is currently available. Alexa, Google Assistant and Siri are the most popular general-purpose voice assistants in the consumer IoT sector. Despite the growing popularity of voice assistants, the smart mobile application or companion app remains the most popular user interface to access smart home and wearable devices as well as consumer IoT services. In that sense, smart mobile devices and their operating systems also play an important role in the consumer IoT sector. Google’s Android and Apple’s iOS are the leading operating systems for smart mobile devices.



3CHARACTERISTICS OF RESPONDENTS

(80)This chapter describes the main characteristics of the companies and organisations that responded to the sector inquiry questionnaires. It identifies, for instance, the distribution of respondents in terms of size and areas of activity within the consumer IoT sector. After a global overview in Section 3.1, the chapter describes the main characteristics of the respondents to each questionnaire (Sections 3.2 to 3.6). 3.1OVERVIEW OF RESPONSES (81)Overall, as set out in Table 1, the Commission received responses to the questionnaires from more than 200 companies active in the manufacturing of smart devices, provision of voice assistants and/or the provision of consumer IoT services, as well as from 14 standard-setting and industry organisations. Smart home device manufacturers 87 Voice assistant providers 13 Wearable device manufacturers 29 Consumer IoT service providers 72 Standard setting and industry organisations 14 Total 215 (82)The number of respondents that declared themselves to be active in different categories of consumer IoT products and services is listed in Table 2 below. Consumer IoT product or service category Number of active respondents (a)Operation of cloud platforms for the IoT 51 (b)Provision of operating systems for smart devices 27 (c)Provision of home automation systems (including manufacturing of hubs or gateways) 50 (d)Manufacturing of smart speakers 31 (e)Manufacturing of connected video entertainment devices 19 (f)Manufacturing of other smart home devices (smart appliances, lighting systems, security devices) 60 (g)Manufacturing of smart home user interfaces (e.g. remotes, dedicated touch-screens) other than wearable devices and smart mobile devices 37 (h)Provision of smart home applications which serve as smart home user interfaces 63 (i)Provision of online creative content services 56 (j)Provision of online shopping services 53 (k)Provision of online information and search services 28 (l)Provision of online intermediation services 28 (m)Provision of online security services 12 (n)Provision of online comfort and lighting services 27 (o)Provision of online health and fitness services 27 (p)Provision of voice assistants 13 (q)Manufacturing of wearable devices 36 (r)Manufacturing of smart mobile devices (smart phones and tablets) 18 (s)Other consumer IoT products and services 52 (t)Other non-consumer IoT products and services 54 (83)A significant number of respondents are simultaneously active in several categories. A large majority of respondents (72%) are active in at least two of the listed categories, around half (55%) in at least three, slightly less than half (45%) in at least four categories, and around one third (34%) sell products or provide services in five or more different categories. (84)Many of the respondents are very large companies, in terms of either turnover or number of employees. (85)Across questionnaires, only a limited number of respondents (10 to 20%) indicate that they generate (at group level) a worldwide turnover of less than EUR 50 million. A slightly larger percentage (15 to 30%) have turnovers between EUR 50 million and 500 million, whereas a majority of respondents report that their turnover is above EUR 500 million (from 50% of respondents in the case of wearable device manufacturers, and up to 90% in the case of voice assistant providers). Figure 1: Distribution of respondents by 2019 worldwide turnover

(% of total respondents per questionnaire) (86)Similarly, a vast majority of respondents have more than 1 000 employees, while companies with less than 50 employees account for less than 10% of the total respondents (for each of the questionnaires). (87)More than two thirds of the addressees are publicly listed companies or, if not listed, belong to larger multinational groups with a significant number of shareholders (including venture capital firms, investment or pension funds and institutional investors), which are active in multiple business areas outside consumer the IoT sector (for example technology and digital services, media, telecommunications, consumer electronics, industrial automation, automotive). (88)A more limited number of respondents are smaller, often privately owned companies that specialise in a single business area or limited business segments thereof. Among these smaller entities, there are also a number of start-ups and not-for-profit entities. (89)Aside from the questionnaires that were sent out, the Commission also welcomed spontaneous submissions from stakeholders that showed an interest in participating in the sector inquiry. The public consultation on the preliminary report also offered an additional opportunity for any organisation to submit its views on the Commission’s preliminary findings. 3.2MANUFACTURERS OF SMART HOME DEVICES

