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
Date: 2022-01-20
Institutions: Directorate-General for Competition, European Commission
Subjects: Internet of Things, competition policy, consumer, data collection, provision of services, sample survey, smart technology, standardisation

EN 

  EN 

   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 

2 

 
 
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 

3 

 
 
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 

4 

 
 
 
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 

5 

 
 
 
 
 
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. 

6 

 
 
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.  

7 

 
 
 
 
1  INTRODUCTION 

1.1  WIDER 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  1/20031,  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 Act2 (DMA). 

1.2  REASONS 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 
20303. 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 whole4. Moreover, the number of voice assistants in use worldwide is expected 
to double between 2020 and 2024, from 4.2 billion to 8.4 billion5. 

15  December 

1 The  sector  inquiry  was  launched  pursuant  to  Article  17  of  Council  Regulation  (EC)  1/2003  of  16  December 
2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ L 1, 
4.1.2003, p. 1. 
2  European  Commission.  Proposal  for  a Regulation  of  the  European  Parliament  and  of  the  Council  on 
contestable  and  fair  markets  in  the  digital  sector  (Digital  Markets  Act)  (COM/2020/842  final).  European 
Commission,  Brussels, 
https://eur-lex.europa.eu/legal-
2020, 
content/en/TXT/?uri=COM%3A2020%3A842%3AFIN 
3 Transforma Insights (22 December 2020), ‘Internet of Things (IoT) revenue worldwide from 2019 to 2030 (in 
billion  U.S. 
2021, 
vertical.’ 
https://www.statista.com/statistics/1183471/iot-revenue-worldwide-by-vertical/  
4 Transforma Insights, (22 December 2020), ‘Number of Internet of Things (IoT) connected devices worldwide 
from  2019  to  2030,  by  use  case  (in  millions)’  [Graph],  Statista,  retrieved  on  20  March  2021,  from 
https://www.statista.com/statistics/1194701/iot-connected-devices-use-case/  
5 Voicebot.ai,  and  Business  Wire  (28  April  2020),  ‘Number  of  digital  voice  assistants  in  use  worldwide  from 
2019 
from 
https://www.statista.com/statistics/973815/worldwide-digital-voice-assistant-in-use/  

24  March 

24  March 

billions)*.’ 

retrievable 

retrieved 

retrieved 

dollars), 

Statista, 

Statista, 

[Chart], 

[Chart], 

2021, 

2024 

from 

(in 

on 

by 

on 

to 

8 

 
 
                                                 
 
 
(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 speaker6. 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 
assistant7.  

(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  home8 and  even  fewer  used  smart  security  solutions9 
(5%  of  individuals) 10  and/or  smart  home  appliances  such  as  cleaning  or  kitchen 
appliances  (5%  of  individuals)11.  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)12.  

(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  household13.  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 IoT14. 

(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 

6

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Eurostat,  Data 

Eurostat,  Data 

Eurostat,  Data 

Internet 
https://ec.europa.eu/eurostat/databrowser/view/isoc_iiot_use/default/table?lang=en  
7
Internet 
https://ec.europa.eu/eurostat/databrowser/view/isoc_iiot_use/default/table?lang=en   
8
Internet 
https://ec.europa.eu/eurostat/databrowser/view/isoc_iiot_use/default/table?lang=en   
9 I.e. a smart home alarm system, smoke detector, security camera, door lock or other internet-connected security 
or safety solution. 
10 Eurostat,  Data 
Internet 
https://ec.europa.eu/eurostat/databrowser/view/isoc_iiot_use/default/table?lang=en   
11 Eurostat,  Data 
Internet 
https://ec.europa.eu/eurostat/databrowser/view/isoc_iiot_use/default/table?lang=en   
12 Statista (11 September 2020), ‘Smart Home - revenue forecast in Europe from 2017 to 2025 (in million U.S. 
dollars)’ [Chart], Statista, retrieved on 23 March 2021, from https://www.statista.com/forecasts/528116/revenue-
in-the-smart-home-market-in-europe 
13  Eurostat,  Data  browser: 
https://ec.europa.eu/eurostat/databrowser/view/isoc_iiot_bx/default/table?lang=en  
14  Eurostat,  Data  browser: 
https://ec.europa.eu/eurostat/databrowser/view/isoc_iiot_bx/default/table?lang=en   

Internet  of  Things  –  barriers 

Internet  of  Things  –  barriers 

to  use,  Eurostat, 

to  use,  Eurostat, 

retrievable 

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9 

 
 
                                                 
processing  capability15.  In  2019,  the  French  Competition  Authority  contributed  to  a 
joint study on voice assistants and connected speakers16. 

(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.  

1.3  THE 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.17 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. 

2020, 

15 Bundeskartellamt, Sector inquiry smart TVs  - Conclusion and recommendations for action (Az. V-22/17), 17 
July 
from 
https://www.bundeskartellamt.de/SharedDocs/Meldung/EN/AktuelleMeldungen/2020/17_07_2020_Sector_inqui
ry_smart_TVs_conlusion.html  
16 Hadopi  &  CSA,  Assistants  vocaux  et  enceintes  connectées  -  l’impact  de  la  voix  sur  l’offre  et  les  usages 
culturels  et  médias,  mai  2019,  retrievable  at  https://hadopi.fr/actualites/lhadopi-et-le-csa-sassocient-pour-la-
realisation-dune-etude-commune-sur-les-assistants 
17 Article  17  of  Council  Regulation  (EC)  1/2003  of  16  December  2002  on  the  implementation  of  the  rules  on 
competition laid down in Articles 81 and 82 of the Treaty, OJ L 1, 4.1.2003, p. 1. 

retrievable 

10 

 
 
                                                 
1.4  DATA GATHERING AND ANALYSIS 

1.4.1  Questionnaires 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.  

(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. 

18 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection 
of  natural  persons  with  regard  to  the  processing  of  personal  data  and  on  the  free  movement  of  such  data,  and 
repealing Directive 95/46/EC (General Data Protection Regulation), OJ L 119, 4.5.2016, pp. 1–88. 

11 

 
 
                                                 
(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. 

1.4.2  The public consultation and the final report on the sector inquiry  

(23)  On 9 June 2021, the Commission published a preliminary report19, 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. 

19 European  Commission,  Commission  Staff  Working  Document:  Preliminary  Report  –  Sector  Inquiry  into 
consumer Internet of Things (SWD(2021) 144 final), European Commission, Brussels, 9 June 2021, retrievable 
from https://ec.europa.eu/competition-policy/system/files/2021-06/internet_of_things_preliminary_report.pdf 

12 

 
 
                                                 
 
(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. 

2  CHARACTERISTICS  OF  CONSUMER  IOT  PRODUCTS 

AND SERVICES 

2.1  OVERVIEW 

(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.  

2.2  VOICE ASSISTANTS 

2.2.1  Characteristics 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;  

13 

 
 
 
  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. 

2.2.2  User 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).  

14 

 
 
(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.  

2.3  SMART HOME DEVICES  

2.3.1  Characteristics 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. 

2.3.2  User 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 

15 

 
 
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) 20 ,  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. 

2.4  WEARABLE DEVICES 

2.4.1  Characteristics 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). 

20 Based on the number of MAUs in 2019, as well as for the period 1 January 2020 to 30 June 2020. 

16 

 
 
                                                 
2.4.2  User 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. 

2.5  CONSUMER IoT SERVICES 

2.5.1  Characteristics 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 

17 

 
 
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.  

2.5.2  User 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.  

2.6  INTERACTION  BETWEEN  CONSUMER  IOT  PRODUCTS  AND 

SERVICES 

2.6.1  Voice 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 

18 

 
 
Alexa  billions  of  times  each  week.  Customers  rely  on  Alexa  to  control  smart  home 
devices hundreds of millions of times each week”21. 

(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 
activated22.  

(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 

21 Amazon  (30  January  2020),  Amazon.com  Announces  Fourth  Quarter  Sales  up  21%  to  $87.4  Billion,  30 
January  2020,  retrieved  on  11  October  2021,  from  https://ir.aboutamazon.com/news-release/news-release-
details/2020/Amazoncom-Announces-Fourth-Quarter-Sales-up-21-to-874-Billion/default.aspx 
22 For more information on the “works with” solution, please see paragraph 197 in Chapter 5.  

19 

 
 
                                                 
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. 

2.6.2  Voice 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.  

2.6.3  Voice 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 assistant23. 

(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. 

23 However, since concurrent use of voice assistants is not possible on most smart devices (see paragraph 65), the 
users are usually not able to switch from interacting with a certain consumer IoT service via one voice assistant 
to interacting with that service via another voice assistant.  

20 

 
 
                                                 
2.6.4  Consumer 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.24 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. 

2.6.5  Consumers 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 faces25 and sleep-related applications.  

24 These types of services are also known as automatic replenishment services.  
25 A watch face is a watch’s home screen. 

21 

 
 
                                                 
(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. 

2.7  KEY 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. 

22 

 
 
 
 
 
3  CHARACTERISTICS 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). 

3.1  OVERVIEW 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,26 as well as from 14 
standard-setting and industry organisations.  

Table 1: Number of respondents to each questionnaire 

Smart home device manufacturers 

Voice assistant providers 

Wearable device manufacturers 

Consumer IoT service providers 

Standard setting and industry organisations 

Total 

87 

13 

29 

72 

14 

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.27  

Table  2:  Distribution  of  respondents  across  different  categories  of  consumer  IoT 
products and services  

Consumer IoT product or service category 

(a)  Operation of cloud platforms for the IoT 
(b) Provision of operating systems for smart devices 
(c)  Provision  of  home  automation  systems  (including 

manufacturing of hubs or gateways) 

Number  of  active 
respondents 
51 
27 
50 

(d) Manufacturing of smart speakers 
(e)  Manufacturing  of  connected  video  entertainment 

31 
19 

devices 

(f)  Manufacturing  of  other  smart  home  devices  (smart  60 

26 For the purpose of the figures in this chapter, responding companies belonging to the same group are counted 
as a single respondent. 
27 For the purposes of this table, replies from companies that responded to more than one questionnaire, as well 
as replies from companies belonging to the same group, are counted only once. 

23 

 
 
 
                                                 
appliances, lighting systems, security devices) 

(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 

63 

smart home user interfaces 

(i)  Provision of online creative content services 
(j)  Provision of online shopping services 
(k) Provision of online information and search services 
(l)  Provision of online intermediation services 
(m) Provision of online security services 
(n) Provision of online comfort and lighting services 
(o) Provision of online health and fitness services 
(p) Provision of voice assistants 
(q) Manufacturing of wearable devices 
(r)  Manufacturing of smart mobile devices (smart phones 

and tablets) 

(s)  Other consumer IoT products and services 
(t)  Other non-consumer IoT products and services 

56 
53 
28 
28 
12 
27 
27 
13 
36 
18 

52 
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). 

24 

 
 
 
Figure  1:  Distribution  of  respondents  by  2019  worldwide 

turnover 

(% of total respondents per questionnaire) 

100%

80%

60%

40%

20%

0%

Manufacturers of
smart home devices

Providers of consumer
IoT services

Providers of voice
assistants

Manufacturers of
wearable devices

Below EUR 50 million

Between EUR 50 million and 500 million

Above EUR 500 million

(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. 

3.2  MANUFACTURERS 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 

25 

 
 
 
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) 

Control and 
connectivity
5%

Security
10%

Others
2%

Home entertainment
12%

Smart appliances
50%

Comfort and lighting
21%

(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.  

Figure  3:  Availability  of  respondents’  smart  home  devices 
(% of total devices) 

in  the  EU  

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

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(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 

26 

 
 
 
 
 
 
between  2018  and  2020  in  the  EU  whereas  MAUs  of  respondents’  devices  almost 
doubled in the same period. 

3.3  VOICE 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 MAUs28 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.  

3.4  WEARABLE 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 

28 MAUs are calculated by most respondents as those users who interacted with the voice assistant at least once 
in the previous month. 

27 

 
 
                                                 
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) 

Smart watches

Fitness trackers

Ear worn devices

Sport watches

Others

Smart clothing

0%

10%

20%

30%

40%

50%

60%

70%

(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. 

3.5  CONSUMER 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). 

28 

 
 
 
 
 
Figure  5:  Distribution  of  providers  across  consumer  IoT  service  categories 
(% of respondents) 

Online creative content services

Online shopping services

Online information and search services

Online intermediation services

Online health and fitness services

Other services (comfort, lighting, security)

0%

10%

20%

30%

40%

50%

60%

(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) 

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

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(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 

29 

 
 
 
 
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. 

3.6  STANDARD-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 
industries,  such  as 
telecommunications, internet  and electronic technologies. These organisations include, 
the  European  standardisation  organisations 29 the 
for 
International 
Telecommunications  Union  (ITU),  the  International  Organisation  for  Standardisation 
(ISO) and the International Electrotechnical Commission (IEC). 

the  consumer  IoT  sector  and  for  wider 

instance, 

(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 

29 Namely,  the  European  Committee  for  Standardization  (CEN),  the  European  Committee  for  Electrotechnical 
Standardization  (CENELEC)  and  the  European  Telecommunications  Standards  Institute  (ETSI),  pursuant  to 
Regulation (EU) No 1025/2012 of the European Parliament and of the Council of 25 October 2012 on European 
standardisation. 

30 

 
 
                                                 
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.  

3.7  KEY 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.  

31 

 
 
 
 
4  MAIN FEATURES OF COMPETITION 

4.1  OVERVIEW 

(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). 

4.2  MAIN 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. 

32 

 
 
Figure  7:  Smart  home  device  manufacturers  -  Importance  of  certain  factors  for 
competing  with  other  smart  home  device  manufacturers  for  integration  on  or 
interoperability with other smart home devices, consumer IoT services, voice assistants 
and other smart home user interfaces 

Quality

Cybersecurity

Brand reputation

Privacy policy

Technical support services

Interoperability with “must-have” voice assistants

Interoperability with other “must have” smart devices

Availability of languages

Requirements to allow interoperability/certification process

Access to data collected through the smart home device

Availability of “must-have” consumer IoT services

Interoperability with a specific home automation system

Interoperability with other smart home user interfaces

Advertising possibilities

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

Importance on a scale from 1 to 5 (5 represents "very important")

(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 

33 

 
 
 
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. 

Figure  8:  Smart  home  device  manufacturers  -  Importance  of  certain  factors  for 
competing with other smart home device manufacturers for users 

Cybersecurity

User-friendliness

Quality

Brand reputation

Privacy policy

Technical support services

Price

Innovation

Range of features available on the smart home device

Availability of “must-have” voice assistant(s)

Interoperability with other “must have” smart devices(s)

Availability of “must-have” consumer IoT services

Interoperability with other “must-have” smart home user 
interfaces

Availability of languages

Price of the consumer IoT services accessible via your smart
home devices

Integration within a brand’s own consumer IoT ecosystem

Price of interoperable smart devices (e.g. smartphone, home
automation system)

Interoperability with a specific home automation system

Possession of other smart home devices which belong to the same
manufacturer

Exclusive access to specific devices and services

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

Importance on a scale from 1 to 5 (5 represents "very important")

(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 

34 

 
 
 
the  capacity  and  reliability  of  the  batteries  of  these  devices,  as  well  as  on  their  user 
friendliness.  

Figure 9: Wearable device manufacturers - Importance of certain factors for competing 
with other wearable devices for users 

Brand reputation

Price

Battery performance/energy consumption

User-friendliness

Footprint (weight, size, design, etc.)

Functionalities of companion apps

Privacy policy

Innovation

Particular functionalities required
 for a specific use

Proprietary operating system

Types and range of sensors

Third-party operating system

GPS

Voice control

Processor

Availability of “must-have” third-party consumer IoT services

Interoperability with other smart devices

Number of applications that can be downloaded directly on your
wearable devices

Memory capacity

Range of the  consumer IoT services accessible via your wearable
device
Price of the consumer IoT services accessible via your wearable
device

Integration within a brand’s own consumer IoT ecosystem

Cellular connectivity

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

Importance on a scale from 1 to 5 (5 represents "very important")

(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 

35 

 
 
 
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  10:  Consumer  IoT  Services  -  Importance  of  certain  factors  for  competing  with 
other consumer IoT services for presence on third-party smart devices 

Quality of the consumer IoT service

Brand reputation

Number of users of the consumer IoT service

Cybersecurity

Privacy policy

Access to data collected via the consumer IoT service

Interoperability with other “must have” smart device(s)

Requirements to allow interoperability/
certification process

Technical support services

Availability of languages

Advertising possibilities

Interoperability with one or more voice assistants

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

Importance on a scale from 1 to 5 (5 represents "very important")

36 

 
 
 
Figure  11:  Consumer  IoT  Services  -  Importance  of  certain  factors  for  competing  with 
other IoT services for users 

Quality

Brand reputation

User-friendliness

Price of the consumer IoT service

Innovation

Interoperability with “must-have” smart devices

Privacy policy

Range of user control functionalities

Range of user functionalities available via mobile device
application

Availability of languages

Exclusive nature of the consumer IoT service

Range of interoperable smart devices via which the
service is available

Interoperability with “must-have” voice assistants

Technical support services

Range of payment options

Price of interoperable smart devices (e.g. smartphone,
smart speaker)

Range of voice assistants with which the consumer IoT
service can be accessed

Integration within a brand’s consumer IoT ecosystem

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

Importance on a scale from 1 to 5 (5 represents "very important")

(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. 

37 

 
 
 
Figure  12:  Voice  assistants  -  Importance  of  certain  factors  for  competing  with  other 
voice assistants for presence on third-party smart devices 

Quality

Brand reputation

Privacy policy

Number of users of the voice assistant

Cybersecurity

Technical support services

Availability of languages

Range of interoperable smart devices

Interoperability with “must have” smart devices

Requirements to allow interoperability/certification
process

Advertising possibilities

Access to data collected through the voice assistant

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

Importance on a scale from 1 to 5 (5 represents "very important")

(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. 

38 

 
 
 
Figure  13:  Voice  assistants  -  Importance  of  certain  factors  of  competition  with  other 
voice assistants for users 

Quality

Brand reputation

Exclusive access to specific devices and/or services

Price

Privacy policy

Availability of “must-have” consumer IoT services

Availability of search engine services

Interoperability with “must-have” smart devices

Range of interoperable smart devices on which the voice
assistant is available

Integration within a brand’s own consumer IoT ecosystem

Technical support services

Range of consumer IoT services accessible via your voice
assistant (e.g. shopping, music)

Price of interoperable smart devices (e.g. smartphone,
smart speaker)

Availability of languages

Price of the consumer IoT services accessible via your
voice assistant

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

Importance on a scale from 1 to 5 (5 represents "very important")

4.3  BARRIERS 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 30 .  The  replies  also  show  that  the  various 

30 The figures represent, per consumer IoT segment, the percentage of the respondents to the question that mark a 
given factor as an existing barrier to entry or expansion. 

39 

 
 
 
 
                                                 
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 

Cost of the technology investment

Competitive pressure

Lack of interoperability with relevant third-party smart
devices

24%

21%

10%

70%

72%

80%

56%

59%

49%

50%

30%

37%

Other

17%

20%

33%

41%

Lack of interoperability with other relevant third-party
technology

11%

Lack of interoperability with home automation systems

Lack of interoperability with relevant third-party voice
assistants

Regulatory barriers

Lack of interoperability with other smart home user
interfaces

Lack of interoperability with relevant third-party consumer
IoT services

Lack of interoperability with the relevant third-party
operating systems

Lack of legal certainty

Lack of access to relevant data

Lack of access to third-party IP rights

Lack of access to cloud services

Lack of interoperability with relevant third-party services

Lack of interoperability with the relevant third-party smart
device operating systems

0%
0%
0%

0%

0%
0%
0%

0%
0%

0%
0%

0%

0%

0%
0%
0%

0%
0%

30%
31%

30%

29%

29%

17%

23%

21%

28%
28%

30%

27%

10%

24%

22%

28%

17%

18%

20%

16%

21%

24%

30%

15%
14%

10%

20%

4%
3%

5%

10%

18%

40%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Smart home device manufacturers Wearable device manufacturers

Consumer IoT service providers

Voice assistant providers

40 

 
 
 
(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.  

4.4  THE  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. 

41 

 
 
(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. 

4.5  ACQUISITIONS 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 
(content  providers,  online 
IoT  service  providers 
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. 

42 

 
 
(134) Another,  often  complementary,  expansion  strategy 

is 
relationships with other actors in the consumer IoT sector.  

to  establish  commercial 

(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.  

43 

 
 
(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.  

4.6  FORWARD-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) 

80%

60%

40%

20%

0%

Manufacturers of smart
home devices

Providers of consumer IoT
services

Providers of voice
assistants

Manufacturers of wearable
devices

Yes No

(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, 

44 

 
 
 
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 

45 

 
 
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.  

4.7  KEY 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. 

46 

 
 
5  INTEROPERABILITY IN CONSUMER IOT ECOSYSTEMS 

5.1  OVERVIEW 

(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). 

5.2  KEY 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. 

47 

 
 
 
 
5.3  OVERVIEW  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 
frequently  make  software 
functionalities 
development  kits  (SDKs)  and  hardware  technical  specifications  available,  to  facilitate 
implementation.  

interfaces.  Parties 

through  software 

(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 

48 

 
 
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.  

5.4  SMART 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.  

5.4.1  Connectivity 

(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  Alliance 31 and  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.  

31 Previously Zigbee Alliance. 

49 

 
 
                                                 
(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 
gateway32 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.  

5.4.2  Management  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. 

32 A  hub  or  gateway  consists  of  a  piece  of  hardware  or  software  that  connects  devices  on  a  home  automation 
network  and  controls  communications  between  them.  There  are  standalone  dedicated  hub  or  gateway  devices, 
but they can also be integrated into smart home devices such as smart speakers.  

50 

 
 
                                                 
5.4.3  Smart 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.  

5.5  CONSUMER 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. 

51 

 
 
5.5.1  Voice 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’ 
certification by consumer IoT technology platform providers). 

5.5.2  Integration with third-party smart device operating systems 

(184) Similarly, many consumer IoT service providers develop specific applications for smart 
home devices’  and wearable devices’ operating systems (for example Android  TV for 
smart TVs or Wear OS for wearable devices). This is particularly the case for creative 
content  service  providers,  which  must  integrate  with  third-party  manufacturers’ 
operating  systems  to  make  their  content  accessible  through  smart  home  devices.  For 
example:  VOD  providers  develop  applications  that  run  on  the  operating  systems  of 
smart  TVs,  streaming  devices  and  gaming  consoles;  and  music  streaming  service 
providers develop applications for wearable device operating systems or smart speaker 
operating systems. 

(185) The  development  of  applications  for  operating  systems  also  follows  review  and 
certification processes governed by the smart device operating system providers. Again, 
operating  system  licensors  and  manufacturers  of  smart  home  and  wearable  devices 
generally  make  their  operating  system’s  APIs  and  technical  specifications  publicly 
available  so  that  consumer  IoT  service  providers  can  use  them  to  develop  the 
corresponding  integration,  subject  to  certain  conditions  and/or  the  signing  of 
agreements.  Once  the  application  is  developed,  tested  and  validated  by  the  consumer 
IoT  service  provider  it  must  undergo  a  proprietary  review  or  certification  process 
governed  by  the  manufacturer  or  operating  system  provider  to  ensure  that  the 
integration works correctly. 

5.5.3  Exception for prominent consumer IoT service providers 

(186) In general, the consumer IoT service providers are in charge of developing integrations 
for consumer IoT technology platforms, but there are a few exceptions for key service 
providers, the presence of which might be important for the providers of consumer IoT 
technology  platforms.  In  such  cases,  the  consumer  IoT  service  provider  might,  for 
example, provide APIs or SDKs to the smart device manufacturer for it to integrate the 
service  into  its  devices,  or  work  together  with  the  smart  device  manufacturer  to  build 
such  integration.  The  manufacturer  would  then  develop  the  software  solution  on  its 
operating system, which the consumer IoT service provider would then review to certify 
that the product meets all of the requirements.  

(187) From  a  contractual  perspective,  the  integration  of  consumer  IoT  services  with  voice 
assistants and smart device operating systems involves, in most cases, the acceptance by 

52 

 
 
the consumer IoT service providers of standard terms and conditions stipulated by the 
voice  assistant  and  operating  system  providers.  Nevertheless,  partners  can  come  to  ad 
hoc  agreements  or  negotiate  those  standardised  contracts  when  more  collaboration  is 
involved for building the integration.  

5.6  WEARABLE DEVICES 

5.6.1  Companion apps and mobile device operating systems 

(188) As explained in Section 2.4, wearable devices generally need the support of companion 
apps  running  on  a  smart  mobile  device  operating  system  to  unlock  certain  functions. 
Moreover, many wearable devices connect through Bluetooth to the user’s smartphone 
in  order  to  provide  internet  connectivity,  which  the  wearable  device  itself  would  not 
support  in  isolation.  Such  companion  apps  are  available  to  download  on  mobile  app 
stores, including Google Play and the Apple App Store.  

(189) Companion  apps  need  to  be  submitted  for  app  review  to  the  app  store  provider  (i.e. 
Apple and Google) to seek approval. In order to obtain a license for the distribution of 
the  companion  apps  through  the  Google  Play  Store  and  the  Apple  App  Store,  the 
wearable  device  manufacturer  must  comply  with  Apple  and  Google’s  standard  non-
negotiable terms and conditions and their app review program. The app store operators 
reserve the right to reject applications that do not meet their standards.  

(190) According  to  wearable  device  manufacturers’  responses,  smooth  interoperability 
between  the  wearable  devices  and  smartphones’  operating  systems  supporting 
companion apps is essential to provide full functionality and a good user experience. 

5.6.2  Wearable device operating systems 

(191) Next to mobile device operating systems, wearable device operating systems are also of 
importance  for  wearable  devices.  Only  a  limited  number  of  wearable  device 
manufacturers have developed or  continue to use their own wearable device operating 
system.  The  majority  of  them  use  operating  systems  licensed  from  the  leading 
providers, because the cost of developing and maintaining such an operating system is 
high. As one stakeholder emphasised in its submission to the public consultation on the 
preliminary report, the limited number of available wearable device operating systems is 
likely to limit the parameters of competition between wearable devices manufacturers.  

(192) For  instance,  Google  licenses  its  “Wear  OS”  operating  system,  which  is  the  most 
successful  wearable  device  operating  system  among  manufacturers;  on  the  contrary, 
Apple does not license its operating system for wearable devices.  

5.6.3  Voice assistants and consumer IoT services’ availability on wearable devices 

(193) Wearable  devices  generally  come  with  first-party  features,  applications  and  voice 
assistants pre-installed on their operating system, which are accessible either directly on 
the device or through its companion app.  

53 

 
 
(194) In  addition,  third-party developers  can  also  make their services available  for wearable 
devices  by  developing  applications  compatible  with  wearable  operating  systems. 
Nevertheless, some respondents report that their wearable devices do not support third-
party applications.  

(195) In  order  to  access  those  third-party  consumer  IoT  services,  users  must  download  the 
applications they wish to use. Wearable device manufacturers report different technical 
ways  of  making  applications  downloadable  by  users  onto  their  wearable  device  or 
alternatively,  onto  the  user’s  smartphone  to  be  used  in  connection  with  the  wearable 
device.  In  particular,  some  wearable  device  operating  systems  integrate  a  built-in 
wearable app store. Wearable device manufacturers might also make available their own 
app stores  for wearable  device operating systems.  In some  cases, it is  also  possible to 
access  third-party  applications  through  the  wearable  device’s  companion  app  or  by 
downloading third-party applications on a connected mobile device.  

5.7  CERTIFICATION PROCESSES 

(196) As  the  preceding  sections  illustrate,  leading  providers  of  consumer  IoT  technology 
platforms  control  and determine access to  their platforms; mainly  voice assistants  and 
smart device operating systems. Through certification processes, such providers impose 
specific  contractual  and  technical  requirements  on  smart  device  manufacturers  and 
consumer IoT service providers that wish to make their products accessible through the 
consumer IoT technology platforms of these leading providers33. 

(197) In  the  case  of  voice  assistants,  the  leading  providers,  namely  Google,  Amazon  and 
Apple, govern certification processes and impose different review processes depending 
on the type of integration that the smart device manufacturer or consumer IoT service 
provider wishes to achieve. In short, there are three categories of certification processes 
for integration with voice assistants: 

a. 

“Works  with”  programs  or  connected  device  certifications  allow  smart  device 
manufacturers  to  make  their  smart  home  devices  controllable  through  a  voice 
assistant  embodied  on  another  device  (i.e.  smart  speaker)  or  support  (i.e. 
smartphone application). For smart home device manufacturers, these programs 
generally involve reviewing the voice assistant provider’s documentation on API 
functionality  for  smart  home  device  interoperability  and  developing  a  voice 
application  following  the  voice  assistant  provider’s  requirements.  The  voice 
assistant  provider  then  tests  the  developed  integration  to  ensure  a  good  user 
experience. If certification is granted, manufacturers can use “works with” logos 
or  badges  in  their  packaging  or  for  online  marketing.  Examples  of  these 

33 Several comments received during the public consultation on the preliminary report confirm that few players 
determine  interoperability  and  third-party  access  to  relevant  consumer  IoT  ecosystems  through  certification 
processes, which can become a burden especially for smaller players.  

54 

 
 
                                                 
b. 

c. 

certification  processes  are  the  “Works  with  Alexa”,  “Works  with  Google 
Assistant” and “Works with Apple Home kit” programs. 

Built-in  certification processes  allow third-party  smart device manufacturers to 
support Amazon or Google’s  cloud-based voice  assistants  on their devices and 
gain  the  “Alexa  built-in”  or  “Google  Assistant  built-in”  badges.  Apple,  on  the 
contrary,  does  not  offer  built-in  certifications,  as  Siri  can  only  be  built-in  on 
Apple’s  own  devices.  Through  built-in  integration,  users  can  access  all  the 
features  supported  by  the  third-party  voice  assistant  from  the  manufacturer’s 
smart  home  device,  including  smart  device  control  and  access  to  third-party 
services through voice applications. In this regard, built-in solutions are different 
from  works-with  programs,  which  are  limited  to  smart  device  control 
functionalities. Built-in certification processes involve a thorough testing of the 
smart  devices  in  which  the  voice  assistant  will  be  embodied  by  the  voice 
assistant provider. On a technical level, manufacturers need to integrate a built-
in microphone and comply with the required hardware requirements specified by 
the voice assistant providers. 

Development  of  voice  applications,  such  as  “Alexa  skills”,  “Google  actions”, 
“Siri’ shortcuts” or  “Capsules” for  Bixby, which  run on the voice assistant  for 
which  they  have  been  developed.  Voice  applications  make  consumer  IoT 
services accessible to the user via voice assistants. From a technical perspective, 
voice  assistant  providers  make  available  SDKs  to  build  custom  voice 
applications.  Developers  must  follow  the  voice  assistant  guidelines  on  how  to 
write  an  application  and  also  comply  with  the  natural  language  understanding 
(NLU)34 rules of the voice assistant. The voice application is then submitted for 
certification  before  it  is  published  and  made  available  through  the  voice 
assistant.  

(198) Providers  of  operating  systems  for  smart  devices  also  impose  review  processes  to 
consumer  IoT  service  providers  and  smart  device  manufacturers  that  develop 
applications or software solutions running on their technology platforms. 

5.8  KEY FINDINGS 

Interoperability in the consumer IoT sector is essential for the full deployment of a variety of 
use  cases  and  functions  that  the  various  types  and  brands  of  consumer  IoT  products  and 
services provide.  

Interoperability requires technical and business engagement among consumer IoT players in 
order to provide meaningful integration and smooth functioning of smart devices, consumer 
IoT  services,  voice  assistants  and  smart  device  operating  systems.  The  technical  integration 
processes are generally based on application programming interfaces (APIs), which are either 

34 Natural language understanding refers to natural language processing involving the transformation of human 
language into a machine-readable format. 

55 

 
 
                                                 
developed  or  made  available  by  one  of  the  parties,  and  which  allow  exchange  of  data  and 
functionalities through software interfaces. 

In  practice,  consumer  IoT  products  and  services  are  generally  centred  on  a  few  proprietary 
consumer  IoT  technology  platforms,  namely  Amazon’s,  Apple’s  and  Google’s  voice 
assistants  and/or  smart  device  operating  systems.  The  majority  of  respondents  consider  that 
leading  technology  platforms  are  key  entry  points  to  first  and  third-party  services  and 
products  in  the  consumer  IoT  sector.  To  achieve  interoperability  with  those  technology 
platforms,  smart  device  manufacturers  and  consumer  IoT  service  providers  need  to  follow 
certification  processes  to  gain  approval  for  their  customised  integrations  and  abide  to  the, 
mostly non-negotiable, terms and conditions of these platforms. 

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6  STANDARDS AND THE STANDARD-SETTING PROCESS 

6.1  OVERVIEW 

(199) Section  6.2  provides  an overview  of  the  Standards  Developing  Organisations  (SDOs), 
as  well  as  the  private  partnerships  and  independent  alliances,  reported  by  the 
respondents  as  most  prevalent  in  the  consumer  IoT  segments  covered  by  this  sector 
inquiry.  Section 6.3  provides a  comparison  of the different  intellectual  property rights 
(IPR) policies of the relevant SDOs and alliances, and Section 6.4 a short description of 
the  role  of  open  standards  vs.  proprietary  technologies  in  consumer  IoT.  Section  6.5 
provides  an  overview  of  the  way  respondents  see  the  evolution  of  standardisation35 in 
consumer IoT in the near future.  

6.2  SDOS AND INDEPENDENT ALLIANCES 

(200) The consumer IoT sector covers a significant number of different services, devices and 
technologies  that  need  to  connect  and  communicate  seamlessly  in  real  time.  An 
important  number  of  SDOs  and  private  partnerships/independent  alliances  have 
developed  and  are  currently  active  in  the  joint  development  of  technologies  that 
consumer IoT products and services may rely on to ensure such seamless but effective 
connection. 

(201) In  view  of  the  potential  of  the  consumer  IoT  sector  and  the  importance  of  the  easy 
integration  of,  communication  between,  and  navigation  among  devices  and  services, 
various  SDOs,  working  groups  within  those  SDOs,  and  independent  alliances  have 
recently  been  initiated  with  the  precise  purpose  of  enabling  and  facilitating 
interoperability  in  this  sector.  Standards  in  the  consumer  IoT  sector  include  not  only 
those needed to integrate and connect devices and applications, but also standards that 
ensure the quality and security of the IoT communications. 

(202) This section gives an overview of recognised European or International standardisation 
bodies (6.2.1.) and relevant other SDOs, independent alliances and partnerships (6.2.2.). 
The  references  to  non-formal  SDOs,  independent  alliances,  organisations  and  private 
partnerships developing, deploying and maintaining standards relevant to consumer IoT 
are  not  exhaustive.  These  are  based  on  the  responses  to  the  questionnaires  and  the 
submissions  to  the  public  consultation,  and  identify  the  broadest  partnerships  and 
alliances that were most often referred to by respondents. The list of SDOs contained in 
this  report  is  not  exhaustive  and  may  evolve  over  time  as  other  SDOs  may  become 
active in the field in the future.  

35 For the purposes of this report, references to standardisation are not limited to European standardisation as set 
by  Regulation  (EU)  No 1025/2012  of  the  European  Parliament  and  of  the  Council  of  25 October  2012  on 
European standardisation. OJ L 316, 14.11.2012, pp. 12–33. 

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(203) Also of relevance, in 2015 the Commission initiated the Alliance for Internet of Things 
Innovation  (AIOTI).  While  AIOTI  is  not  an  SDO  as  it  does  not  adopt  standards,  its 
purpose is  to  strengthen  the dialogue  and interaction among  IoT players in  Europe, to 
contribute  to  the  creation  of  a  dynamic  European  IoT  ecosystem  and  accelerate  the 
uptake  of  IoT.  AIOTI  members  include  key  European  IoT  players  –  large  companies, 
successful SMEs and dynamic start-ups – as well as research centres, universities, and 
associations.  

6.2.1  Most relevant formal SDOs36 for consumer IoT  

(204) The  European  Committee  for  Standardization  (CEN)  and  European  Committee  for 
Electrotechnical  Standardization  (CENELEC) 37 ,  the  European  Telecommunications 
Standards Institute (ETSI)38, and the International Telecommunication Union (ITU), the 
International  Organisation for Standardisation (ISO) and  International  Electrotechnical 
Commission (IEC)39 all have work streams for the development of standards relevant to 
particular areas of consumer IoT.  