(90)The Commission received replies from 87 companies active in the manufacturing of smart home devices and/or related products such as home automation systems supporting the functioning of smart home devices. Based on figures provided by the respondents, their smart home devices had a combined total of approximately 52 million MAUs in Europe in June 2020. (91)In terms of the number of smart home devices manufactured by the respondents, smart appliances constitute the largest product category, as illustrated by Figure 2 below, followed by comfort and lighting, and then home entertainment and security. The “control and connectivity” category includes home automation systems, hubs and gateways, and all smart home user interfaces other than wearable devices and smart mobile devices. The category “others” includes smart home devices outside the four main product categories outlined above, such as products used for child monitoring, pet care and home healthcare. Figure 2: Distribution of respondents’ products per smart home device category (% of total smart home devices manufactured by the respondents) (92)Respondent manufacturers were also asked to indicate the Member States in which they make their smart home devices available, and provided detailed replies with regard to a total of over 1 000 different smart home device types. Figure 3 below shows the distribution of available smart home devices across the EU. The availability of the surveyed devices varies significantly, ranging from more than 70% (out of the total number of device types) available in France and Germany, to 41% in Latvia and Lithuania. (93)The respondents’ replies confirm the growing trend of consumer IoT for this segment. The total number of shipped items for respondents’ smart home devices increased both worldwide (by almost 30%) and within the EU (by almost 40%) from 2018 to 2019. Similarly, registered users of respondents’ smart home devices more than trebled between 2018 and 2020 in the EU whereas MAUs of respondents’ devices almost doubled in the same period. 3.3VOICE ASSISTANT PROVIDERS (94)The Commission received responses to the questionnaire addressed to voice assistant providers from 13 companies, including both general-purpose and specialised voice assistants. (95)Voice assistant providers generally belong to very large multinational groups. Only one respondent is a smaller privately-owned company, whose activities focus on the provision of smart devices. (96)The respondents provide a wide range of smart devices and consumer IoT services. On average, each respondent is active in 11 of the 20 product and service categories covered by the sector inquiry (see Table 2 above), showing a strong and growing presence in the overall consumer IoT sector. A particularly high percentage of responding voice assistant providers is also active in the provision of online creative content services (84%), the operation of cloud platforms (76%) and the manufacturing of smart speakers (69%). (97)The number of registered users of respondents’ voice assistants increased across all Member States from 2018 to 2019, and into the first six months of 2020. Separately, the combined total of MAUs that respondents recorded in January 2020 was almost five times higher than in January 2018, showing the growth in both the availability and use of voice assistants. This significant growth in MAUs continued in 2020, with almost double the number of MAUs recorded by respondents in June compared to January. General-purpose voice assistants seem to be driving the take-up of this user interface. Based on figures provided by the respondents, providers of general-purpose voice assistants reported, on average, over 100 times more MAUs in Europe in June 2020 than the providers of specialised voice assistants. 3.4WEARABLE DEVICE MANUFACTURERS (98)The Commission received responses to the questionnaire addressed to wearable device manufacturers from 29 companies. (99)Having regard to their activity in the wearables sector, almost half (47%) of the respondents indicate that they manufacture more than one type of wearable device. The most commonly produced wearable devices among the respondents are smart watches, fitness trackers and ear-worn devices (produced respectively by 60%, 43% and 26% of the respondents). Fitness trackers were also the most shipped wearable device among the respondents’ devices, representing approximately half of all shipped items in 2019 and in the first half of 2020. Furthermore, some respondents are active in the manufacturing of sport watches, smart clothing and other types of wearable devices (such as head-mounted displays, wearable cameras and body sensors). Figure 4: Distribution of manufacturers across wearable device categories (% of respondents) (100)Based on figures provided by the companies, their devices had a combined total of approximately 14.5 million MAUs in the EU in January 2020. Their MAUs within the EU moreover increased by over 40% between January 2018 and January 2020. Other figures provided by respondents confirm the growing user reach of wearable devices, with about 40% more registered users in 2019 compared to 2018. This growth is set to continue based on figures provided for the first half of 2020. 3.5CONSUMER IoT SERVICE PROVIDERS

(101)The Commission received information from 72 providers of consumer IoT services. (102)In terms of characteristics, there is great variety amongst the respondents. The core business of respondents ranges from communication and entertainment to banking and financial information services, to operation of digital platforms, as well as book publishing. They often also offer services outside the IoT, for example offline and online media services. (103)Respondent providers are active in all the service categories covered by the sector inquiry (see Table 2 above), with a quarter active in at least two service categories. Over half of the respondents are creative content providers, such as radio broadcasting companies, music streaming services, video-on-demand (VOD) and e-book providers. This is followed by providers of online shopping services, intermediation services and information and search services (22% in each respective area). Only 2% of respondents provide other types of services (for example online comfort and lighting and security services). Figure 5: Distribution of providers across consumer IoT service categories

(% of respondents) (104)In each EU Member State, at least 53% of the surveyed services are available. Figure 6 shows the availability of the respondents’ services in each Member State. The Member States with the highest availability of respondents’ IoT services are Germany (77%), France (73%), Spain and Italy (70% each). Figure 6: Availability of respondents’ consumer IoT services in the EU (% of total consumer IoT services) (105)As regards the business models used to commercialise IoT services, respondent providers use a variety of these models. For instance, some services are ad-funded, while others are subscription-based; based on single transactions with users; or provided without charge to users (with or without additional paid features). (106)Around one in four of the consumer IoT services provided by the respondents are provided free of charge to consumers: these mostly include services offered by intermediation platforms (where intermediation fees are charged to businesses rather than to consumers) and online services that are ancillary or complementary to the respondent’s main product or service. The “other” category includes mixed business models, such as “freemium” services (combining ad-funded and subscription-based models) or subscription-based services that offer additional paid features on a per-transaction basis. (107)The offer of creative content services, such as VOD, radio and music streaming services, sometimes passes through third-party distributors, such as for example telecommunication operators in the case of audio-visual services. The precise nature of such distribution arrangements varies but may include the integration of different first- and/or third-party services into a bundled offer to the user. (108)The most popular services vary according to the type of device and/or category of service. For example, the most popular creative content services calculated on the basis of the MAUs of these services on the respondents’ smart home devices in June 2020 were Spotify, TuneIn, Amazon Music and Amazon Video, Netflix, Deezer, Disney Plus and YouTube. On wearable devices, the most popular health and fitness applications in terms of the MAUs in 2019, on the basis of respondents’ replies, include different Strava applications, Google Fit, Nike Run Club, Map My Run, My Fitness Pal, Adidas Train, and Calm. 3.6STANDARD-SETTING AND INDUSTRY ORGANISATIONS (109)The Commission received 14 responses to the questionnaire addressed to standard-setting and industry organisations. The responding organisations are diverse in nature and with regard to the scope of their activities. Around a third are international standardisation organisations, active in the development of standards relevant for the functioning of the consumer IoT sector and for wider industries, such as telecommunications, internet and electronic technologies. These organisations include, for instance, the European standardisation organisationsthe International Telecommunications Union (ITU), the International Organisation for Standardisation (ISO) and the International Electrotechnical Commission (IEC). (110)Several respondents are technical professional organisations and international associations whose main purpose is to foster technological innovation, share knowledge and strengthen dialogue and interaction among players in a specific industry. Some of these associations develop and promote open standards relevant for the consumer IoT environment. Generally, their membership is composed of both public institutions and private members (including corporate entities and/or individuals). (111) Finally, other respondents are private not-for-profit organisations and partnerships (alliances) between undertakings operating in the consumer IoT sector. These organisations and partnerships are committed to enabling and promoting interoperable consumer IoT ecosystems through the adoption of particular standards and/or protocols, such as standardised wireless technologies; connectivity, data transmission and networking protocols. These organisations and partnerships (which include, among others, EnOcean Alliance, LoRa Alliance, Mioty Alliance and Thread Group) are active internationally and have a substantial membership, ranging from several dozen to more than 100 undertakings. 3.7KEY FINDINGS Respondents to the sector inquiry are for the most part large corporations, both in terms of number of employees and in terms of turnover. However, the sample also includes SMEs, start-ups or specialised service providers. Most respondents sell products or provide services in at least two categories covered by the sector inquiry, and around half sell in more than four categories.

Voice assistant providers are among the largest players and have the most widespread presence in all areas of consumer IoT activity, showing a growing tendency towards the creation of integrated consumer IoT solutions (from the operation of cloud platforms, to the manufacture of smart speakers, smart streaming devices, and the provision of related consumer IoT services). Smart home device manufacturers most commonly produce smart home appliances, comfort and lighting systems and home entertainment devices, including smart speakers, while the majority of consumer IoT service providers are creative content providers, or operators of online shopping and intermediation services. The availability of the surveyed smart home devices and consumer IoT services varies across the EU, with the highest percentage of them being available in the four largest Member States (Germany, France, Italy and Spain). However, at least 50% of the surveyed smart home devices, and 40% of the surveyed services, are available in each Member State. Shipments of smart devices, as well as the number of registered users and monthly active users have consistently increased from 2018 throughout the first half of 2020.



4MAIN FEATURES OF COMPETITION 4.1OVERVIEW (112)This chapter looks at the main parameters of competition in the consumer IoT sector identified by respondents (4.2), the perceived barriers to entry and expansion (4.3), the competitive position of leading players (4.4), the respondents’ acquisitions and business strategies (4.5) and the expected evolution of competition (4.6). 4.2MAIN PARAMETERS OF COMPETITION (113)The respondents were asked about the importance of various factors that play a role in competition. First, from the perspective of competing for integration with, for example, smart home devices, consumer IoT services or voice assistants, and second, from the perspective of competing for users. (114)As Figure 7 shows, the manufacturers of smart home devices indicate that the quality, cybersecurity, brand reputation and privacy policy of their own devices play a crucial role when competing with other smart home devices for integration with other devices, services, voice assistants and other smart home user interfaces. (115)As regards competing directly for users, Figure 8 shows that similar factors play the most important role. However, user friendliness and technical support services are also indicated as among the most important features. This is not surprising, given that many smart home device categories are still relatively nascent and users are still in the learning phase of being able to operate and use these devices with ease. (116)Price is also an important factor, but it does not feature among the most important. This suggests that competition among smart home device manufacturers is primarily driven by quality. However, several respondents note that there is strong price competition in the smart speakers category, between the so-called first-party device manufacturers (i.e. those which have their own smart home user interface, that is, a voice assistant, and have launched their own branded smart speakers) and third-party device manufacturers. The prices of the former are much lower than those of the latter. (117)Regarding wearable devices, as Figure 9 shows, brand reputation and price competition are the most important factors when competing for users. This is particularly true for smart watches and fitness trackers. The quality of user experience strongly depends on the capacity and reliability of the batteries of these devices, as well as on their user friendliness.