(205) CEN  and  CENELEC  actively  cooperate  with  ISO  and  IEC  to  reach  agreements  on 
common standards that  are applicable worldwide, thereby facilitating the development 
of  consumer  IoT  technologies.  Various  CEN  and  CENELEC  Technical  Committees 
have  been  developing  standards  that  relate  to  the  communication  and  interoperability 
between  smart  home  devices,  voice  assistants  and  wearable  devices,  as  well  as 
consumer IoT services40.  

36  As  recognised  by  Regulation  (EU)  No 1025/2012  of  the  European  Parliament  and  of  the  Council  of 
25 October 2012 on European standardisation. OJ L 316, 14.11.2012, pp. 12–33. 
37 CEN and CENELEC are two distinct private non-profit international organisations. CEN and CENELEC are 
also officially recognised European Standardisation Organisations by the European Union and by the European 
Free  Trade  Association  (EFTA)  as  being  responsible  for  developing  and  defining  voluntary  standards  at  the 
European  level.  The  CEN  and  CENELEC  Members  are  the  National  Standard  Bodies  and  the  National 
Electrotechnical Committees in the EU, EFTA and official candidate countries to the EU.  
38 ETSI  is  a  leading  standardisation  organisation  for  Information  and  Communication  Technology  (ICT) 
standards. It is an officially recognised European Standardisation Organisation. ETSI has more than 900 member 
organisations  worldwide,  drawn  from  65  countries  and  five  continents.  Members  comprise  a  diverse  pool  of 
large and small private companies, research entities, academia, and government and public organisations.  
39 The ITU is a specialised agency of the  United Nations responsible for all matters related to information and 
communication  technologies.  ISO  is  an  independent,  non-governmental  international  organisation  with  a 
membership  of  165 national  standards  bodies.  IEC  is  an  international  organisation  with  members  from  170 
countries, and which coordinates the work of more than 20 000 experts. 
40 See for instance the standards developed by CEN/TC 294 ‘Communication systems for meters’, or standards 
developed by CLC/SR 124 ‘Wearable Electronic Devices and Technologies’  for standardisation in the field of 
wearable  electronic  devices  and  technologies  which  include  patchable  materials  and  devices,  implantable 
materials and devices, ingestible materials and devices, and electronic textile materials and devices. CLC/TC 79 
‘Alarm  Systems’  prepares  European  Standards  for  detection,  alarm  and  monitoring  systems  for  protection  of 
persons and property and for elements used in these systems.  

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(206) ETSI  works  across  all  sectors  of  industry  and  society  that  make  use  of  or  rely  on 
Information and Communications Technology (ICT). It also addresses the development 
of standards relevant to voice assistants, wearable devices and smart home devices41.  

(207) ITU  has  established  a  Joint  Coordination  Activity  on  IoT  and  Smart  Cities  and 
Communities  (JCA-IoT  and  SC&C)  to  coordinate  the  ITU  Telecommunication 
Standardisation Sector’s (ITU-T) work on the “Internet of Things and Smart Cities and 
Communities” and provide a visible contact point for IoT and its applications, including 
smart  cities  and  communities  (SC&C)  activities  within  the  ITU-T.  ITU  is  also 
collaborating  on  developing  OneM2M  technical  specifications  (see  Section  6.2.2 
below).  In  areas  of  information  technology  falling  within  ITU-T's  purview,  the 
necessary standards are prepared collaboratively with the ISO and the IEC.  

(208) ISO  and  IEC  have  a  dedicated  joint  technical  committee  (ISO/IEC  JTC  1)  that  deals 
with  Information  technologies.  ISO/IEC  JTC  1  is  composed  of  sub-committees 
addressing  the  development  of  standards  for  voice  assistants,  smart  home  devices  and 
wearable devices42. 

6.2.2  Most relevant other SDOs, independent alliances and private partnerships43 

(209) The respondents to the different questionnaires identify various long-established SDOs, 
alliances  and  partnerships  as  running  programs  and  activities  highly  relevant  to  the 
consumer IoT sector. In particular, the Institute of Electrical and Electronics Engineers 
(IEEE) 44 ,  the  Internet  Engineering  Task  Force  (IETF) 45 ,  OASIS 46 ,  the  Open 

41 See for instance TS 122 243 Digital cellular telecommunications system (Phase 2+) (GSM); Universal Mobile 
Telecommunications System (UMTS); LTE; Speech recognition framework for automated voice services; Stage 
1 (3GPP TS 22.243 version 16.0.0 Release 16). This Technical Specification contains core requirements for the 
Speech  Recognition  Framework  for  automated  voice  services.  See  also  TS  103  504  Speech  and  multimedia 
Transmission  Quality  (STQ);  Methods  and  procedures  for  evaluating  performance  of  voice-controlled  devices 
and functions: far talk voice assistant devices. 
42 JTC 1 SC 6: Telecommunications and information exchange between systems  
 JTC 1 SC 17: Cards and security devices for personal identification (some activities are mirrored at European 
level by CEN/TC 224)  
JTC 1 SC 25: Interconnection of information technology equipment  
JTC 1 SC 41: Internet of Things and related technologies. JTC 1 SC 41 develops International Standards on IoT 
and  related  technologies.  It  serves  as  the  proponent  for  JTC  1's  standardisation  programme  on  the  Internet  of 
Things and related technologies, including Sensor Networks and Wearables technologies. ISO/IEC JTC /SC 41 
also provides guidance to JTC 1, IEC, ISO and other entities developing Internet of Things related applications. 
JTC 1/SC 41 published foundational standards on IoT, such as ISO/IEC 30141:2018 Internet of Things (IoT)  - 
Reference architecture and ISO/IEC 20924:2018 Internet of Things (IoT) – Vocabulary. 
43 Relevant  alliances,  organisations  and  partnerships,  independent  of  their  size  and  importance,  that  are  not 
officially  recognised  as  standardisation  organisations  under  Regulation  (EU)  No 1025/2012  of  the  European 
Parliament and of the Council of 25 October 2012 on European standardisation, are listed under this point. 
44 IEEE  is  the  world's  largest  technical  professional  organisation  composed  of  engineers,  scientists,  and  allied 
professionals. It has over 400 000 members in over 160 countries. It runs several programs and activities in  the 
IoT  sector.  These  include  the  IEEE  IoT  Initiative  and  Community  where  stakeholders  can  learn,  share 
knowledge, and collaborate on the growing convergence of technologies, markets, and applications. Main areas 
of  activities  and  achievements  in  the  setting  of  technical  standards  include:  (i)  Architectural  frameworks:  IoT 
architectural  frameworks  assist  with  connectivity,  interoperability,  and  integration  of  IoT  systems;  (ii) 
Harmonisation and security: for data sharing and the authorisation by the owner of devices to access the devices’ 
data including control of these devices; and (iii) Sensor performance and quality. 

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Connectivity  Foundation  (OCF) 47 ,  and  the  GSM  Association  (GSMA) 48  have  been 
singled out for their relevant achievements.  

(210) Similarly,  more  specialised  alliances,  such  as  the  ioXt  Alliance 49  (developing 
cybersecurity  standards  for  the  safety  and  security  of  IoT  products,  with  a 
corresponding  cybersecurity  certification  program),  the  Hybrid  Broadcast  Broadband 
TV  (HbbTV)  Association 50 ,  the  Z-Wave  Alliance 51 ,  the  Mioty  Alliance 52  and  the 

45 IETF is an Internet standards body that began as an activity of the US Government over 50 years ago and since 
1993,  has  acted  as  a  standards  setting  organisation  funded  through  the  Internet  Society.  It  published  protocol 
specifications  as  Request  For  Comments  (RFCs),  some  of  which  it  categorises  as  standards,  while  others  are 
informational/experimental or draft/proposed standards. At  the time of the submission of the IETF’s response, 
over  8 900  RFCs  have  been  published,  including  RFCs  relevant  to  consumer  IoT.  See for  instance  RFC  8428 
“Sensor  Measurement  Lists  (SenML)”.  This  specification  defines  a  format  for  representing  simple  sensor 
measurements and device parameters in Sensor Measurement Lists (SenML). RFC 8790 “FETCH and PATCH 
with Sensor Measurement Lists (SenML)” The Sensor Measurement Lists (SenML) media type and data model 
can  be  used  to  send  collections  of  resources,  such  as  batches  of  sensor  data  or  configuration  parameters.  The 
Constrained  Application  Protocol  (CoAP)  FETCH,  PATCH,  and  iPATCH  methods  enable  accessing  and 
updating parts of a resource  or multiple resources  with one  request. See also RFC 8798 “Additional Units for 
Sensor Measurement Lists (SenML)”. 
46 OASIS  is  a  long-established  open  standards  development  consortia  in  the  transactional  internet  space.  Its 
development  activities  have  hosted  approximately  5 000  active  participants,  representing  about  500  member 
organisations  and  individual  members  in  over  80  countries.  It  runs  many  projects  covering  a  wide  range  of 
methodologies, including projects relevant to IoT. Major OASIS standards relevant to consumer IoT include the 
messaging  and  telemetry  specifications  Message  Queuing  Telemetry  Transport  (MQTT,  also  approved  as 
ISO/IEC  20922),  the  Advanced  Message  Queuing  Protocol  (AMQP,  also  approved  as  ISO/IEC  19464);  the 
Classification  of  Everyday  Living  (COEL)  specification  for  human  behaviour  and  object  interaction 
classification, and the suite of smart grid/smart device transaction standards developed in cooperation with the 
US  National  Institute  of  Standards  and  Technology  (NIST)  and  Department  of  Energy  smart  grid  programs. 
OASIS open standards, specifications and code, usually developed by globally diverse expert groups, are often 
contributed to and re-issued, or jointly issued with ISO, ITU-T, ISO/IEC JTC1 and similar bodies. OASIS has 
been  a  member  of  the  EU  Commission’s  Multistakeholder  Panel  on  ICT  Standards  (among  others)  since  its 
inception, and holds Accredited Standards Developer status from the American National Standards Institute (US-
ANSI). It also enjoys active expert participation from public administrations around the world. 
47  OCF  is  an  industry  organisation  with  a  focus  on  developing  specification  standards,  promoting  a  set  of 
interoperability guidelines, and providing a certification program for devices involved in IoT. It has become one 
of the biggest industrial connectivity SDOs for IoT. It currently has more than 300 member companies, including 
Samsung,  Intel,  Qualcomm,  Microsoft,  Cisco,  Huawei,  Panasonic,  LG,  Resideo  and  Electrolux.  OCF's 
Specifications provide connection mechanisms between devices, as well as between devices and the cloud, and 
manage  the  flow  of  information  among  devices,  regardless  of  their  form  factors,  operating  systems,  service 
providers  or  transports.  OCF  submitted  various  IoT  specifications  to  JTC  1  for  publication  as  ISO  and  IEC 
standards.  The  OCF  Smart  Home  Project,  with  its  user  base  of  over  300  companies,  creates  common  data 
modelling for secure interoperability between smart home devices of different brands. See for instance the OCF 
2.0.2  release,  including  OCF  Device  Specification  (2.0.2),  OCF  Wi-Fi  Easy  Setup  Specification  (Core 
Specification Extension) (2.0.2), OCF Cloud Specification (Core Specification Extension) (2.0.2). 
48 The  GSMA  represents  the  interests  of  mobile  operators  worldwide,  as  well  as  of  companies  in  the  broader 
mobile ecosystem, including handset and device makers, software companies, equipment providers and internet 
companies, as well as organisations in adjacent industry sectors. It aims at achieving scale and interoperability 
for new mobile technologies. It units more than 750 operators with almost 400 companies in the broader mobile 
ecosystem. 
49 Individual  companies  such  as  Amazon,  Google,  T-Mobile,  Motorola,  Logitech,  Legrand,  NXP,  Schneider 
Electric,  as  well  as  other  industry  alliances  such  as  Z-Wave  and  Connectivity  Standards  Alliance  (previously 
Zigbee) are also members. 
50 HbbTV  aims  at  harmonising  the  broadcast  and  broadband  delivery  of  entertainment  services  to  consumers 
through connected TVs, set‐top boxes and multiscreen devices. Products and services using the HbbTV standard 
can  operate  over  different  broadcasting  technologies,  such  as  satellite,  cable,  or  terrestrial  networks,  and  can 
show digital television content from a number of different sources, including traditional broadcast TV, internet, 

60 

 
 
                                                                                                                                                         
 
EnOcean  Alliance53 are  consistently  identified  throughout  the  questionnaires  for  their 
programs and achievements in different fields relevant to the consumer IoT sector.  

(211) Some  of  the  organisations  most  recently  developing  standardised  technologies  and 

protocols relevant to this sector inquiry are briefly referred to below:  

(212) OneM2M54 is an international partnership formed of regional formal SDOs whose goal 
is to create a global technical standard for interoperability concerning the architecture, 
API  specifications,  security  and  enrolment  solutions  for  Machine-to-Machine  (M2M) 
and  IoT  technologies  based  on  requirements  contributed  by  its  members.55 There  are 
currently nearly  230 members (some of  which are supporting  companies from  partner 
SDOs),  including  Amazon,  Samsung,  Broadcom,  IBM,  Intel,  LG,  Nokia,  Qualcomm, 
Panasonic,  Orange,  Deutsche  Telekom,  Vodafone,  and  T-Mobile.  OneM2M  technical 
specifications  are  transposed  by  the  member  SDOs  in  formal  standardisation 
deliverables. 

(213) The  LoRa  Alliance® 56  is  responsible  for  creating,  developing  and  sustaining  the 
LoRaWAN general connectivity standard that covers transmission of very low data rate 
messages  to  enable  IoT  applications.  The  goal  of  the  LoRa  Alliance  is  to  standardise 

and connected devices in the home. The HbbTV specification is developed by industry players to improve the 
video user experience for consumers. It is based on elements of existing standards and web technologies, such as 
OIPF  (Open  IPTV  Forum),  CEA-2014  (CE-HTML),  W3C  (HTML  etc.)  and  DVB  Application  Signalling 
Specification (ETSI TS 102 809) and DASH. Amazon, Google, Samsung, LG, Panasonic, BBC, RTL, Rai, Sky, 
TCL and Dolby are, amongst many others, members of the Association. 
51 The  Z-Wave  Alliance  consists  of  over  700  members,  including  Silicon  Labs,  ADT  Corporation,  Viva  Labs, 
Homey,  Vodafone,  Jasco,  Leedarson,  LG  Uplus,  Ring,  SmartThings,  and  Vivint.  Established  in  2005,  it  is 
designed  to  achieve  reliable  communication  and  operation  between  devices  manufactured  by  its  members.  Z-
Wave is a wireless communications protocol used primarily for home automation, allowing for wireless control 
of residential appliances and other devices, regardless of their brand or vendor, such as lighting control, security 
systems, thermostats, windows, locks, swimming pools and garage door openers.  To guarantee interoperability, 
each  Z-Wave  product  must  pass  a  stringent  conformance  test  to  assure  that  it  meets  the  Z-Wave  standard  for 
complete compliance with all other devices and controls. 
52 The  Mioty  Alliance  was  founded  in  November  2019  to  promote  wireless  LPWAN  technology  standardised 
under ETSI TS 103 357. It provides connectivity  for low  power, low data  rate  end points  (e.g.  sensors or any 
data acquisition device relying on low data rate). Mioty aims at building end-to-end solutions across the entire 
IoT value chain. The Mioty technology is widely adopted in particular for massive IoT deployments. 
53 The EnOcean  Alliance  is an  international association of leading companies in the  building and IT industries 
founded  in  2008  and  headquartered  in  Germany.  It  is  an  open,  non-profit  organisation,  committed  to  enabling 
and  promoting  interoperable  eco-systems  for  smart  homes,  smart  buildings  and  smart  spaces.  EnOcean  is  the 
inventor of the patented resource-saving wireless technology for use in building automation and consumer IoT. 
EnOcean produces maintenance-free, self-powered solutions such as wireless switches and sensors, which gain 
their  energy  from  the  surroundings  –  from  movement,  light  or  temperature,  for  example.  The  Alliance  is 
partnering with more than 350 leading product manufacturers worldwide to build energy harvesting solutions.  
54 OneM2M  is an international  partnership between eight of  the  world’s  leading SDOs seeking to develop IoT 
relevant  standards,  namely  ARIB  (Japan),  ATIS  (United  States),  CCSA  (China),  ETSI  (Europe),  TIA  (USA), 
TSDSI (India), TTA (Korea) and TTC (Japan).  
55 OneM2M develops technical specifications for a common M2M Service Layer that can be readily embedded 
within  various  hardware  and  software,  and  relied  upon  to  connect  devices  with  M2M  application  servers 
worldwide. See for instance the Release 2A deliverables, such as TS 001 to TS 0032. 
56 LoRa Alliance is an open, non-profit association launched in March 2015 that has grown to have  more than 
500  members.  The  LoRa  Alliance  is  composed  of  individual  member  companies  from  around  the  world  who 
collaborate to develop and sustain the Long Range Wide Area Network (LoRaWAN) protocol.  

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LPWAN specifications for LoRaWAN connectivity and to enable large-scale volume of 
IoT deployments through standardisation.  

(214) The  LoRa  Alliance  is  similar  to  the  WiFi  Alliance  and  the  Bluetooth  SIG,  in  that  all 
three  organisations:  (i)  develop  the  requirements  and  protocols  of  the  relevant 
technology  (LoRaWAN,  WiFi  and  Bluetooth/BLE);  (ii)  establish  test  and  certification 
programs to ensure products utilising these technologies adhere to the performance and 
security  rules  of  the  protocols;  and  (iii)  promote adoption  of  each  technology  through 
advocacy,  leadership  and  industry  collaboration.  LoRaWAN,  as  well  as  WiFi  and 
Bluetooth,  are  all  connectivity  standards,  providing  the  rules  on  how  to  transmit  data 
wirelessly using these technologies.  

(215) The  Connectivity  Standards  Alliance  aims  at  developing  open,  global  standards  for 
wireless  device-to-device  communication  for  IoT,  certifying  products  to  help  ensure 
interoperability through the certification program of the alliance, and to promote the use 
of its standards around the world. Leading members (“Promoters”) of the Connectivity 
Standards Alliance include, among others, Amazon, Apple, Google, Samsung, Huawei, 
IKEA,  Resideo,  Signify  (formerly  Philips  Lighting),  Somfy,  Legrand,  and  NXP 
Semiconductors. As a result of its membership, it has a high adoption rate in many of 
the most popular ecosystems in consumer IoT markets.  

(216) In  December  2019,  Amazon,  Apple,  Google  and  the  (then)  Zigbee  Alliance  joined 
together  to  promote  a  new  working  group  under  the  (now)  Connectivity  Standards 
Alliance,  the  Connected  Home  over  IP  (internet  protocol)  or  CHIP  Project,  today 
operating under the name “Matter”. The plan was to develop and promote the adoption 
of  a  new,  royalty-free  connectivity  standard  to  increase  compatibility  among  smart 
home  products,  thereby  simplifying  development  for  manufacturers,  and  increase 
compatibility for consumers. Based on the standardisation framework, Matter defines a 
multi-layer framework supporting existing standards on several layers. In particular, the 
project  aims  to  make  it  easier  for  device  manufacturers  to  build  devices  that  are 
compatible  with  smart  home  services  and  voice  assistants  such  as  Alexa,  Siri,  and 
Google Assistant. Today, Matter has over 145 active member companies. 

(217) The  working  group  takes  an  open-source  approach  for  the  development  and 
implementation of the new, unified connectivity protocol: the reference implementation 
and its supporting tooling will be developed and maintained on the GitHub open source 
platform. The Project plans to define a specific set of IP-based networking technologies 
for  device  certification.  Compliant  devices  would  need  to  implement  at  least  one 
supported technology but not necessarily all.  

(218) Thread is an Internet Protocol57-based network protocol for IoT products. In July 2014, 
the Thread Group alliance was formed as a working group to aid Thread in becoming an 
industry  standard  by  providing  Thread  certification  for  products.  Thread  members 

57 Internet Protocol version 6 (IPv6). 

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include  Google-subsidiary  Nest  Labs,  Samsung,  Silicon  Labs,  Somfy  and  Qualcomm. 
Apple joined the group in 2018 and released its first Thread based products in 202058. 

(219) The  Voice  Interoperability  Initiative  (VII)  is  an  Amazon-led  initiative  launched  in 
September  2019.  Today  it  has  approximately  80  members.  The  VII  aims  at  providing 
customers with the ability to choose their preferred voice assistant for any task, by using 
multiple voice assistants concurrently on a single device. Customers could activate any 
of those voice assistants by saying the relevant  activation word for that assistant. This 
customer experience principle is called “multi-simultaneous wake word” (or MSWW). 
The VII’s members commit to enabling MSWW customer experiences. 

flexibility 

(220) The VII has four areas of focus: (i) Customer choice – building voice-enabled devices 
that  promote  customer  choice  and 
(ii)  Secure 
interoperability  –  developing  voice  assistants  that  can  work  alongside  others  while 
protecting  the  privacy  and  security  of  customers;  (iii)  Technology  solutions  – 
developing  and  releasing  technologies  and  solutions  that  make  it  easier  to  integrate 
multiple  voice  assistants  on  a  single  product;  and  (iv)  Research  and  development  – 
accelerating  machine  learning  and  conversational  AI  research  to  improve  the  breadth, 
quality and interoperability of voice assistants59.  

through  MSWW; 

(221) The Open Voice Network (OVN)60 is a non-profit industry association, started in 2019, 
which operates as a directed fund61 of the Linux Foundation. It works on the proposal, 
development,  and  implementation  of  standards  in  the  field  of  voice  assistant-related 
technologies and ‘conversational AI’. The OVN aims to bring user trust to the forefront 
of artificial intelligence-enabled voice assistance and to create a future of voice that is 
open, standards-based, interoperable, accessible, and data-protected. 

6.3  THE RELEVANT IPR POLICIES  

(222) The  above  SDOs  and  private  partnerships/independent  alliances  apply  different  IPR 
policies for the licensing of the specifications they develop. Many SDOs’ and alliances’ 
IPR  policies  stick  to  high-level  definitions,  typically  limited  to  a  general  FRAND 62 

58 Thread’s IP foundation is application layer agnostic, offering product manufacturers the flexibility to choose 
one (or multiple) app layers for their use case to connect devices across multiple networks. For instance, a single 
application  layer  (such  as  the  smart  home  standard  being  developed  by  Project  Matter)  could  run  on  devices 
connected  via  both  Thread  and  Wi-Fi.  This  would  create  a  seamless  network  of  interoperable  products,  while 
allowing device manufacturers to choose the right networking technology for their application. Developers can 
select from a number of Thread certified components to build their products or choose from an array of certified 
Thread products to build an ecosystem.  
59 In  September  2020,  Amazon  published  the  first  version  of  a  Multi-Agent  Design  Guide.  The  Multi-Agent 
Design  Guide  is  intended  to  help  establish  a  common  framework  and  lexicon  for  discussions  about  MSWW 
experiences, and to present design principles and best practices for multiple voice services to work concurrently 
on the same device. 
60 OVN  brings  together  communities  of  voice  developers,  designers,  strategists,  practitioners  and  influencers, 
ethical experts and those working for the Health & Life Sciences industry. 
61 I.e. subject to the discretionary management and control of the Linux Foundation. 
62 Fair, reasonable, and non-discriminatory licensing. Licensing is also commonly granted on RAND (reasonable 
and non-discriminatory) terms.  

63 

 
 
                                                 
licensing  commitment,  without  significant  additional  detail.  The  formal  SDOs  (CEN, 
CENELEC,  ETSI,  ISO/IEC/ITU)  essentially  belong  to  this  category.  A  number  of 
SDOs have developed their  IPR policies further.  Some of  them commit themselves  to 
the  outcome  (for  instance  warranting  a  royalty-free  outcome),  while  others  introduce 
different  rules  without  committing  to  a  specific  outcome,  for  instance  by  offering  an 
optional  choice  (typically  (F)RAND  commitment  or  royalty  free  or  non-assertion 
covenant).  

(223) The  table  below  provides  a  largely  simplified  comparison  of  the  licensing  and  other 
access  rules  under  those  IPR  policies,  as  reported  and/or  publicly  available.  The  full 
texts of the relevant IPR policies are available on the websites of the relevant SDOs and 
alliances. 

Table 3: Comparison of formal SDOs licensing policies 

NAME  

FRAND/RAND63 
other reasonable 
non-
discriminatory 
licensing  

ROYALTY-
FREE licensing 
only 

ROYALTY-
FREE 
licensing 
with 
possibility  to 
opt out  

Open option 
between 
FRAND/RAND 
and royalty-free 
licensing 

OTHER 
terms for 
access to 
standard 

CEN/CENELEC 

X 

X 
N.B. For full 
implementation 
or reproduction 
by a member 
National 
Standard Body  

ETSI 
ITU/ISO/IEC 
joint IPR policy 

X 

X 

Member 
organisations 
are bound to 
implement 
the adopted 
European 
Standards as 
national 
standards, 
and withdraw 
conflicting 
national 
standards. 

63 FRAND/RAND terms can also cover royalty-free licensing. This table makes a distinction to highlight existing 
typical differences. The IPR policy of several SDOs, such as ETSI, requires identification of individual patents 
as potentially essential. 

64 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Table 4: Comparison of other licensing policies 

NAME  

FRAND/RAND 
or other 
reasonable non-
discriminatory 
licensing 
commitment 

IEEE 

X 

Or covenant not to 
enforce the SEP64. 

IETF 

OASIS 

OCF 

LoRa  

Z-Wave  

ROYALTY-
FREE 
licensing 
only 

ROYALTY-
FREE licensing 
with  possibility 
to opt out  

FRAND/RAND 
or royalty-free 
licensing 
commitment 

OTHER 
licensing terms  

(Typically 
with 
other 
terms  being 
(F)RAND) 

X 

Or  covenant  not 
to 
the 
enforce 
SEP.  

No 
mandatory 
commitment,  but 
lack 
of 
commitment  may 
lead  to  choice  of 
alternative 
technology. 

Non-binding 
reference  to  value 
based  on  smallest 
saleable compliant 
implementation. 

the 

Depends  on 
Technical 
Committee 
(TC) 
that  develops  the 
standard :  
1.  RAND  mode 
TC  with  RAND 
licensing; 
2. 
Royalty free mode 
TC;  
3.  Royalty 
free 
with  other  terms 
being RAND;  
4.  Non-assertion 
mode  TC  where 
the 
are 
SEPs 
unenforceable. 
OPEN  SOURCE 
implementation 
Membership  and 
reciprocity 
requirement  

X 

X 

Royalty-free 
and 

otherwise 

64 SEP or Standard essential patents are patents that cover technology to which a standard makes reference and 
that implementers of the standard cannot avoid using.  

65 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
NAME  

FRAND/RAND 
or other 
reasonable non-
discriminatory 
licensing 
commitment 

X 
So-called RANDz 
license. Possibility 
to opt-out 
(“Necessary 
Claims Notice”), 
but opt-out may 
lead to choice of 
alternative 
technology. 

Connectivity 
Standards 
Alliance 
(previously 
Zigbee 
Alliance) 

Matter 
(previously 
CHIP) 
working 
group within 
the 
Connectivity 
Standards 
Alliance 

Thread 

VII 
EnOcean  

Mioty 

OVN 

OneM2M 

ROYALTY-
FREE 
licensing 
only 

ROYALTY-
FREE licensing 
with  possibility 
to opt out  

FRAND/RAND 
or royalty-free 
licensing 
commitment 

OTHER 
licensing terms  

(Typically 
with 
other 
terms  being 
(F)RAND) 

RAND 
license, 
but possibility to 
signal  that  there 
is  no  guarantee 
for  granting  the 
license 
(“withholding of 
license”)  to  the 
SEP 

X 

X 

X 

Not yet applicable 

RANDz 
terms 
also  apply  to  SEP 
claims 
that 
“directly relate” to 
the 
relevant 
specification, even 
if those are subject 
to  other  SDOs’ 
IPR terms.  

Royalty-free terms 
also  apply  to  SEP 
that 
claims 
“directly relate” to 
the 
relevant 
specification, even 
if those are subject 
to  other  SDOs’ 
IPR terms. 
Membership 
linked 
membership 
within 
Connectivity 
Standards 
Alliance. 
Membership 
requirement 

the 

to 

Membership 
requirement 
(check) 
Company SISVEL 
manages IP 

Largely OPEN 
SOURCE  

X 
Via its partner 
SDOs that all 
support (F)RAND 
terms. 

66 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ROYALTY-
FREE 
licensing 
only 

ROYALTY-
FREE licensing 
with  possibility 
to opt out  

FRAND/RAND 
or royalty-free 
licensing 
commitment 

OTHER 
licensing terms  

(Typically 
with 
other 
terms  being 
(F)RAND) 

NAME  

FRAND/RAND 
or other 
reasonable non-
discriminatory 
licensing 
commitment 

GSMA 

X 

(only exceptional, 
justified opt-out) 

ioXt 
Alliance 
HubbTV 
Association 

No unified IPR Policy. Certification only to members. 

Based on a combination of elements of existing standards. No unified IPR Policy.  

(224) As the indicative tables above suggest, IPR policies of SDOs and independent alliances 
vary  greatly,  impacting  contributors  to  the  standard  development,  as  well  as 
implementers of the standards.  

(225) SDOs and private alliances that, as a matter of principle, have a royalty-free approach, 
may  either  decide  to  accept  technical  contributions  for  which  the  contributor  would 
request a royalty and allow the contributor to declare in due time its intention to opt out 
from  the  royalty-free  licensing,  or  not  allow  for  an  opt-out  and  exclude  any  royalty-
claiming contribution. 

(226) Where  an  opt-out  is  made  possible  (see  the  examples  in  the  above  table),  the 
IPR/licensing policy of the SDO or private alliance would typically allow members to 
replace the royalty-claiming contribution (following the declaration of the opt-out) with 
an  alternative,  royalty-free  contribution.  SDOs  and  private  alliances  that  intend  to 
warrant a royalty-free outcome exclude any royalty-claiming contribution. 

(227) SDOs  and  private  alliances  that  operate  under  IPR  rules  that  do  not  allow  for  the 
exclusion  of  royalty-claiming  contributions  are  not  able  to  warrant  royalty-free  terms 
for their specifications. 

(228) Respondents report that some SDOs and independent alliances do not have sufficiently 
clear patent declaration  or licensing rules  to  duly  assess  the likelihood of open source 
elements or royalty-free/royalty-bearing (standards-essential) patents in the standard or 
specification. 

(229) In  addition,  royalties  are  not  the  only  costs  implementers  face.  Many  alliances  only 
license to members that pay membership fees. These range from a couple of hundreds 
of  dollars  or  euro  a  year,  up  to,  for  instance,  USD  75 000  yearly  “Promoter” 
membership fees in the Connectivity Standards Alliance (in addition to USD 15 000 for 
a  yearly  “Participant”  membership),  a  USD  100 000  yearly  “Platinum  Sponsor” 
membership  in  the  OVN,  (or  USD  7 500  for  the  lower  implication  “OVN  Advocate” 

67 

 
 
 
 
 
 
 
 
 
 
 
membership),  USD  65 000  yearly  “Sponsor”  membership  in  the  Thread  group  (USD 
15 000  for  yearly  “Participant”  membership),  and  a  similar  amount  (USD  65 000  for 
“Founding”  or  “Principal”  membership  and  USD  10 000  for  “Manufacturer” 
membership)  in  Z-Wave  Alliance.  Implementer-only  memberships  are  typically  less 
expensive  (from  a  couple  of  hundred  to  a  couple  of  thousand  dollars  or  euros). 
Moreover, certifications are also costly, based on a direct certification fee or dependent 
on  a  yearly  membership  to  the  relevant  organisation  or  alliance.  As  a  result,  the 
implementation  of  royalty-free  or  open  source  technologies  may  in  fact  still  generate 
significant costs for implementers. 

6.4  THE  ROLE  OF  STANDARDS  AND  PROTOCOLS  VS. 

PROPRIETARY TECHNOLOGIES IN CONSUMER IOT 

(230) Responses  to  the  questionnaires  reflect  a  highly  heterogeneous  environment:  devices 
and  services  rely  on  a  combination  of  open  standards,  protocols,  and  proprietary  and 
open source technologies. For the purposes of this report, proprietary technology refers 
to  technology  owned  by  a  company  and  not  subject  to  an  open  source  licence. 
Proprietary technology may be licensable or not licensable to third parties. Technologies 
in the consumer IoT sector are typically mixtures of the above, with components relying 
on open standards or open source technologies, and others on proprietary technologies: 
either  own  technologies  or  licensed  from  third  parties.  The  combination  of  standards, 
proprietary  and  open  source  technologies  largely  varies  depending  on  the  different 
technology layers incorporated in devices and software programmes. 

(231) On the one hand, basic enabling technologies are mostly based on open standards. Some 

of the most prevalent categories of standards in the consumer IoT sector are: 

  Lower  level  connectivity  standards,  such  as  Bluetooth,  WiFi,  802.11  a/b/g/n/ac, 
IEEE 802.15.4 (WPAN), Ethernet, USB, HDMI, Connectivity Standards Alliance, 
Thread or Z-Wave; 

  Audio  codecs  (for  example  MP3) 65 and  Video  codecs  (for  example  MPEG-2, 
Open  XR  that  is  an  open  standard  for  access  to  virtual  reality  and  augmented 
reality platforms and devices)66, or the HEVC video compression standard; 

  Transfer/streaming/messaging  standards  and  protocols  such  as  HTTP,  Bluetooth 
TCP/IP, RTP, HLS, MPEG-DASH, SIP, LoRaWAN, MQTT (Message Queueing 
Telemetry Transport), TLS (Transport Layer Security), SCEP (Simple Certificate 
Exchange  Protocol),  AMQP  (Advanced  Message  Queuing  Protocol);  DDS  (Data 
Distribution Service); 

  Content Standards (HTML, JSON); 

65 Other examples include AAC-LC, HE-AACv1, HE-AAC-v2. 
66 Other examples include H.265, H.264, H.263, MPEG-4 parts 2, 10, 29. 

68 

 
 
                                                 
  Cybersecurity (ETSI EN 303 645, ETSI TS 103 701)67; and 

  Other:  IEEE  P360  (overview,  terminology  and  categorisation  for  Wearable 
Consumer  Electronic  Devices),  IEEE  P1708  (Wearable  Cuffless  Blood  Pressure 
Monitors  Working  Group),  Wireless  payment  standards  (such  as  NFC),  ISO 
22810:2010 (water resistance for wearables), ISO 6425 (specifications for divers’ 
watches). 

(232) While  the  above  technologies  are  specified  in  standards,  their  implementation  can  be 
proprietary  or  open  source  (for  example  the  implementation  of  a  video  codec  by  the 
hardware/software  to  perform  the  encode/decode  function  may  be  proprietary  or  open 
source).  In  the  same  vein,  those  standardised  technologies  may  also  have  proprietary 
enhancements  for 
the  purposes  of  specific  devices  or  applications,  such  as 
enhancements for security reasons, in order to control access on network level. 

(233) Such  proprietary  or  open  source  implementations  and  enhancements  of  standardised 
technologies further add to the complex and heterogeneous technical environment. 

(234) Many  respondents  find  access  to  certain  standards,  such  as  to  the  major  lower  level 
connectivity standards (for example Bluetooth, WiFi, Connectivity Standards Alliance), 
essential  to  their  ability  to  compete.  However,  depending  on  the  profile  of  the 
respondents, most of the standards are not seen as essential for them to compete. This is 
due  to  the  existence  of  other,  competing  technologies,  and  the  relatively  limited  user 
base for many of those competing technologies.  

(235) On the other hand, device definitions,  application layers and user interfaces rely more 

often on proprietary technologies.  

(236) Examples  of  proprietary-based  technologies  relevant  in  the  segments  covered  by  the 
sector  inquiry  are:  audio  components  (microphones,  speakers/transducers);  display 
components  (LEDs);  sensors  (cameras,  light  sensors,  passive  infrared  sensors); 
mechanical components (enclosures, frames, brackets, light pipes, heat sinks and other 
thermal Management); integrated circuits (IC): analog-to-digital converter ICs, digital-
to-analog  converter  ICs,  power  management  ICs,  amplifier  ICs,  switch  ICs,  electrical 
settings  and  updates, 
components 
personalisation, catalogues, parental control systems, launcher (including app launching, 
UI/UX,  browsing,  search  features),  UI  Library,  information  architecture,  customer 
support  services,  app  store  services;  cloud  services  management;  mesh  routing  and 
management; access point management; firewalls.  

switches,  connectors); 

(buttons, 

software 

(237) However, device definitions and application layers may also be standards-based (see for 
instance  the  widely  used  Connectivity  Standards  Alliance  and  KNX  standards).  User 

67 Some  national  authorities  in  the  EU  have  published  specific  security  recommendations  on  critical  consumer 
IoT devices.  One  example  is  BSI  (Bundesamt  für  Sicherheit  in  der Informationstechnik)  in  Germany  with  TR 
03148 on broadband router for smart home and building application. 