(118)Regarding consumer IoT services, as Figure 10 shows, the most important factors of competition for the integration of a consumer IoT service with third-party smart devices are quality, brand reputation, cybersecurity and the number of users of the consumer IoT service. The latter demonstrates that providers of consumer IoT services can benefit from the network effects of a large number of users, including when it comes to integration on smart devices, which may not have, or may not offer, unlimited slots for carrying more than one or a few providers of consumer IoT services. In this context, a broadcaster respondent points out that the large number of users of global over-the-top media service providers gives them unattainable competitive advantages vis-á-vis smaller players. As shown by Figure 11, quality, brand reputation, user-friendliness and prices are the most important factors for competition for users. Figure 11: Consumer IoT Services - Importance of certain factors for competing with other IoT services for users (119)Regarding voice assistants, Figure 12 shows that, in addition to quality, brand reputation and privacy, the number of users plays a crucial role in competition between voice assistants for integration with a third-party smart device. As in the case of consumer IoT services, this demonstrates the network effects from which voice assistants with a large user base benefit. Figure 12: Voice assistants - Importance of certain factors for competing with other voice assistants for presence on third-party smart devices (120)When it comes to competition between voice assistants for users, Figure 13 shows the importance of exclusive access to specific devices or services, which suggests that users choose a voice assistant as part of a broader set of devices and services to which they are an important user interface. Figure 13: Voice assistants - Importance of certain factors of competition with other voice assistants for users 4.3BARRIERS TO ENTRY AND EXPANSION (121)The respondents in each consumer IoT segment covered by the sector inquiry were asked to mark potential obstacles or entry barriers to developing and launching smart home and wearable devices, consumer IoT services and voice assistants. (122)As Figure 14 shows, in each consumer IoT segment, the respondents to the question indicate the cost of the technology investment and the competitive situation as the main existing barriers to entry or expansion. The replies also show that the various interoperability issues, the lack of access to data as well as regulatory barriers are also seen as obstacles to entry and/or expansion in the relevant markets. Figure 14: Barriers to entry or expansion

(123) Several respondents, across all consumer IoT segments, highlight the costs of technology investment as one the highest barriers to entry and/or expansion. In this respect, several manufacturers of smart devices and providers of consumer IoT services point specifically to the fact that the cost of developing cloud storage and computing for their own use is often prohibitively high and rarely justified. Cloud storage and computing are increasingly necessary for the operation of certain smart devices and services, as data storage and resource-intensive computing often cannot be carried out locally on the device. As a result, a significant number of smart device manufacturers and service providers depend on the infrastructure of well-established cloud service providers (for example Amazon, Microsoft, Alibaba and Google). One of the respondents, which also offers cloud services to third parties, points out that the possibility of buying access to cloud services, instead of developing their own, facilitates entry, as it decreases the technological investment barrier. This dependence on the main actors, however, may come at a price: as other respondents note, the lack of interoperability of data stored and processed in the various clouds makes switching very costly. (124)Most (80%) of the voice assistant providers indicate that the costs of technology investment is a high barrier to entry into the voice assistant market. In particular, general-purpose voice assistants (i.e. those that could compete with Alexa, Google Assistant, Siri and Bixby) are expensive to develop and operate. Their integration with various operating systems and third-party devices would also entail significant expenses. Finally, data is also mentioned as a key input for developing and training a voice assistant. 4.4THE LEADING COMPETITORS IN THE CONSUMER IOT SECTOR