69 

 
 
                                                 
interfaces however are at least combined with the provider’s proprietary technology in 
order to bring a differentiated offering to users. 

(238) Respondents to the sector inquiry were asked about the most widely adopted proprietary 
technologies  in  the areas covered by the  sector inquiry. These were referred to  as  “de 
facto  standards”  in  the  questionnaires  and  defined  as  “proprietary  technology  with  a 
large  user  base  that  competes  with  standards”.  The  proprietary  technologies  of  the 
following products have been highlighted as the main de facto standards: 

  For voice assistants : Google Assistant, Amazon Alexa, Apple Siri  
  For smart home devices: Google Home and Weave,68 Amazon Echo, Prime Video 
API  and  AVS, 69 Apple  HomeKit  and  Apple  MFi, 70  and  Dolby  Digital.  Many 
respondents  also  highlight  the  large  user  base  of  the  Open  Connectivity 
Foundation Smart Home Project and the Open Voice Network. 

  For wearable devices: Apple Watch, Samsung Galaxy Watch, ANT+ (by Garmin) 

(239) Nearly all respondents find full interoperability with these technologies and ecosystems 
essential to compete71, as these technologies are identified as enablers for consumer IoT 
products and services. Due to the popularity of the above voice assistants and devices, 
offering  products  or  services  in  the  consumer  IoT  sector  that  could  not  integrate  or 
interoperate with the above technologies does not seem to be a viable option. Rather, the 
integration  and  interoperability  of  hardware  and  software  with  the  above  proprietary 
technologies  is  mostly  presented  as  a  “must  have”  for  consumer  IoT  hardware 
manufacturers and software developers.  

from  developing  and/or 

(240) However,  the  owners  of  the  above  technologies  generally  stress  that  the  existence  of 
such  proprietary  technologies  does  not  mean  that  any  IP  rights  would  prevent  third 
parties 
technologies  with  comparable 
functionality.  In  the  same  vein,  various  SDOs  also  express  the  view  that  the  above 
proprietary  technologies  are  not  essential,  as  other  open  standards/protocols  and 
proprietary  technologies  with  similar  functionality  are  available  to  compete  in  the 
consumer IoT sector. 

implementing 

68 Google’s  Weave  is  an  open  source  network  application  layer  protocol  and  the  implementation  toolkit  for 
consumer  IoT  applications.  It  is  an  “information  schema”  that  defines  common  types  of  devices  to  have  a 
common language and be able to communicate with each other. It is fully integrated with Android, so products 
that use it will be instantly recognised by users’ mobile devices.  
69 Amazon  AVS (Alexa Voice  Service)  is an  API that enables developers to integrate  Alexa directly into their 
smart products. The AVS Device software development kit (SDK) enables smart devices to process audio inputs 
and triggers, establish persistent connections with AVS, and handle all Alexa interactions. The SDK also allows 
adding third-party wake word engine and audio player. 
70 Apple’s  MFi  Program  offers  a  broad  range  of  wireless  and  wired  technologies  that  can  be  used  to  connect 
hardware accessories to Apple devices. 
71 The owners of these technologies typically do not find their own technologies essential to compete. 

70 

 
 
                                                 
6.5  THE  EXPECTED  EVOLUTION  OF  STANDARDISATION  IN  THE 

NEAR FUTURE 

(241) Approximately 60% of the respondents to the different questionnaires express the need 
for  further  standardisation  in  consumer  IoT,  while  approximately  40%  would  not 
prioritise  further  standardisation  over  proprietary  developments.  Those  that  consider 
there is a need for further standardisation, however, largely acknowledge the difficulties 
and  potential  risks  relating  to  it,  which  may  lead  to  a  slowing  down  of  future 
standardisation. 

(242) On  the  one  hand,  many  see  standardisation  as  crucial  for  achieving  true,  fully 
functional,  “plug  and  play”  interoperability:  for  hardware  and  software  to  be  able  to 
fully  integrate  and  communicate,  thereby  offering  a  greater  choice  to  consumers  and 
building  consumer  trust  in  the  various  segments  of  consumer  IoT  markets.  Amongst 
others,  telecommunication  service  providers  express  the  need  to  support  commonly 
developed, open technical standards instead of relying on de facto standards, developed 
by  a  limited  number  of  large  players.  Communication  standards  are  highlighted  as 
particularly  important,  with  an  ever-growing  variety  and  number  of  devices  and 
applications that need to rely on them.  

(243) The  fact  that  proprietary  technologies  are  not  subject  to  FRAND  terms  further 
reinforces  the  views  supporting  the  need  to  prioritise  standardisation  over  proprietary 
developments. 

(244) In  that  context,  the  rules  and  procedures  of  SDOs  in  terms  of  contributions  and  IPR 
policies are seen as an important factor that may impact the future of standardisation in 
consumer  IoT.  Recognised  SDOs  that  are  open  to  all  participants,  and  “de  jure” 
standards, are identified  by some SDOs as  warranting an inclusive process  that would 
not be monopolised by the private initiatives of large corporations. 

(245) On the other hand, many argue that standardisation is not necessarily the best solution 
for  interoperability  in  the  consumer  IoT  sector.  Standardisation  would  be  desirable 
when  it  solves  customer,  business,  and  technical  problems  more  effectively  and  more 
cost-efficiently  than  other  approaches,  such  as  proprietary  solutions  or  open  source 
solutions.  Respondents  argue,  among  other  points,  that  open  source  and  other 
proprietary  solutions  can  be  equally  efficient  to  standards,  as  long  as  they  are  well-
documented,  and  allow  for  an  easy,  less  costly  and  full  integration  of,  and 
interoperability with, devices and applications. 

(246) While  most  respondents  acknowledge  the  importance  of  standardisation  for  the  future 
evolution of consumer IoT, many plead for the need to consolidate the already existing 
standards,  rather  than  developing  even  more  competing  and  potentially  conflicting 
standards. Increasing the number of competing standards would not necessarily lead to 
better  choice  for  consumers,  but  rather  generate  the  risk  of  even  less  interoperability 
between the different hardware and software technologies. 

71 

 
 
(247) The  number  and  the  cost  of  existing  standards  are  put  forward  as  disadvantageous  to 
smaller  players,  creating  barriers 
terms  of  overall  production  costs  and 
in 
procedural/administrative and legal burdens. In addition, various respondents claim that 
the leading role of large technology platforms in the standardisation processes leads to 
them  pushing  their  own  technologies,  thereby  concentrating  innovation  within  the 
leading  players  that  “own  the  standards”,  and  generating  a  barrier  to  wide 
standardisation in the longer-run.  

(248) A few respondents expect patent pools to gain significance in IoT, as they may reduce 
transaction  costs,  also  possibly  reducing  the  aggregate  royalty  for  the  total  number  of 
SEPs present in consumer IoT products. 

(249) In terms of the proprietary technologies, many respondents single out the Matter and the 
VII  projects  as  having  the  potential  to  bring  together  sufficiently  wide  user  bases  to 
address technology fragmentation challenges in consumer IoT. A few players identify a 
move towards two, well-differentiated types of partnerships as a potential option. In this 
situation,  a  first  type  of  partnership  would  group  players  around  the  large  ecosystems 
and  a  second  type  of  partnership  would  group  together  more  specialised  hardware 
manufacturers  and/or  application  developers  for  the  development  of  technologies, 
allowing for better integration and interoperability  of their products,  both  among  each 
other and into the large consumer IoT ecosystems. 

(250) Overall, over 80% of the respondents to the different questionnaires nevertheless expect 
standardisation  to  develop  further  in  consumer  IoT  segments  in  the  coming  years,  in 
particular  for  basic,  enabling  technologies.  A  slower  development  of  standards 
(including for other technology layers) is however expected as a result, among others, of 
newly  emerging  technologies  (including  AI/Machine  learning)  and  continuously 
evolving use cases, generating ever-changing requirements and challenges for standards 
(including  in  terms  of  related,  crucial  aspects  such  as  secure  data  exchange  or  energy 
efficiency of large data-transfers). 

6.6  KEY FINDINGS 

As  a  result  of  the  nature  of  the  segments  covered  by  the  sector  inquiry,  where  an 
unprecedented number of different hardware and software technologies need to interconnect 
in  real-time,  the  market  for  “isolated”,  standalone  smart  devices  is  more  limited,  and 
ecosystems are more prone to achieving high market penetration.  

The integration of stand-alone technologies into such ecosystems is reported as a “must-have” 
for  consumer  IoT  hardware  manufacturers  and  app  developers.  This,  in  turn,  leads  to  an 
environment  in  which  proprietary  technologies  of  such  eco-systems  play  a  major  role,  in 
particular  at  the  level  of  device  definitions,  application  layers  and  user  interfaces.  While 
standardised technologies prevail at the level of basic enabling technologies, formal standards 
are  currently  not  in  a  position  to  compete  effectively  with  proprietary  technologies  of  the 
leading  providers  of  operating  systems  and  voice  assistants  for  other  types  of  technologies 
such as device definitions, application layers and user interfaces. 

72 

 
 
7  DATA  

7.1  OVERVIEW 

(251) This chapter concerns the role of data in the consumer IoT sector. This role is explained 
based  on  answers  provided  by  respondents  on  the  part  data  plays  in  the  operation  of 
their businesses, and the functionality of their devices and services.  

(252) The first part of this chapter looks at the role of data in the context of the business-to-
consumer  (B2C)  relationship,  addressing  how  and  when  devices  and  services  collect 
data, what type of data they collect, what access users have to their data and what ability 
they have (or do not have) to port it between different devices and services. 

(253) The  second  part  of  the  chapter  focuses  on  business-related  aspects  of  consumer  IoT 
data. This includes the circumstances in which data flows between third-party devices, 
services and/or voice assistants, how the data is processed and what format it takes, the 
purposes  for  which  the  respondent  companies  use  the  data,  and  whether  and  to  what 
extent respondents monetise the data they collect. 

7.2  USER-RELATED ASPECTS OF CONSUMER IOT DATA 

(254) Manufacturers  and  providers  of  consumer  IoT  products  and  services  collect  data  in  a 
variety of circumstances, including through the manual input of a user, in the context of 
the use of a device or service, or automatically, for example as part of them functioning 
in the background. Many types of data are collected. 

(255) Consumer IoT products and services collect data to facilitate their connected nature. In 
many  cases,  data  collected  in  a  B2C  relationship,  between  a  device  manufacturer  or 
service  provider  and  the  user,  will  come  under  the  definition  of  personal  data  for  the 
purposes  of  the  GDPR.  More  information  about  the  access  to  personal  data  for 
individuals  and  the  definition  of  personal  data  is  provided  in  Section  7.2.4  below. 
Collection  of  data  from  terminal  equipment,  that  is  a  device  connected  to  a  public 
communications  network,  is  only  allowed  with  the  consent  of  the  user  or  subscriber 
concerned, or for the sole purpose of carrying out the transmission of a communication 
over an electronic communications network, or as strictly necessary for the provision of 
an information society service explicitly requested by the user or subscriber72. Several 
respondents  specify  that  such  data  are  only  collected  with  the  knowledge  of  the  user 
and, in particular instances, only  when the users  have opted in to have additional data 
collected  (for  example,  as  part  of  a  research  programme  or  where  they  agree  to 
contribute to data analytics). 

72  Article  5(3)  of  Directive  2002/58/EC  of  the  European  Parliament  and  of  the  Council  of  12  July  2002 
concerning the processing of personal data and the protection of privacy in the electronic communications sector 
(Directive  on  privacy  and  electronic  communications),  OJ  L  201,  31.7.2002,  p.  37,  as  amended  by  Directive 
2009/136/EC of the European Parliament and of the Council of 25  November 2009, OJ L 337, 18.12.2009, p. 
11. 

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7.2.1  How data is collected  

7.2.1.1  User input 

(256) A device or service can collect some data through the direct manual input by the user. 
This  can  include  the  personal  and  contact  information  entered  when  a  user  sets  up  an 
account to use a service for the first time or when installing a device. Other examples of 
when  a  device  or  service  receives  data  via  this  direct  input  include  when  users  enter 
their  height,  weight,  or  information  about  their  activities  into  their  wearable  fitness 
device or its companion app. 

7.2.1.2  Through use of the device or service  

(257) Other data is collected by the device or  service through its use, with or without direct 

interaction with the user.  

(258) For example, a smart TV collects device usage data whenever a user carries out certain 
actions,  such  as  turning  the  device  on  or  off,  moving  from  one  service  to  another,  or 
when the user is navigating a selection on the TV. Consumer IoT services also collect 
data when the user interacts with that service, for example, the interactions involved in 
carrying out a search or making a purchase. 

(259) The  device  can  also  collect  data  when  it  is  in  use  without  direct  user  interaction.  For 
example, robotic vacuum cleaners store maps of houses in their internal memory made 
up of data they collect while cleaning, and a music streaming service may collect data 
about the songs playing while the service is active. 

7.2.1.3  Automatic or background data collection 

(260) Smart  devices  can  also  collect  data  automatically  as  part  of  their  ‘background’ 
functioning or when in standby mode, and can passively collect data in situations where 
the  user  has  not  taken  any  action.  Examples  of  such  types  of  data  include  functional 
background  tasks  such  as  error  logs  or  diagnostics  or  data  required  to  calculate 
analytics.  Providers  of  consumer  IoT  services  state  that  they  do  not  generally  collect 
data when the service is not active. 

(261) Some  smart  devices,  such  as  some  types  of  security  devices,  do  not  require  user 
interaction to carry out their function but have sensors that collect data, including visual 
and acoustic data when they are triggered. This can include motion sensors registering 
movement,  a  device  equipped  with  facial  recognition  identifying  a  person,  or  devices 
with voice recognition registering a command. 

7.2.2  Types of data collected 

(262) Contact  details  such  as  names  and  email  addresses,  location  information,  and  IP 
addresses  are  the  most  commonly  collected  data  points  indicated  by  the  respondents. 
Payment information in the form of credit card details may also be collected, along with 

74 

 
 
other  discrete  items  of  data  about  the  users  themselves,  including  their  gender, 
profession, and level of education. 

(263) Other types of data collected vary depending on the consumer IoT segment concerned. 
This  data  can  include  personal  or  other  user  data,  whether  in  the  form  of  information 
input  by  the  user,  or  of  user  behaviour  information  collected  through  the  operation  of 
the device or access to the service. In addition, smart devices and consumer IoT services 
can gather data about how they function themselves and about their surroundings.  

7.2.2.1  Smart home devices 

(264) The data collected by smart home devices can relate generally to user behaviour and the 
usage  history  of  the  device,  by  collecting  data  each  time  the  device  is  used  or  a 
consumer IoT service is accessed via the device.  

(265)  The  data  can  also  include  specific  information  on  operational  parameters  relating  to 
that particular device.  For example, a smart  washing machine may collect  data on the 
washing cycle chosen and how often the user chooses this setting. A smart coffee maker 
may  collect  data  on  the  settings  selected  when  brewing  coffee,  collecting  data  on  the 
preferred  beverages  and  times  for  making  coffee.  An  electric  smart  toothbrush  can 
collect data on the pressure applied when brushing and the time taken.  

(266) A smart home device can also collect data about the task it is carrying out, enabling it to 
carry it out more efficiently, such as the example provided above of automated robotic 
vacuum cleaners storing a map of a house in their internal memory for future use. 

(267) Other  smart  home  devices  collect  data  on  their  environments  and  status.  Examples 
include a smart connected refrigerator noting the temperature, or the status of the water 
filter. A smart thermostat or heating system can collect data on household temperature 
and  air  quality,  movement,  the  heating  system  being  switched  on  and  off,  and  can 
register when  users leave  and arrive home. Home security devices  collect  information 
on users’ interaction with the system, as well as gathering audio or video data when, for 
example, a sensor is triggered. 

(268) Respondents indicate that smart home devices can also gather more general behavioural 
data, such as the user’s preferred times for using the device and how often the device is 
used.  For  example,  when  a  smart  home  device  is  accessed  via  a  voice  assistant,  the 
device  may  collect  data  related  to  the  specific  instruction  or  command  given  to  the 
device (for example on/off, temperature increase/decrease) as well as the date and time 
of the command. 

(269) Smart  home  devices  can  also  collect  information  confined  to  the  device  itself  and  its 
use, such as  device type and  ID, or  software status. For instance, this can be the case 
where  there  are  no  user  profiles  associated  with  the  device.  Such  general  device  data 
can  also  include  usage  history  of  an  account,  error  logs  (abnormal  information)  and 
technical interventions. 

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7.2.2.2  Consumer IoT services 

(270) Providers  of  consumer  IoT  services  indicate  that  the  services  collect  account  data, 
behavioural  and  usage  data,  and  technical  data  related  to  the  service  and/or  other 
consumer  IoT  components  (for  example  the  device  on  which  it  runs),  or whether  it  is 
connected to the internet. 

(271) Whether or not a user has an account with the consumer IoT service is relevant for the 
purposes of data collection. Where a service provider requires users to have an account 
in  order  to  use  the  consumer  IoT  service,  as  is  often  the  case,  information  such  as 
personally identifiable information and contact details are collected when the users set 
up their account. In different instances, users may or may not need to be signed in to use 
a  service,  and  certain  data  may  only  be  collected  when  they  are  signed  in.  When  the 
users  do  not  sign  in,  respondents  indicate  that  the  data  collected  may  be  limited  to 
technical information such as IP addresses and analytics data.  

(272) Where  a  user  has  an  account  and  signs  in  to  this  account  to  use  the  consumer  IoT 
service,  the  service  will  typically  collect  data  such  as  login  details  (user  ID,  email 
address  and  password),  profile  information  (username,  language,  profile  picture),  and 
settings  (communication  preferences,  editorial  preferences,  personalised  advertising, 
public/private profile ). 

(273) Consumer  IoT  services  may  collect  behavioural  and  usage  data,  including  the  user’s 
usage  history  and  habits.  For  example,  an  audio  streaming  service  collects  data  on 
which podcasts the user has listened to in the past and added to their list, and a  VOD 
service will collect data on viewing history, favourites and ratings on titles. 

(274) Other  services  collect  technical  data  on  interaction  with  the  service  and  how  the  user 
navigates it, such as data on paths taken to access content, the time the user initiates and 
finishes a session with the service, and search queries. Other technical data mentioned 
by respondents include information on the device (type of device used, hardware model, 
version  of  the  operating  system),  information  on  the  internet  connection  (internet 
service  provider,  type  of  connection),  and  analytics  data  (usage  trending  over  time, 
number of recurring users, errors). 