(125)Across all four consumer IoT segments (smart home devices, wearable devices, consumer IoT services and voice assistants), respondents have pointed to Amazon and Google as their main competitors, alongside – to a slightly lesser extent – Apple. These three players are also considered to be “must-have” brands for certain products and services (for example home automation systems, voice assistants). The features of competition nevertheless vary depending on the product or service concerned. For example, and as already indicated, there are only a few alternative voice assistant providers, whereas quite a large number of companies are active in the manufacturing of smart devices and the provision of consumer IoT services. (126)A large number of respondents, across all consumer IoT segments, point out that the main obstacle to developing new products and services is the lack of ability to compete with Google, Amazon and Apple. These players have become the leading technology companies and built their own ecosystems within and beyond the consumer IoT sector by combining their own, and integrating third-party, products and services into a branded consumer offering with a large number of users. (127)In this respect, Google’s, Apple’s and Amazon’s general-purpose voice assistants play an important role as key points of entry to their respective consumer IoT ecosystems. (128)Google’s search engine is integrated with various search platforms such as computers, smart phones and tablets, whether through browsers or dedicated search applications. Voice assistants have the potential to become a new generation of user interfaces to search platforms. (129)Amazon’s Alexa is an access point to shopping services. (130)Apple’s Siri is not available on third-party devices and it uses Google’s search engine. However, Siri provides access to a walled garden of fully integrated services, a full-range of branded proprietary smart devices and Apple’s application store. (131)Moreover, Google and Apple are providers of the leading operating systems for smart mobile devices, and as such, they also operate the two main app stores that determine access to consumer IoT services via applications. (132)Even if other players are present across multiple products and services, Google, Amazon and Apple have a unique position in the consumer IoT sector through their ecosystems combining voice assistants with search and/or marketplaces, and/or operating systems and/or app stores. As respondents point out, with every new smart device or consumer IoT service added, these three consumer IoT ecosystems can realise growth through network effects. A submission to the public consultation on the preliminary report emphasises that such network effects may also benefit small firms and private users. However, the Commission notes that the leading players’ unique position may allow them to control other firms’ ability to benefit from such network effects. The leading players’ position also means that they are well-placed to benefit the most from network effects and obtain unprecedented access to user (and sometimes competitor) data. 4.5ACQUISITIONS AND COMMERCIAL ARRANGEMENTS (133)A number of respondents have chosen to expand through vertical integration and grow their consumer IoT business through acquisition(s) and/or joint ventures. Overall, 16.5% of respondents indicate that they made acquisitions and/or created joint ventures since January 2017, with a view to integrating or developing their economic activities in the consumer IoT sector. In total, around 90 different transactions are reported by these respondents, with a total value of around EUR 20.5 billion. Most frequently, the target companies are consumer IoT service providers (content providers, online intermediaries, online shopping services) or manufacturers of smart home devices. Moreover, a significant number of transactions involve developers of software relevant to consumer IoT (such as machine learning or voice recognition) or providers of wireless connectivity solutions for smart home devices. (134)Another, often complementary, expansion strategy is to establish commercial relationships with other actors in the consumer IoT sector. (135)The main objective of such contractual arrangements appears to be the integration and interoperability of products and services with the other components of a consumer IoT ecosystem (in particular those of Google, Apple and Amazon), including the operating systems. (136)Another goal of the contractual arrangements is to promote products and services through purely commercial partnerships. Such arrangements are aimed at expanding the usage and/or sale of consumer IoT products and services and cover various commercial practices, such as bundling, exclusivity, co-branding and revenue-sharing. (137)For example, almost half of consumer IoT service providers have entered into partnerships with other consumer IoT service providers in order to make their service(s) available to users via an integrated offer and/or via an intermediation service. Examples of this would be a VOD channel made available via an aggregated audio-visual content platform, or an online music streaming service bundled with a mobile telecommunication service. (138)In addition, a number of the consumer IoT service providers surveyed have revenue-sharing agreements with a variety of partners, including, typically, manufacturers of smart TVs, smart watches and smart speakers. The revenue-sharing agreements have different forms and contractual obligations, but generally include a fee paid by the consumer IoT service provider to the smart device manufacturer for each new customer acquired via the device. In most cases, a “new customer” is defined as a customer who is not an existing subscriber of the service (or who has not been a subscriber within the previous 12 months) and who subscribes to the service via a web address, to which the smart device’s users are directed when they download the service provider’s application. (139)The revenue-sharing arrangement is usually: (i) either a fixed fee or a percentage of a fee (the rate ranging between 0 and 30% depending on the relative importance of the parties), per new user acquired by the consumer IoT service via the device; (ii) a percentage of the revenue, which the consumer IoT service provider generates by its service running on the manufacturer’s device; or (iii) a combination of these. (140)A specific form of revenue-sharing between consumer IoT service providers and smart device manufacturers concerning after-markets (spare parts or consumables of the primary product) is provided for in some agreements in relation to automatic product reordering. In these cases, the manufacturers of smart devices participating in the scheme may be eligible to receive revenue-sharing payments depending on the brand of products that the users order through the program. (141)The respondents also mention revenue-sharing agreements between voice assistant providers and consumer IoT service providers, through which the voice assistant provider earns a commission on the transactions processed via the voice assistant. 4.6FORWARD-LOOKING TRENDS (142)The respondents were asked to explain in which consumer IoT segments they are currently not active and the underlying reasons for that. The main reason for not being present in a particular segment is lack of interest or that the segment is outside the company’s core business area. Other reasons mentioned by respondents include the time required for developing the relevant technology, the high investments needed for entry, or the presence of established players operating in that specific segment, which would make entry more difficult. These reasons are most notably cited for some categories, such as the provision of voice assistants or the provision of operating systems for smart devices, and are in line with the findings regarding barriers to entry and expansion in Section 4.3 above.

(143)In terms of future expansion within the consumer IoT sector, most respondents indicate that they plan to develop and launch other smart devices and/or to expand their business to any of the other consumer IoT segments in the next three years, as shown by Figure 15. Figure 15: Plans to launch new consumer IoT products or services in the following three years (% of total respondents per questionnaire) (144)A closer analysis shows that almost half of the manufacturers of smart home devices consider launching new consumer IoT services within the next three years. Most of these services would expand the functionalities of the manufacturers’ smart home devices and improve user experience, especially by increasingly relying on artificial intelligence tools. (145)Of those manufacturers of smart home devices that do not intend to launch their own consumer IoT services, many plan to expand the range of third-party services accessible via their devices. Several manufacturers of smart home devices specifically indicate that their strategy is to expand the range of third-party services by integrating their devices with the leading providers of consumer IoT technology platforms, namely, Amazon, Apple and Google, which would give the manufacturers automatic access to a large number of consumer IoT services. (146)Moreover, around half of the surveyed wearable device manufacturers plan to enable users to download and install applications or increase the range of own or third-party applications available on their wearable devices within the next three years. (147)Similar replies were received from the vast majority of providers of consumer IoT services and voice assistants. On the one hand, around two thirds of the service providers plan to increase the range of smart devices through which users can access their consumer IoT services in the next three years. On the other hand, most voice assistant providers plan to increase the range of consumer IoT services accessible via their voice assistant in the next three years, including by developing their own consumer IoT services. (148)In relation to voice assistants, only a few respondents plan to launch a specialised voice assistant, predominantly for their own services, in the near future. However, half of the surveyed manufacturers of smart home devices are planning to increase the range of voice assistants through which their smart home devices can be controlled in the next three years. In particular, most of these respondents plan to add Google Assistant, Alexa and/or Siri, whereas a few respondents plan to make their devices controllable via other voice assistants, such as Yandex or Xiaowei, in order to serve non-EU markets. (149)The respondents were also asked to explain how they see the consumer IoT sector evolving and whether they expect other companies that are not yet active in any of their respective segments to launch products in those segments in the next three years. (150)Regarding the smart home devices segment, the replies reflect an overall expectation that the segment will remain or become increasingly attractive, as many users are getting familiar with and starting to use these devices, creating a growing demand. Some respondents even expect that almost all home appliances and devices will ultimately become smart and be connected to the Internet, with this therefore becoming the norm. A respondent also mentioned the emergence of the “silver economy” as a driver for innovation, as voice-activated IoT systems and multiscreen and television-enabled monitoring consoles are expected to become quite popular for the purposes of elderly care at home. (151)This brings an expectation that existing players will also expand into new segments. Views are mixed as to which categories of smart home devices would be affected by this expansion: while further new entry is expected in the segments of home appliances and home energy consumption, the segments of smart TVs and smart speakers appear to be maturing. A large number of respondents expect that Google, Amazon and Apple will continue to expand into different smart home device categories and use cases. (152)Regarding wearable devices, the majority of respondents expect growing demand, expansion and continued innovation. Some point out a possible convergence of sport watches and fitness trackers towards smart watches. Many also highlight the importance of elderly care, as well as healthcare in general, as potential drivers of growth for wrist-worn devices. (153)Regarding consumer IoT services, the majority of respondents expect that this segment will continue to grow dynamically. The emergence of 5G will increase opportunities for businesses in this space. In particular, it is foreseen that new international and domestic players will enter the VOD market, also potentially with new monetisation models (for example purely ad-funded or hybrid), whereas existing providers will keep expanding the scope and territorial reach of their offering. Entry and expansion are expected in the audio streaming market as well, while radio is predicted to remain strong, but to shift from analogue and digital radio receivers to connected smart speakers. The respondents active in the segment highlight that health and fitness services will grow rapidly as they become hyper-targeted to individual users. (154)Regarding voice assistants, the expectations are remarkably different: the general view is that the segment is already concentrated around Amazon and Google, while Apple is also very important. The scale of these companies, the competitive pressure they exert and the high costs associated with developing voice assistants explain why the majority of respondents do not expect new general-purpose voice assistants to be launched in the near future. Some respondents as well as Amazon in its submission to the public consultation on the preliminary report expect, however, that specialised voice assistants could enter the market, given that users may expect a voice-operated interface for some particular services. 4.7KEY FINDINGS A large number of respondents point out that the main obstacle to developing new products and services is the inability to compete effectively with the leading players in the consumer IoT sector, namely Google, Amazon and Apple. These vertically integrated players have built their own ecosystems within and beyond the consumer IoT sector by combining their own, and integrating third-party, products and services into an offering with a large number of users. Even if respondents identified quality and brand reputation as the main parameters of competition in the sector, the importance of the few market players combined with the high costs of technology investment suggest that there are significant barriers to entry in the different consumer IoT segments (smart home devices, wearable devices, voice assistants, services). This is especially true for voice assistants, for which the respondents stress that the cost of developing and operating new general-purpose voice assistants is almost prohibitively high and there is a general belief that there will not be any new entrants in the short term. Consequently, most respondents’ business strategies focus on expanding the accessibility of their smart devices and consumer IoT services via the leading general-purpose voice assistants.