7.2.2.3  Voice assistants 

(275) Voice  assistant  providers  indicate  that  voice  assistants  collect  data  related  to  their 
interactions with users. This includes voice and language recognition data and audio of 
the  queries  and  commands  received,  as  well  as  conversation  history  between  the  user 
and voice assistant in text format. 

(276) Voice  assistants  also  collect  data  beyond  the  content  of  the  user  query  itself.  For 
example,  a  voice  assistant  may  collect  contextual  data  on  when  the  query  was  made, 
what device the query was made from (such as its location or IP address), and whether 
or not the query was successful. 

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(277) Depending  on  the  purposes  for  which  the  voice  assistant  is  used,  it  may  be  able  to 
access  data  in  consumer  IoT  services  linked  to  the  voice  assistant  account,  for  the 
purposes  of, for example, reading emails  aloud  to the user or making appointments in 
the user’s calendar.  

(278) Where  there  is  this  link  between  voice  assistants  and  consumer  IoT  services,  a  voice 
assistant may collect location data enabling it to tailor its responses to the most suitable 
options  or  to  provide  accurate  responses  on  geographically  specific  queries,  such  as 
those about the weather. In addition, as one respondent indicates, the user can provide 
data  such  as  locations  and  other  supplementary  information  unconsciously.  For 
example, when a user asks a voice assistant to order a taxi to a location, he or she will 
consequently  provide  an  address  to  the  voice  assistant.  One  submission  to  the  public 
consultation  on  the  preliminary  report  refers  to  the  fact  that  the  human  voice  may 
provide some insight into a wide range of information about the user and its behaviours, 
including  socio-demographic  aspects  or  even  on  certain  physical  and  mental  health 
conditions.   

(279) Voice assistants can also collect other technical information not related to queries, such 
as  data  about  the  device  on  which  they  are  installed  (for  example  IP  address  and 
operating system), and technical logs used for support purposes. 

(280) As  voice  assistants  are  frequently  used  in  connection  with  smart  devices  and/or 
consumer IoT services, they will collect different data in these use cases. This will be 
discussed in detail in Section 7.3.2 below. 

7.2.2.4  Wearable devices 

(281) Wearable  devices,  particularly  those  of  fitness  or  health  trackers,  commonly  collect 
biometric data about users and data about the activities they carry out. This can include 
information such as height and weight, heart rate during exercise and while at rest, body 
temperature,  data  on  sleeping  patterns,  calories  burned,  and  location  data  for  the 
purpose of for example logging distance or altitude gained during an activity. 

(282) Wearable  devices  other  than  fitness  or  health  trackers  can  collect  data  on  the  settings 
used (such as volume for headphones, or data on whenever certain features are used for 
a  smart  wearable  camera).  Wearable  device  manufacturers  also  indicate  that  their 
devices  collect  data  about  the  device  itself,  such  as  serial  numbers  and  connectivity. 
Wearable  devices  can  also  collect  data  through,  and  in  conjunction  with,  their 
companion  apps  installed  on  mobile  devices.  More  advanced  smart  watches  can  also 
access  and  collect  data  from  consumer  IoT  services  such  as  calendars,  email  or  other 
messaging applications.  

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7.2.3  User access to data 

7.2.3.1  Types of data to which the users have access  

(283) Users have the right to access personal data collected about them according to Article 
15  of  the  GDPR.  The  right  to  access  personal  data  also  includes  a  right  to  obtain 
information  about  for  example  the  purposes  of  the  data  processing,  the  categories  of 
personal  data  concerned  and  the  recipients  or  categories  of  recipients  with  whom  the 
personal data is shared.  

(284) The findings of the sector inquiry show that most respondents, across all consumer IoT 
segments, give users access to their personal data collected via the respondents’ smart 
devices,  consumer  IoT  services  and  voice  assistants.  Article  4  of  the  GDPR  provides 
that  in  order  for  data  to  qualify  as  “personal  data”,  the  user  must  be  “identified”  or 
“identifiable”. Most respondents indicate that the data collected via their smart devices, 
consumer IoT services and voice assistants is linked to a specific user via a user ID or 
user  account,  and  that  the  user  can  thereby  be  identified  and  linked  to  data  collected 
about him or her. A few respondents indicate that they do not register users or that they 
only collect data on an aggregated and anonymised basis. Therefore, the data cannot be 
linked to a specific user or be subject to an access request.  

(285) The data points to which a certain company gives the user access depend on what data 
the  company  collects  and  this  is  determined  individually  by  each  company  (see  also 
Section 7.2.2.).  

(286) A few smart device manufacturers indicate that the data generated via the use of their 
device is actually not or only to some extent collected by them. An example given by 
respondents  is  the situation when a smart  device  is  controlled via a voice assistant.  In 
that  case,  most  data  concerning  the  use  of  the  smart  device  is  collected  by  the  voice 
assistant  provider.  Consequently,  the  smart  device  manufacturer  either  does  not  have 
access to the data related to the device usage or has access only to some of it and can 
therefore not provide users access to it.  

(287) Most  respondents  indicate  that  users  generally  do  not  have  access  to  more  technical, 
non-personally identifiable information, such as data collected for security purposes, for 
the  purpose  of  customer  support  or  for  problem  analysis,  as  well  as  data  collected 
through  cookies  and  other  automated  technologies.  Others  explain  that  they  only  give 
access to this type of non-personal data in an aggregated form. 

(288) Where a user  is  connected to  several  smart devices from the same manufacturer or  to 
consumer IoT services of the same service provider, the user often has access to all the 
data  collected  by  that  manufacturer  or  service  provider,  via  the  user’s  ID  or  the  user 
account. Some respondents indicate that they design their smart devices and consumer 
IoT services with a view to minimising the amount of data collected by the devices and 
services, and that it is the user who controls what data is collected. According to these 
respondents, data minimisation enhances privacy and security while also promoting user 

78 

 
 
control, by limiting the parties with access to the data and who could therefore use the 
data in a manner not approved by the user.  

7.2.3.2  Ways in which the user can access data 

(289) The findings of the sector inquiry show that companies give users access to their data in 
different  ways,  which  will  depend  on  factors  such  as  the  type  of  smart  device  or 
consumer IoT service that the company provides and its intended use. The replies to the 
sector  inquiry  indicate  that  the  following  are  the  most  common  ways  in  which  the 
respondents provide users access to their data:  

a.  Many  respondents  explain  that  the  users  have  access  to  their  personal  data  via  the 
user  account  that  can  be  accessed  in  a  smart  mobile  device  application  or  on  the 
company’s website. A user would in general need to synchronise the smart device or 
consumer IoT service to the smart mobile device application and log into the account 
in order to get access to the data. One example provided by respondents is that certain 
models of smart watches must be synchronised with the companion app, via which the 
user must log into the user account in order to access the data collected via the smart 
watch. 

b.  Respondents explain that users can also access their personal data via user interfaces 
other  than  smart  mobile  device  applications  and  web-based  applications,  for 
example,  the  screen  of  a  smart  home  hub.  In  order  to  do  so,  the  user  needs  to 
synchronise the smart device or consumer  IoT service  with  the user interface before 
being able to access the data.  

c.  Users can sometimes access part of their personal data directly on the smart device. 
For  example,  the  user  can  access  fitness-  and  activity-related  data  such  as  steps, 
distance, calories consumed and the user’s heart rate on a wearable device. 

d.  Some respondents explain that they have developed specific tools or technology that 
facilitate  users’  access  to  data.  One  example  is  Google’s  data  retrieval  platform 
“Google Takeout”. It allows users to import and export data from a number of Google 
products  and  services.  Another  respondent  explains  that  it  has  developed  a  specific 
technology  that  facilitates  data  reporting.  It  enables  the  user  to  manage  easily  his  or 
her personal data in order to control data privacy and security. Via this tool, the user 
can also download the data in the format of a PDF report.  

e.  Users  also  have  the  option  to  make  a  data  export  request  directly  to  the  data 
processor, in order to access their data. As set out in Article 15 GDPR, such requests 
can be made by electronic means73. Most respondents indicate that they provide users 
with  access  to  their  personal  data  following  a  request  by  the  user  via  email  or  the 

73 Article  15  of  the  GDPR  provides  that:  “Where  the  data  subject  makes  the  request by  electronic  means,  and 
unless otherwise requested by the data subject, the information shall be provided in a commonly used electronic 
form.” 

79 

 
 
                                                 
company’s website. For example, users of Amazon’s services and devices may access 
their  data  by  submitting  a  Data  Subject  Access  Request  via  the  “Request  My  Data” 
feature on the Amazon website. 

7.2.4  Data portability  

(290) According to Article 20 of the GDPR74, users have the right to receive a copy of their 
personal  data  that  was  collected  by  one  company,  and  “transmit”  that  data  to  another 
company.  Such  data  portability  must,  according  to  the  same  article,  be  based  on  the 
user’s  consent  or  on  a  contract.  Article  20  GDPR  also  specifies  that  the  user  shall 
receive  the  data  “in  a  structured,  commonly  used  and  machine-readable  format”  and 
that, “where technically feasible”, the data shall be ported directly from one company to 
another. 

7.2.4.1  User managed data portability 

(291) A majority of consumer IoT service providers and smart device manufacturers indicate 
that they give users the possibility to access and download their personal data and that 
the  user  can  also  port  this  data  in  accordance  with  Article  20  GDPR  to  third-party 
service providers and device manufacturers. In order to enable data portability between 
services  and  devices  of  different  providers  and  manufacturers,  the  user  would  either 
need to access and download his or her data via an application or another user interface, 
or make a direct request to the data processor to access and take possession of his or her 
personal data.  

(292) However, a few respondents across questionnaires state that it is currently not possible 
to port the data collected via their devices or services. One reason is that the data cannot 
be linked to a specific user, which is necessary for the data to qualify as personal data. 
One respondent states, “As we do not require an account registration or a user profile, 
there is no mechanism to port any data tied to a specific user.”  

(293) A few  respondents  report  that their data cannot  be ported because their consumer  IoT 
service or smart device is unique and there are therefore no other services or devices to 
which  the  data  could  be  ported  in  a  meaningful  way.  Moreover,  a  few  respondents 

74 The full text of Article 20 of the GDPR is the following: “1. The data subject shall have the right to receive the 
personal data concerning him or her, which he or she has provided to a controller, in a structured, commonly 
used  and  machine-readable  format  and  have  the  right  to  transmit  those  data  to  another  controller  without 
hindrance from the controller to which the personal data have been provided, where:  
(a) the processing is based on consent pursuant to point (a) of Article 6(1) or point (a) of Article 9(2) or on a 
contract pursuant to point (b) of Article 6(1); and 
(b) the processing is carried out by automated means.  
2. In exercising his or her right to data portability pursuant to paragraph 1, the data subject shall have the right 
to have the personal data transmitted directly from one controller to another, where technically feasible. 
3. The exercise of the right referred to in paragraph 1 of this Article shall be without prejudice to Article 17. 
4.  That  right  shall  not  apply  to  processing  necessary  for  the  performance  of  a  task  carried  out  in  the  public 
interest or in the exercise of official authority vested in the controller.  
The right referred to in paragraph 1 shall not adversely affect the rights and freedoms of others.” 

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indicate  that  they  have  so  far  not  received  any  data  portability  requests  from  users  of 
their services or devices. 

(294) As  regards  voice  command  data  collected  by  voice  assistants,  some  voice  assistant 
providers explain that such data is specific to each voice assistant provider, all of which 
have their own technology to process such data. Commands already given to one voice 
assistant  constitute  “old”  speech  data,  which  cannot  be  used  to  train  a  different  voice 
assistant,  because  of  for  example,  the  lack  of  industry-wide  standards  for  natural 
language  understanding  APIs.  Some  voice  assistant  providers  claim  that  portability  of 
such data would therefore not be useful for them. 

(295) Moreover,  in  relation  to  other  data  collected  by  voice  assistants,  it  appears  from  the 
replies  to  the  sector  inquiry  that  there  are  currently  limited  possibilities  for  the 
portability of such data by the user. Some voice assistant providers explain that the data 
they  collect via their voice  assistants  is  anonymous and not associated with  a specific 
user  (account),  and  that  the  data  therefore  is  not  portable.  Other  voice  assistant 
providers  state  that  they  do  associate  data  collected  via  their  voice  assistant  with  user 
accounts,  and  that  the  user  could  access,  download  and  port  that  data  to  third-party 
voice assistant providers but  that those third-party  voice  assistant providers would not 
necessarily be able to receive or import their data.  

(296) Overall, most respondents explain that they in general, as required by Article 20 GDPR, 
give  the  users  access  to  their  personal  data  in  a  structured,  commonly  used  machine-
readable format that the user can port to third-party consumer IoT service providers or 
smart device manufacturers. For the purposes of enabling portability, many respondents 
state that they make the data available in one or the more commonly used formats (that 
is JavaScript Object Notation (JSON),75 comma-separated value (CSV), PDF).  

(297) Furthermore,  several  respondents  indicate  that  they  only  enable  portability  of  their 
users’  personal  data  provided  that  certain  requirements  are  met,  in  particular  that  the 
accessing  party  respect  all  the  requirements  of  the  GDPR,  as  well  as  the  exporting 
party’s internal privacy rules.  

7.2.4.2  “Direct” portability between data controllers 

(298) The  direct  transmission  of  data  to  another  data  controller  is  set  out  in  Article  20(2) 
GDPR, according to which “[i]n exercising his or her right to data portability pursuant 
to  paragraph  1,  the  data  subject  shall  have  the  right  to  have  the  personal  data 
transmitted directly from one controller to another, where technically feasible”.  

(299) A few providers of consumer IoT services state that their data could be ported directly 
from one service provider to another by automatically transferring the data between the 
applications  of  the  two  service  providers.  Such  transfer  requires,  as  set  out  in  Article 
20(2) GDPR, that the user has requested the transfer and that the two service providers 

75 The JSON and CSV file formats can be understood by both computers and human beings. 

81 

 
 
                                                 
have  made  the  transfer  possible  through  API  integration.  The  necessity  of  a  user’s 
explicit  request  was  highlighted  by  submissions  to  the  public  consultation  on  the 
preliminary report.   

(300) One  example  mentioned  by  respondents  of  such  direct  data  transfer  is  the  transfer  of 

workout and nutrition data between different health and fitness applications.   

(301) However,  most  respondents  explain  that  they  currently  do  not  have  a  mechanism  in 
place  for  such  direct  portability  between  data  controllers.  Developing  the  necessary 
integration for such direct transfer can require significant development efforts, to ensure 
security of personal data and a stable user experience. During the public consultation on 
the  preliminary  report,  stakeholders  emphasised  the  fact  that,  due  to  different  formats 
used by different data controllers, there is currently no guarantee that the recipient of the 
data can directly use it in its systems. Several respondents explain that direct portability 
of  content  from  one  consumer  IoT  service  provider  or  smart  device  manufacturer  to 
another would require the development of industry-wide standards. With such standards 
in place, direct transmission of data between different service providers could take place 
in a secure and reasonable manner. 

(302) Smart device manufacturers also explain that in order to enable direct portability of data 
between  devices  from  different  manufacturers,  such  as  different  smart  devices  in  the 
same home environment, these devices would need to be integrated via APIs in order to 
enable  data  exchange  between  them.  As  regards  data  collected  via  voice  assistants, 
several respondents to the sector inquiry explain that each voice assistant provider has 
created its own ecosystem and limits the transfer and portability of data outside of this 
ecosystem.  

7.3  BUSINESS-RELATED ASPECTS OF CONSUMER IOT DATA 

7.3.1  Data Formats and Processing 

7.3.1.1  Data formats 

(303) Across  questionnaires,  respondents  report  that  there  are  no  industry-wide  standardised 
formats for collecting and sharing data between companies active in the consumer IoT 
sector. Instead, data is collected and processed either in a company-specific proprietary 
format,  or  in  a  non-standardised  but  commonly  used  non-proprietary  file  format  that 
enables the data to be directly shared with and used by third parties. 

(304) In particular, several respondents explain that they collect and share data in commonly 
used  non-proprietary  file  formats  such  as  JSON-formatted  files  or  CSV  files. 
Respondents also explain that certain data types such as IP addresses are in a standard 
format, which is directly sharable and usable by third parties. Several wearable device 
manufacturers  explain  that  they  collect  and  share  data  in  the  commonly  used  FIT  file 
format,  which  has  become  a  de  facto  standard  data  format  for  data  sharing  on  the 
wearables market.  

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(305) Other  respondents  report  that  they  and  their  business  partners  in  the  consumer  IoT 
sector  share  data  in  a  proprietary  format  that  is  unique  to  each  partner.  In  such  cases, 
different actions such as data cleaning, processing, validation, decoding etc. are needed 
to  reformat  the  data  into  a  directly  accessible  format  usable  for  third  parties,  for 
example CSV. Where data that was stored in a proprietary format is shared with a third 
party, the data holder might need to give access to its APIs and/or SDKs in order for the 
third party to be able to use the data. The format of the data is then decided on the basis 
of those APIs/SDKs.  

(306) Consumer  IoT service providers explain that when their services are integrated with  a 
voice assistant and data is shared as a necessary functional part of that integration, the 
data must be in a format that is directly usable by the voice assistant (provider). In those 
cases, the data format is determined by the APIs of the voice assistant provider.  

(307) Many  respondents  to  the  sector  inquiry  explain  that  when  they  share  data  with  a 
contractual  party,  they  often  agree  with  that  party  on  a  format  for  data  collection  or 
sharing.  That  agreed  data  format  may  be  contractually  regulated  between  the  parties. 
Other respondents explain that data formats are sometimes determined via the APIs and 
SDKs of one company. There are indications that some companies, such as the leading 
voice  assistant  providers,  impose  the  use  of  a  certain  data  format  for  access  to  and 
sharing of their data via their APIs and SDKs.  

7.3.1.2  Data processing  

(308) Voice assistants,  consumer  IoT services  and smart devices collect  significant  amounts 
of  data,  such  as  millions  of  interaction  data  points  and  billions  of  logs  monthly. 
Depending  on  the  circumstances,  the  companies  collecting  this  data  then  share,  store, 
aggregate, clean, normalise, format or process the data76 in other ways in order to create 
value for the company, and possibly also for third parties.  