5INTEROPERABILITY IN CONSUMER IOT ECOSYSTEMS 5.1OVERVIEW (155)In the consumer IoT sector, interoperability refers to the ability to interconnect and communicate between the hardware and software components of various consumer IoT products and/or services. In this respect, interoperability is essential to deploy fully the variety of possibilities offered by consumer IoT products and services, enabling and ensuring consumer choice. (156) This chapter describes the processes consumer IoT players undertake to attain such interoperability. For this purpose, Section 5.2 explains the key role of the leading consumer IoT technology platforms (in particular voice assistants and smart device operating systems) in attaining interoperability and Section 5.3 gives an overview of how interoperability is attained in the consumer IoT sector. The following Sections 5.4, 5.5 and 5.6 describe in more detail how technical interoperability is attained in the smart home device, consumer IoT service and wearable device segments as defined in the sector inquiry. Section 5.7 concerns certification processes as a means to achieve the integration of various products and services with consumer IoT technology platforms. Finally, Section 5.8 outlines the main conclusions of this chapter. (157)The competition concerns raised by respondents in relation to interoperability in the consumer IoT sector are set out in Chapter 8 (Section 8.2). 5.2KEY ROLE OF CONSUMER IOT TECHNOLOGY PLATFORMS (158)Consumer IoT products and services are generally centred on technology solutions, enabling the integration of consumer IoT services and smart devices in a connected system. In other words, consumer IoT technology platforms, such as voice assistants and operating systems, bring together different hardware and software components, enabling communication with those components and increasing their complementarity. They also allow for centralised access to and control of the products and services they integrate. In this regard, consumer IoT technology platforms, including voice assistants, have played a significant role in advancing technology integration. (159)The leading consumer IoT technology platforms are proprietary and controlled by Amazon, Apple and Google. They are the leading general-purpose voice assistant providers, and also provide leading smart device operating systems. (160)The majority of respondents acknowledge that access to and good performance on the leading consumer IoT technology platforms is essential to compete in the consumer IoT sector and to make consumer IoT products and services interoperable. 5.3OVERVIEW OF TECHNICAL INTEROPERABILITY IN THE CONSUMER IOT SECTOR (161)Respondents report that there are multiple ways to enable interactions between smart home devices, wearable devices, consumer IoT services and third-party consumer IoT technology platforms such as voice assistants. However, in most cases, third-party integration involves technical and business engagement by the parties involved. The costs of these methods, and the degree of joint work between different operators required, varies depending on a number of factors. (162)Requirements and processes to achieve interoperability are largely determined by the presence of the leading providers of consumer IoT technology platforms. These providers govern the integrations with their products by imposing certification processes, which they control unilaterally (see Section 5.7 on certification processes). Partnership negotiations and case-by-case integration arrangements are also present, but for the most part only between the leading technology platform providers and counterparties with sufficient bargaining power to negotiate, or in situations where the leading technology platforms are not involved (for example integration projects between smaller smart device manufacturers). (163)Business strategies and approaches that some companies take on issues such as privacy and security also influence integration processes. For example, some respondents do not share technical documentation with third parties and others do not make their devices controllable by third-party user interfaces in order to avoid data sharing with third parties or to wall their systems against external interference. (164)Although there is no common approach to integration, interoperability, from a technical perspective, is generally based on application programming interfaces (APIs), developed or made available by one of the parties, which allow exchanges of data and functionalities through software interfaces. Parties frequently make software development kits (SDKs) and hardware technical specifications available, to facilitate implementation. (165)Once the relevant API documentation or SDK is released, smart device manufacturers and consumer IoT service providers can build integration by developing software solutions or applications written for the specific consumer IoT technology platform (for example for a particular voice assistant or smart device operating system). When the integration involves the certification of a smart device, hardware specifications need to be followed. Once the integration is tested and validated internally, it normally needs approval by the provider of the consumer IoT technology platform, following a certification process to verify its correct performance. (166)Nevertheless, there are exceptions to these integration steps. For instance, some companies have a policy of not sharing their APIs, and integrate third-party APIs or SDKs into their own systems instead. In this way, they customise third-party applications to their systems and control the integration process of third-party products and services within their systems. (167)APIs, SDKs and hardware specifications are generally made available to third parties subject to the conclusion of agreements. In this regard, providers of relevant user interfaces, such as voice assistants, have standardised their requirements for integration into terms and conditions, which are generally not open to negotiation with counterparties. Nevertheless, when horizontal collaboration is required or the business partners are on an equal footing, companies negotiate contractual and technical integration on an ad hoc basis and sign customised agreements. (168)In the following sections, the specific interoperability requirements and integration processes for each of the following consumer IoT segments are set out: smart home devices, consumer IoT services and wearable devices. Such information relating to voice assistants is considered across all of these sections, given their widespread presence in accessing and controlling products and services in the consumer IoT sector.