7.3.1.2.1  Data processing locations used by the respondents to the sector inquiry 

(309) Across  questionnaires,  respondents  explain  that  they  process  data  mainly  in  the 
following locations: (i) on the smart device, (ii) in a companion app on a smart mobile 
device,  (iii)  in  third-party  cloud  service  providers’  processing  infrastructure  (“in  the 
cloud”)77 and (iv) in company-owned processing infrastructure (“on-premise”).  

76 For the purpose of this section, “data processing” refers to an operation or set of operations which is performed 
on  data,  whether  or  not  by  automated  means,  such  as  collection,  recording,  organisation,  structuring,  storage, 
adaptation  or  alteration,  retrieval,  consultation,  use,  disclosure  by  transmission,  dissemination  or  otherwise 
making available, alignment or combination, restriction, erasure or destruction of data as  well as the  storage of 
data”.  
77 Respondents  use  the  term  “cloud”  in  different  ways  in  their  replies  to  the  sector  inquiry.  Some  respondents 
refer to a broader category of processing locations as the “cloud”. For the purpose of this report, the definition of 
“cloud computing services” provided in Article 4(19) of Directive (EU) 2016/1148 of the European Parliament 
and  of  the  Council  of  6  July  2016  concerning  measures  for  a  high  common  level  of  security  of  network  and 
information  systems  across  the  Union  (OJ  L  194,  19.7.2016,  p.  1–30),  is  used  and  which  defines  “cloud 

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7.3.1.2.1.1  On-device processing 

(310) According  to  the  replies,  typical  examples  of  on-device  processing  include  data 
processing on a wearable device and temporary data storage on a hub in a smart home 
environment.  Several  respondents  refer  to  the  following  three  reasons  for  processing 
data on-device: 

a.  A  first  reason  for  data  processing  on-device  is  response  time,  that  is,  the  time 
needed for a signal to reach another processing location, and for the result to return 
to the device. Respondents choose to process data on a smart device if the response 
time  is  too  long  to  allow  for  a  desired  user  experience.  For  example,  as  regards 
wearable devices, the response time might be too long to allow for the fast display 
of data collected by sensors on a wrist-worn device.  

b.  A second reported reason for on-device processing is that some smart devices are 
less  dependent  on  a  permanent  and  fast  internet  connection  for  data  processing, 
such as wearable devices, which might not have permanent internet access.  

c.  A third reason for on-device processing mentioned by some respondents  is smart 
device  battery  consumption.  Manufacturers  of  wearable  devices  explain  that  the 
sending  of  data  to  a  server  consumes  significant  battery  power  of  the  sending 
device, which some manufacturers of wearable devices characterise as scarce.  

(311) Respondents indicate that data is transferred from the smart device to other processing 
locations such as smart mobile devices, the cloud, or company-owned infrastructure, in 
particular when data processing involves complex computations, or if data aggregation 
is necessary. Respondents indicate that they may aggregate data from one smart device 
and/or across several devices and consumers to compute anonymous business metrics in 
other storage locations, such as company-owned processing infrastructure or the cloud.  

7.3.1.2.1.2  Processing in a smart mobile device application 

(312) A second location for data processing mentioned in replies to the  sector inquiry is the 
smart mobile device application. For example, data may be processed in a smart mobile 
device application for the purpose of temporary storage of data, in order to transfer data 
to other locations such as the cloud or company-owned infrastructure, or to give users 
access to their data via such applications on smart mobile devices. 

7.3.1.2.1.3  Processing in the cloud  

(313) Most  respondents  indicate  that  they  process  at  least  some  of  their  data  in  the  cloud. 
Examples of data processing mentioned by respondents are sensor measurements, audio 
and video recordings, and device statistics. The findings of the sector inquiry show that 

computing  service”  as  “a  digital  service  that  enables  access  to  a  scalable  and  elastic  pool  of  shareable 
computing resources”. 

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the  cloud  services  most  frequently  used  by  the  respondents  are  Microsoft  Azure, 
Amazon Web services and Google Cloud.  

(314) Several respondents indicate that data processing in the cloud typically takes place via 
different specialised software solutions. Two frequently named examples are data lakes, 
which are repositories of raw data, and data warehouses, which are repositories of more 
structured data that allow for fast analysis. Respondents report that they use data lakes 
in order to combine raw data in a common storage solution, before data is prepared for 
further analysis using other solutions. A respondent explains that a data lake is a storage 
area  that  gathers  data  from  multiple  sources.  Another  respondent  indicates  that  their 
“data lake stores [all] the raw and non-aggregate data”. Examples of solutions used by 
respondents  as  data  lakes  are  Microsoft  Azure’s  Gen2  Data  Lake  and  Amazon  Web 
Services’  Simple  Storage  Service.  Respondents  name  speech  data,  log  files  or  sensor 
data as examples of raw data stored in data lakes.  

(315) Data  warehouses  are  according  to  many  respondents  used  to  process  more  structured 
data to which fast access is needed. A respondent highlights as a difference between the 
use  of  a  data  warehouse  and  a  data  lake:  “Due  to  the  volume  and  velocity  of  data,  a 
Data Lake is suited to collect and store data, the data warehouse is well suited for high 
speed  reporting.”  Examples  of  data  warehouse  services  used  by  respondents  are 
Snowflake  and  Amazon  AWS’  Redshift  or  third-party  software  hosted  on  Microsoft 
Azure.  

7.3.1.2.1.4  Processing on-premise 

(316) Respondents  explain  that  they  generally  opt  for  processing  in  company-owned 
infrastructure  for  smaller  datasets,  since  this  would  be  cheaper  than  using  a  cloud 
service,  balancing  fixed  costs,  variable  costs,  and  service  fees  charged  by  cloud 
providers.  As  explained  by  one  respondent,  “[t]he  cost  of  on-premise  [processing]  is 
lower than cloud's when data size is smaller”. 

7.3.1.2.2  Choice of processing solution 

(317) Most  respondents  indicate  that  they  use  several  data  processing  and  storage  locations 
and solutions simultaneously. Their choice of processing solutions depends on different 
factors, such as the characteristics of the data as well as the efficiency and costs of the 
specific solution.  

(318) Respondents indicate that when choosing data processing solutions, performance is  an 
important  parameter,  that  is  how  fast  a  certain  volume  of  data  can  be  accessed  and 
processed. For example, respondents indicate that  for processing of complex data that 
needs  to  be  statistically  analysed,  they  would  use  more  flexible  processing  solutions. 
For  the  ability  to  process  large  data  volumes,  respondents  refer  to  data  lakes.  Data 
warehouses are used, for example, where fast analysis of data is necessary.  

(319) Moreover,  respondents  report  that  they  use  different  storage  and  processing  solutions 
depending on the sensitivity of the data to be processed. As an example, sensitive data 

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such as payment-related data would in  general be processed and stored on on-premise 
servers.  Respondents  also  indicate  that  they  often  use  encryption  technology  when 
processing sensitive (personal) data, and indicate health or location data as examples of 
data  that  would  often  be  encrypted.  Some  respondents  also  explain  that  they  use 
separate data storage solutions for personal data and for non-personal data. 

(320) The findings of the sector inquiry also provide other reasons for the simultaneous use of 
multiple processing solutions.  Respondents  explain  that cost is  an important  factor for 
their  choice  of  processing  solution.  For  example,  the  desire  to  reduce  “managed 
overheads”, that is, reduce the fixed cost of (temporarily) unused processing resources, 
would  govern  their  choice  of  processing  solution.  Given  that  cloud  services  are  on-
demand,  that  is  the  user  pays  only  for  the  services  used,  the  operational  costs  of 
company-owned  servers  are  absent,  independent  of  dataset  size,  for  companies  using 
cloud services, and cloud services reduce managed overhead.   

(321) Other  reasons  mentioned  by  respondents  for  simultaneous  use  of  multiple  processing 
solutions  are  the  regulatory  environment,  the  cost  to  change  the  location  of  data  and 
business continuity. For example, changes to the company structure play a role for the 
choice  of  processing  location.  Some  respondents  explain  that  data  processing  and 
storage  solutions  used  by  the  different  companies  involved  in  a  concentration  are  not 
immediately  combined  after  the  transaction.  Therefore,  the  companies  would,  at  least 
during an initial period, continue using the different storage solutions used prior to the 
transaction.  Some  respondents  also  indicate  that  their  decision-making  regarding  data 
processing and storage is  decentralised within their companies and that sub-teams  can 
make their own decisions regarding data storage.  

7.3.2  Data collection from and data sharing with third parties 

(322) As  explained  in  Section  7.2.,  manufacturers  and  providers  of  consumer  IoT  products 
and services collect a broad variety of data, the types of which differ depending on the 
circumstances  and  use  cases.  Given  that  the  consumer  IoT  sector  is  based  on  the 
interconnection  of  and  communication  between  smart  devices,  voice  assistants  and/or 
consumer IoT services,  data is  – at least potentially – also collected from third parties 
within  the  same  consumer  IoT  ecosystem  and/or  otherwise  shared  between  these 
companies. 

(323) In  this  regard,  respondents  indicate  that,  in  general,  consumer  IoT  data  flows  have  a 
very functional nature, with data shared to allow smart devices, voice assistants and/or 
consumer  IoT  services  “to  interact  with  each  other”  and  “in  order  for  the  user 
interface to operate”.  

(324) When voice assistants are involved, data flows allow for the processing and execution 
of  the  voice  command.  For  example,  when  a  user  gives  a  command  through  a  voice 
assistant to a connected lighting system, the voice assistant will collect data required to 
link user accounts and set up the lighting system, as well as data on the lighting system 
itself. 

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(325) Other  examples  of  this  functional  data  include  smart  device  status  information  (for 
example  on/off  status  shared  by  smart  home  manufacturers  with  voice  assistant 
providers), user validation and authentication data, the time and duration of user access, 
or login  data where a user  sign-in  is required. Similarly, providers  of  creative content 
services may share their catalogue metadata with voice assistant providers.  

(326) Non-aggregated data related to errors or trouble-shooting problems may also be shared.  

(327) According  to  a  few  replies,  the  voice  assistant  or  other  user  interface  provider  is  also 
managing  data  flows  between  smart  device  manufacturers  and  consumer  IoT  service 
providers.  Indeed,  several  respondents  indicate  that  there  is  no  direct  data  sharing 
between smart device manufacturers and consumer IoT service providers. 

(328) In the case of account linking (see Section 2.5.2), the data is typically made available to 
the  third  party  as  a  result  of  this  link  between  for  example  the  user’s  consumer  IoT 
service account and the user’s voice assistant account.  

(329) Access to data plays a specific role in the context of the provision of certain consumer 
IoT services that have revenue-sharing agreements with a variety of partners, including 
smart  device  manufacturers  (see  Section  4.5).  Again,  these  data  flows  can  be  said  to 
have  a  functional  nature  as  they  allow  for  the  calculation  and  payment  of  the  agreed 
revenue  shares.  In  this  context,  partner  services  may  also  provide  individual  user 
identification  data  to  facilitate  the  user’s  activation  of  a  specific  service  within  a 
bundled offer. For example, a consumer IoT service provider may provide the number 
of  new  subscribers  who  have  signed  up  to  the  service  on  the  specific  partner  device 
and/or service. 

(330) Besides functional data provided on a continuous basis, some respondents have referred 
to aggregate performance data being shared on a recurrent (for example monthly) basis. 
One  creative  content  service  provider,  for  example,  requires  device  manufacturers  to 
provide  monthly  data  in  relation  to  how  many  times  a  service  is  launched  or 
downloaded  on  a  specific  device,  and  other  aggregate  monthly  metrics,  while  also 
requiring  voice  assistant  providers  to  report  aggregate  metrics  about  voice  usage  data 
when users are interacting with the service.  

(331) When data collected by one company (for example a consumer IoT service provider or 
voice  assistant  provider)  can  be  accessed  by  a  third  party,  this  usually  happens  in 
practice via a central dashboard. Examples include the Apple App analytics, Actions on 
Google  analytics  console,  and  Amazon’s  Developer  Portal.  Typically,  this  data  is 
aggregated and anonymised. 

(332) Only  a  few  examples  of  individual  agreements  to  share  additional  or  more  granular 
information  are  mentioned.  The  parties  concerned  seem  to  be  relatively  prominent 
market players, which presumably have a better negotiation position. Yet, even in these 
cases, the data is said to be shared mainly in view of improving system performance and 
troubleshooting. 

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(333) However, even in the absence of active data sharing, some players will have access to 
data that relate to a third party’s activities in the consumer IoT ecosystem. For example, 
smart  device  operating  system  providers  may  be  able  to  collect  information  about  a 
consumer’s  interaction  with  their  service  by  virtue  of  the  application  being  on  the 
operating  system.  Aside  from  the  operating  system  provider,  such  players  with 
extensive  data  access  seem  to  include  voice  assistant  providers  in  particular.  For 
example, for consumer IoT services accessible via voice applications, the relevant voice 
assistant provider will typically have insights on the user queries asked. 

(334) Many respondents indicate that, in general, they do not share any data with other types 
of  third-party  stakeholders.  If  any  data  flows  to  other  entities  are  mentioned,  these 
mainly  serve  a  functional  or  legal  purpose.  Firstly,  several  respondents  indicate  that 
government,  judicial  or  regulatory  authorities  may  require  them  to  disclose  data, 
including  personal  information,  when  legally  required  or  otherwise  necessary,  for 
example  to  verify or enforce  compliance with  the applicable terms  and policies or for 
security and safety reasons. Secondly, a number of respondents indicate that data may 
be  shared  with  entities  contracted  by  the  company  to  execute  certain  tasks  or  provide 
certain services. Examples include the provision of an outsourced customer service, the 
provision  of  marketing  assistance,  of  cloud  services,  the  processing  of  payments  or 
other  technical  services.  Specific  data-sharing  arrangements  in  relation  to  (targeted) 
advertising  are  mentioned  a  few  times  as  well,  usually  by  consumer  IoT  service 
providers.  Data-sharing  for  research  purposes  is  mentioned  by  a  limited  number  of 
players in the health and fitness market. 

7.3.3  Contractual provisions governing business-related aspects of consumer IoT data   

(335) Several contractual provisions seem to govern business-related aspects of consumer IoT 
data. One of the underlying objectives is to comply with applicable law, in particular the 
GDPR.  For  example,  data  transmission  is  governed  by  the  applicable  data  processing 
agreement  as  required  by  Article  28  GDPR  or  a  Controller  to  Controller  agreement 
(Article 26 GDPR).   

(336) Firstly,  the  technical  specifications  that  allow  the  interoperability  of  devices  and/or 
services, such as the applicable APIs and  SDKs (see Chapter 5), describe in detail the 
data  that  is  shared  between  the  relevant  parties.  Contractual  clauses  regarding  data 
processing  are  also  generally  included  in  licensing  agreements  governing  the  use  of 
APIs and SDKs. Typically, these agreements specify that rights over data remain with 
the respective parties, and include clauses that prohibit certain uses of data (for example 
use of data with malicious intent) or limit the volume of requests to the API. 

(337) Moreover, when the integration of the different consumer IoT segments is subject to a 
certification  process  (see  Chapter  5),  the  relevant  data  sharing  process  and  format  are 
among the elements assessed.  

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(338) Secondly,  given  that  much  of  the  data  concerned  is  of  a  personal  nature,  the  privacy 
policies  of  each  of  the  parties  involved  are  also  of  relevance,  including  for  data  flow 
management.  

(339) Thirdly, data flows seem to be governed by the (often standard) agreements between the 
parties.  Contractual  arrangements  may  nevertheless  differ  depending  on  the  parties 
involved  and,  among  other  things,  on  the  nature  of  the  integration.  For  example,  the 
provisions  on  data  between  a  smart  device  manufacturer  and  voice  assistant  provider 
may be different depending on which technical connectivity solution is used. Different 
standard agreements may apply depending on the underlying operating system as well.  

(340) In relation to personal data protection, respondents mention several clauses, which are 
typically based on the requirements set out in the GDPR. Such clauses often concern the 
scope  and  purpose  of  the  data  processing,  user  consent,  security  obligations  linked  to 
certain  processing,  such  as  data  transfers,  and  liabilities  in  cases  of  privacy  incidents. 
Moreover,  many  respondents  explain  that  they  require  their  data  to  be  processed  at 
certain  geographical  locations.  Several  EU-based  companies  explain  that  they  require 
that their data, and in particular personal data, be processed on servers or in a cloud with 
a storage location located in the EU or the EEA only.  

(341) Some  contractual  clauses  prohibit  the  processing  and  storage  of  data  that  a  company 
collects  or  receives  based  on  the  users’  interaction  with  third-party  consumer  IoT 
products and services. In this context, several respondents indicate that companies with 
more market power, in particular the leading general-purpose voice assistant providers, 
can often impose their standard contractual clauses concerning data, with no possibility 
for the other party to negotiate deviations from them. 

(342) Respondents  to  the  sector  inquiry  explain  that  voice  assistant  providers  often  require 
smart device manufacturers and consumer IoT service providers not to record, process 
or store data related to the use of the voice assistant, and in particular, not to create user 
profiles  based  on  such  interactions.  According  to  examples  of  such  clauses,  smart 
device manufacturers must not “collect or store copies of any audio, transcripts, voice, 
metadata or other content either intended for or delivered by” the voice assistant.  

(343) Furthermore,  agreements  between  voice  assistant  providers  and  smart  device 
manufacturers limit the manufacturers’ possibilities to store or modify data collected by 
voice assistants.  For example, some clauses require smart device manufacturers not to 
alter audio that is recorded after an activation word is recognised and before the devices 
send the audio recording to the voice assistant provider’s data centre. Some agreements 
also  require  device  manufactures  to  delete  all  data  they  collect  through  the  use  of  the 
voice assistant concerning a user if the voice assistant provider asks them to do so, even 
if this data is not personal data as specified in the GDPR.  

(344) At the same time, agreements often allow voice assistant providers to use data received 
through  the  consumption  of  third-party  smart  devices  and  consumer  IoT  services  to 
improve  their  own  products  or  services.  There  are  some  exceptions  to  this,  as  some 

89 

 
 
respondents indicate that they have contractually limited the use of data by third parties 
to  develop  competing  services.  However,  one  respondent  notes  that  there  is  little 
visibility as to what the voice assistant providers use the shared data for in practice.  