5.4SMART HOME DEVICES (169)According to respondents’ replies, the smart home segment is characterised by complex technology and the presence of a significant and growing number of smart home device manufacturers. These players use different communication standards, data models and system architectures. In addition, most smart home systems are built around the leading providers of consumer IoT technology platforms and, in particular, around a few general-purpose voice assistants, namely, Google Assistant, Alexa and Siri, which allow for centralised control of smart devices from different brands and access to a variety of consumer IoT services. 5.4.1Connectivity (170)As set out in further detail in Section 6.4, there is a wide variety of communication standards and protocols in the market that facilitate communication with smart devices, but that do not necessarily communicate with each other. In fact, the two most prominent communication protocols according to respondents, the Connectivity Standards Allianceand Z-Wave, do not allow for interoperability between smart devices using one or the other. (171)Manufacturers must decide how many, and which, communication protocols will run on their devices and implement a certain number of feature requirements (i.e. memory size, low power optimisation and security) to support them. (172)To allow communication between smart home devices that do not support the same communication protocols and/or between smart home devices and the cloud, a hub or a gateway might be necessary to facilitate interconnection and data exchanges. (173)Moreover, some devices and sensors (for example smart bulbs) use non-IP based networks like Bluetooth, the Connectivity Standards Alliance or Z-Wave, for reasons such as limited battery capacity or to save on costs. In some cases, developers need to support their devices and sensors with dedicated hubs or gateways that translate non-IP based protocols into a format that can be communicated through the internet. 5.4.2Management and control of smart home devices through first-party vs. third-party user interfaces (174)As explained in Section 2.3, most smart home devices can be controlled through a first-party user interface without the support of or integration with a third-party technology platform. Nevertheless, the user interface of a sole smart home manufacturer might not be interoperable with third-party devices. For this reason, standalone user interfaces create a fragmented experience for users, who need to navigate through different set-ups and use distinct smart home applications to control each of their smart home devices. (175)In addition, in certain use cases, interaction and data exchanges with third-party smart devices and services are essential for delivering the smart device functionality. For example, smart speakers depend on interaction with third-party music streaming services; smart TVs on streaming of movies and TV series; smart shutters on integration with a weather app; and smart thermostats on connection with heating systems. Thus, entering the market with a standalone user interface, which only allows control of one device or of devices from one brand, creates inconvenience for the user, makes smart home devices less functional and interoperable and creates competitive disadvantages. (176)To overcome the shortcomings of only having first-party user interfaces, the majority of respondents make their smart devices operable through third-party technology platforms that incorporate user interfaces and, in particular, through leading general-purpose voice assistants. In fact, once integration with third-party user interfaces has been achieved, the brand’s user interface (for example smart home application) usually becomes redundant and thus is employed less frequently by the user. (177)The integration of smart home devices with voice assistants is typically achieved through various certification programs, which are governed by the voice assistant providers and explained in more detail in Section 5.7 below. 5.4.3Smart home device operating systems (178)Complex and high-end smart home devices such as smart TVs or smart fridges run on operating systems, which allow these devices to not only collect and transmit data but also analyse it and support automatic decision-making. On the contrary, smaller or low-level smart devices such as smart bulbs or smart sensors typically do not run on operating systems but on firmware, a specific class of computer software that provides the low-level control for a device´s hardware of such characteristics. (179)For those smart devices running on operating systems, smart home device manufacturers choose the operating system that best fulfils their specifications. Many respondents use open source operating systems such as Linux to develop their own operating system adapted to the device’s requirements. Others resort to third-party proprietary operating systems. (180)To license smart device operating systems provided by third parties (for example Amazon Fire TV, Android TV), manufacturers of smart home devices must enter into license agreements (for example, for Amazon’s Fire OS and Fire TV, Amazon’s Fire TV Edition Program Agreement). The operating system licensor might require that the manufacturer complies with certain requirements set by the licensor. (181)Smart device operating systems also function as technology platforms for accessing third-party consumer IoT services and voice assistants through applications developed and installed on such operating systems. For this purpose, consumer IoT service and voice assistant providers develop applications to make their services accessible through smart home device operating systems, which function as technology platforms in this sense. This enriches the user experience, since third-party consumer IoT services and voice assistants can be accessed together with the first-party features or functions. 5.5CONSUMER IOT SERVICES (182)While leading providers of consumer IoT technology platforms (i.e. Google, Amazon and Apple) are able to offer their first-party services via their own smart devices, operating systems and voice assistants (for example, Amazon’s Echo Speakers offer Amazon Music via a first-party Alexa skill), most consumer IoT service providers need to develop integration with third-party consumer IoT technology platforms in order to reach users. For instance, music streaming service providers need to develop voice applications to make their services accessible via voice assistants. Similarly, VOD providers would need to develop applications for smart TV operating systems to be accessible on those consumer IoT technology platforms. Likewise, providers of fitness services would have to develop applications for a certain wearable operating systems to be accessible through a smart watch. 5.5.1Voice applications

(183)Prior to being made available on a voice assistant, third-party voice applications must initially accept the voice assistant’s terms and conditions, and get the approval of the voice assistant provider through its proprietary review process. Once voice applications are approved, third-party consumer IoT services can be found and accessed by users via the voice assistant (see Section 5.7 below for information on voice applications’ certificatio