7.3.4  Data use within IoT Companies 

(345) The Commission asked addressees of the sector inquiry to detail the five most frequent 
ways in which they use the data collected through their smart home devices, wearable 
devices,  voice  assistants  and  consumer  IoT  services.  The  five  most  recurrent  data  use 
cases  reported  by  respondents  are:  (i)  the  normal  functioning  of  IoT  products  and 
services; (ii) personalisation of the user experience; (iii) business analytics; (iv) product 
maintenance  and  development;  and  (v)  other  use  cases 
including  marketing 
communications and safety and fraud prevention.  

7.3.4.1  Normal functioning of IoT products and services 

(346) The vast majority of respondents report that collected data is used primarily in order to 
provide  and  deliver  the  services  and  functionalities  requested  by  the  user  that  can  be 
enjoyed  through  smart  home  devices,  wearable  devices,  voice  assistants  or  consumer 
IoT services. For instance, voice assistants use the voice commands that a user provides 
in order to fulfil the user’s request, such as turning smart lights on or off. 

(347) According to respondents’ replies, personal data and data related to triggering events is 
essential for the functioning of consumer IoT products and services. Indeed, consumer 
IoT  functionalities  typically  require  interaction  with  the  user  or  with  the  user’s 
environment  to  execute  requests  (for  example  voice  commands)  or  to  detect  the 
triggering  events  that  would  spark  actions  (for  example  motion  sensors  triggering  the 
activation of smart lights). 

7.3.4.2  Personalisation of the user experience 

(348) In  the  second  place,  the  majority  of  respondents  employ  data  to  evaluate  the  interests 
and  preferences  of  users  and  make  suggestions  based  on  consumer  behaviour.  This 
allows  respondents  to  personalise  the  user  experience  when  using  the  smart  device  or 
consumer  IoT service by recommending services, content or features,  which increases 
the  user-friendliness  of  the  device  or  service  and  the  perception  of  its  value  by 
consumers.  

(349) The user’s activity record or content consumption history is what enables companies to 
customise  the  experience  and  interaction  of  a  particular  user.  Moreover,  some 
respondents  also  analyse  general  patterns  within  groups  of  users,  such  as  popular 
content among users of a certain age or gender, or frequent users of a particular service 
or  device  feature,  in  order  to  categorise  users  by  segment  and  make  targeted 
recommendations to clusters of users. 

(350) Consumer IoT service providers emphasise the increasingly important role of data in the 
provision  of  content  and  media  services.  Content  providers  such  as  music  streaming 

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providers,  radio  stations  or  video  streaming  providers  typically  personalise  the 
experience by displaying content recommendations directly on the user interface or by 
content  promotion  via  newsletters,  e-mails  or  push  notifications  addressed  to  user 
clusters.  

(351) With  respect  to  voice  assistants,  providers  indicate  that  they  use  collected  data  to 
suggest  certain  consumer  IoT services  and/or specific content. Given the key  role that 
voice assistants  play in  the consumer  IoT sector, leading providers of  general-purpose 
voice  assistants  get  an  overview  of  the  services  and  devices  the  user  interacts  with, 
which puts these players in a privileged position to personalise their offerings.  

(352) Some  respondents  indicate  that  vertically  integrated  companies  present  in  various 
consumer IoT segments (that is manufacturing smart devices and/or providing consumer 
IoT services and/or voice assistants) might connect information across their ecosystem 
to provide a more tailored and consistent experience for the user. This concerns mainly 
leading voice assistant providers (i.e. Google, Amazon and Apple), which also provide 
smart devices and consumer IoT services. 

7.3.4.3  Business analytics  

(353) The  majority  of  respondents  also  report  that  they  use  data  collected  through  their 
products  to  create  statistics  about  the  usage  of  their  smart  devices,  consumer  IoT 
services  and  voice  assistants  in  order  to  better  understand  users’  interactions  and 
preferences, and take strategic business decisions on this basis.  

(354) For  this  purpose,  it  is  relevant  for  respondents  to  know  how  much  time  users  interact 
with a service or feature; which features are most used on a device; the number of times 
a certain action or query is triggered; the audience of certain content and the quality of 
the services and features provided. By analysing these elements, consumer IoT players 
can get  an overview of the usage frequency of different device features and consumer 
IoT  services,  in  order  to  prioritise  them  for  maintenance,  upgrades  and  product 
development, or decide to withdraw a certain feature or service due to low usage.  

(355) In  particular,  many  respondents  indicate  that  they  collect  and  analyse  data  concerning 
which  type  of  hardware  and  operating  system  version  is  the  most  common  to  access 
their consumer IoT services and/or to control their smart home and wearable devices.  

(356) Data  can  also  be  used  to  monitor  smart  mobile  device  application  engagement.  In 
particular, data collected through the application  can be used following an application 
update  to  analyse  whether  the  improvements  have  led  to  a  better  experience.  Some 
respondents also conduct satisfaction surveys about their applications. Likewise, data is 
also used by some respondents to determine the effectiveness of a particular marketing 
campaign or promotion. 

(357) Looking  at  business  analytics  in  particular  consumer  IoT  segments,  some  wearable 
device manufacturers indicate that they analyse how people typically wear their product 
(for example duration of wear) and how they engage with their companion apps. On the 

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other  hand,  some  smart  home  device  manufacturers  and  voice  assistant  providers 
analyse data collected to understand the distribution of smart home devices and models 
within the household.  

7.3.4.4  Product maintenance and development 

(358) The majority of respondents indicate that they use data for product maintenance in order 
to  ensure  that  their  smart  devices  and  consumer  IoT  services  are  working  as  intended 
and  to  plan  upcoming  upgrades.  Data  is  also  used  in  order  to  ensure  communication 
with  the  customer  to  provide  technical  support  and  aftersales  maintenance  (that  is 
appliance malfunctions, component defects, problems with cloud registration).  

(359) Further,  the  majority  of  respondents  report  that  the  data  collected  through  their  smart 
devices and consumer IoT services is used for improving their products and developing 
new  functionalities  and  offerings  through  their  existing  devices  and  services.  For  this 
purpose,  respondents  monitor  the  functioning  of  their  devices  and  services  and  how 
users interact with them.  

(360) In the case of voice assistant providers, voice recordings consisting of voice commands 
(questions, requests and instructions given by users) and the feedback provided by the 
assistant  (such  as  responses,  answers  and  content)  may  be  processed  for  the 
improvement  of  natural  language  understanding  and  speech  recognition  technology. 
This can enhance the accuracy of the assistant’s interactions with users and reduce the 
number  of  mistaken  activations.  Voice  assistant  providers  might  also  monitor 
unanswered queries so they can build capabilities to respond better in the future. 

(361) In this regard, voice assistant providers with a large user base are better placed to collect 
and use customer speech data in order to improve their service, while smaller providers 
and newcomers  on this  segment  face  a shortage of these type of data to develop  their 
technology.  

7.3.4.5  Other use cases 

(362) Respondents report various additional ways in which they use the data collected by their 

consumer IoT services and smart devices, including the following: 

a.  First,  many  respondents  use  data  to  detect,  prevent  and  respond  to  fraud  and 
security  risks.  In  particular,  companies  conduct  analytics  aiming  at  foreseeing 
fraudulent activities and security breaches.  

b.  Second, the  majority of respondents  indicate that they use data collected  through 
their  smart  devices,  consumer  IoT  services  or  voice  assistants  to  provide 
promotions and offers through marketing communications via emails, newsletters 
or  push  notifications  within  the  app  environment.  However,  respondents  indicate 
that they only send these communications when the user has given separate prior 
consent to receive marketing content in line with the GDPR rules. 

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(363) Other  use  cases  mentioned  by  respondents  concern  the  usage  of  data  for  digital 
advertising  purposes  (this  is  particularly  the  case  for  online  content  providers),  for 
enabling  online  payments  and  for  sharing  data  with  public  interest  organisations,  (for 
example  wearable  device  manufacturers  sharing  anonymised  metrics  for  public  health 
research projects).  

7.3.5  Data monetisation  

(364) Respondents indicate that they do not charge third parties for making available the data 
they collect through smart devices and consumer IoT services. Thus, respondents have 
not  provided  the  Commission  with  figures  regarding  the  revenue  generated  by  data 
monetisation.  Looking  forward,  the  majority  of  respondents  indicate  that  they  do  not 
plan to monetise in a direct way the data they collect (that is selling data to third parties 
for remuneration). Some of them express concerns as to the lawfulness of such practices 
in the light of data protection rules and others point to privacy regulations as limitations 
on exploring possible data monetisation possibilities.  

(365) Nevertheless, there is consensus among respondents that data brings value to their smart 
devices  and  consumer  IoT  services,  since  it  allows  personalisation  of  the  user 
experience  by  making  recommendations  based  on  usage  history,  to  improve  the 
functionalities of current consumer IoT products and services, and to develop new ones.  

(366) Although  virtually  all  respondents  explain  that  they  do  not  monetise  data  in  a  direct 
way, many refer to two particular cases in which data collected through smart devices, 
voice  assistants  and  consumer  IoT  services  constitute  a  relevant  input  for  providing 
services to third parties: digital advertising and user profiling. Some respondents refer to 
these as indirect data monetisation cases, since the data concerned is used as an input to 
third-party  services  in  the  form  of  providing  interest-based  digital  advertisements  and 
user profiles (as opposed to selling data directly for remuneration).  

7.3.5.1  Digital advertising 

(367) Some respondents indicate that they use the data they collect from their consumer IoT 
products  and  services  to  offer  digital  advertising  services.  This  concerns  in  particular 
those  companies  operating  in  the  digital  advertising  business  that  also  offer  leading 
general-purpose voice assistants such as Google and Amazon. Also, some respondents 
indicate  that  they  share  the  consumer  IoT  data  they  collect  with  third  parties  for 
advertising  purposes  and  that  they  monetise  advertising  space  on  consumer  IoT 
products and services.  

(368) Digital advertising is based largely on the collection of data on consumer preferences, as 
such  data  is  an  essential  input  used  to  attribute  advertising  space  to  advertisers.  In 
particular,  digital  platforms  running  consumer-facing  online  services  such  as  search 
engines, social media platforms and marketplaces have become key providers of digital 
advertising services to third parties.  

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(369) The consumer IoT sector has unlocked new advertising space possibilities. In particular, 
some  types  of  smart  home  devices  can  show  advertisements  through  displays  (for 
example  a  smart  fridge  incorporating  a  display  that  might  advertise  food  products). 
Likewise, voice assistants can serve digital audio advertisements.  In this regard, given 
the  increasingly  central  role  of  voice  assistants,  digital  audio  advertising  could  play  a 
more important role in the future. 

(370) Consumer IoT players receive valuable input through the operation of smart devices and 
consumer  IoT  services  to  identify  consumer  lifestyles  and  preferences  and  provide 
personalised digital advertising services. This is especially the case for those companies 
that  were  already  present  in  the  digital  advertising  business  and  expanded  to  the 
consumer  IoT  sector,  such  as  Google.  According  to  some  respondents,  the  data 
collected from consumer IoT products and services allow these companies to attribute 
advertising  space  to  third-party  advertisers  in  a  more  accurate  manner  taking  into 
account user preferences. 

(371) In this  regard, some leading general-purpose voice assistant providers seem  to  use the 
audio  records  of  users’  queries  for  providing  such  services  to  digital  advertisers  for 
remuneration. However, these companies consider that digital advertisement constitutes 
a  separate  business  in  which  data  is  just  one  element,  among  others,  in  the 
advertisement generation process.  

third-party  advertisers 

(372) In  this  respect,  those  leading  voice  assistant  providers  understand  that  their  digital 
serve  personalised 
advertising  businesses  enable 
advertisements  by  attributing  advertising  space  (on  digital  platforms,  on  publisher’s 
websites  or  on  new  advertising  space  in  the  user’s  IoT  ecosystem  supported  by  smart 
devices)  according  to  data-driven  attribution  models  and  tools  that  target  users  in  a 
personalised  and  efficient  way.  In  this  scheme,  they  argue,  data  is  only  one  input, 
together with the advertising space and the internet-based advertising tools, that allows 
digital advertising service providers to serve interest-based ads.  

to 

(373) In addition, some consumer IoT service providers offering creative content services (for 
example music streaming, VOD, radio) indicate that they share data collected through 
their  services  with  digital  advertising  companies  for  targeted  advertising  purposes. 
Some of these creative content service providers also explain that they generate revenue 
through (for example  digital  audio) advertising space displayed on their own services. 
Those  respondents  using  data  as  an  input  in  their  digital  advertising  services  to  third-
party advertisers specify that the data used for this purpose is anonymised, secured and 
maintained in dedicated and distinct systems.  

7.3.5.2  User profiling 

(374) A  few  respondents  refer  to  the  possibility  of  using  data  for  user  profiling,  in  order  to 
evaluate or predict particular aspects about users. Such profiling might be of interest to 
third parties such as insurance companies or banking institutions.  

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(375) Indeed,  data  collected  by  smart  home  devices,  wearable  devices,  voice  assistants  and 
consumer  IoT  services  can  be  used  in  order  to  predict  future  user  behaviour  or 
triggering  events  concerning  the  user’s  environment  and  make  projections  about  a 
user’s situation or certain aspects of his or her life.  

(376) The  pervasiveness  of  smart  devices  and  consumer  IoT  services  in  users’  homes  and 
personal lives can provide valuable input for this purpose. Data collected from various 
smart  devices  surrounding  users  can  be  used  to  better  understand  their  personal 
situation. For example, a smart fridge can detect whether the user buys fresh food on a 
regular  basis  and  a  smart  watch  will  record  whether  he  or  she  exercises  periodically. 
With this input, a company might build a user profile concerning the healthy habits of 
users, which could then be sold to health insurance companies to determine how much 
such users should pay for their insurance premium. In addition, data collected through 
smart  home  devices  in  a  user’s  house  might  be  useful  to  determine  the  appropriate 
premium for property insurance that such a user should pay.  

(377) Some  respondents  indicate  that  they  see  an  interesting  business  opportunity  in 
monetising user profiling. However, they consider that the industry is not fully mature 
and there is still a long way to go before the data is generated in the necessary amounts 
and  of  a  sufficient  quality  to  develop  a  product  that  could  be  sold  and  used  by  third 
parties.  Moreover,  respondents  indicate  that  privacy  concerns  and  data  protection 
regulations  limit the development of this monetisation possibility.  

7.4  KEY FINDINGS 

Connectivity and  communication, which are key characteristics of the consumer  IoT sector, 
build  upon  the  collection  and  flow  of  large  amounts  of  data  concerning  consumer  IoT 
products  and  services  as  well  as  their  users.    This  includes  the  collection  of  and  sharing  of 
data with third parties within the same consumer IoT ecosystem78. 

Respondents  indicate  that  such  consumer  IoT  data  flows  typically  have  a  very  functional 
nature and are designed to make the system work properly for the user. Other types of data-
sharing  between  companies  cover  non-aggregated  data  in  relation  to  errors  and  aggregate 
performance data. Such data is usually made accessible through a central dashboard.   

Even in the absence of active data sharing, some consumer IoT players have access to data in 
relation  to  a  third  party’s  activities  in  that  consumer  IoT  ecosystem:  these  are  typically  the 
smart device operating system provider and/or the voice assistant provider, which are able to 
collect certain information about a user’s interaction with for example a consumer IoT service 
by  virtue  of  their  position  in  a  consumer  IoT  ecosystem.  The  findings  of  the  sector  inquiry 
indicate  that,  in  particular,  the  leading  voice  assistant  providers  can  impose  standard  terms 

78  Any  processing  of  personal  data  is  framed  by  the  GDPR  and  the  Directive  on  privacy  and  electronic 
communications,  including  access  to  the  smart  devices  and  the  possible  use  and  sharing  of  the  personal  data 
generated or stored on such devices. As already noted in paragraph 17, 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. 

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and  conditions  that  limit  data  access  and  use  for  third  parties,  while  themselves  having 
extensive data access and associated use possibilities. 

In relation to data use cases within consumer IoT companies, respondents report that they use 
the data collected for (i) the normal functioning of consumer IoT products and services; (ii) 
the  personalisation  of  the  user  experience;  (iii)  business  analytics;  (iv)  product  maintenance 
and  development;  and  (v)  various  other  use  cases  (for  example  marketing  communication, 
safety and fraud prevention).  

Respondents  report  that  they  do  not  make  data  available  to  third  parties  for  remuneration. 
However,  respondents  refer  to  digital  advertising  and  user  profiling  as  current  indirect  data 
monetisation cases and future monetisation possibilities. Using consumer IoT data for digital 
advertising purposes may be of particular value for those leading consumer IoT players with 
an existing digital advertising business. The pervasiveness of smart devices and consumer IoT 
services in users’ homes and personal lives can increase the value of consumer IoT data for 
user  profiling  purposes,  but  respondents  indicate  that  this  business  opportunity  is  not  very 
developed yet and would need to comply with data protection rules. 

8  CONCERNS RAISED DURING THE SECTOR INQUIRY 

8.1  OVERVIEW 

(378) The  present  chapter  sets  out  concerns  raised  by  the  respondents  about  practices  that 
could  potentially  have  a  negative  impact  on  competition,  innovation  and  consumer 
choice in the consumer IoT sector in the EU. These concerns relate to: 

a.  interoperability (Section 8.2), 

b.  standardisation (Section 8.3), 

c.  data (Section 8.4), 

d.  pre-installation, default settings and prominence (Section 8.5), 

e.  exclusivity, concurrency and tying (Section 8.6) 

f.  disintermediation (Section 8.7), and 

g.  contractual issues (Section 8.8). 

(379) Section 8.9 outlines the main conclusions of this chapter. 

8.2  INTEROPERABILITY CONCERNS 

(380) In relation to interoperability, respondents raise concerns in relation to two main issues: 
(i)  obstacles  regarding  access  and  integration  of  their  products  with  consumer  IoT 
technology  platforms  and  (ii)  the  limitation  of  functionalities  for  third-party  products 
and services on such technology platforms as compared to the performance of first-party 
products and services. 

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8.2.1  Obstacles  concerning  access  and  integration  of  products  on  consumer  IoT 

technology platforms  

8.2.1.1  Certification processes governed by consumer IoT technology platform providers 

(381) As  explained  under  Section  5.2,  leading  consumer  IoT  technology  platforms  (i.e. 
Google, Amazon and Apple) control and determine access  to  relevant  voice assistants 
and  smart  device  operating  systems.  Those  providers  impose  specific  contractual  and 
technical  requirements  on  smart  device  manufacturers  and  consumer  IoT  service 
providers,  through  certification  processes  governing  the  integration  of  devices  and 
services on their technology platforms. 

(382) From a technical  perspective, a common feature for these integration processes is  that 
the smart device manufacturers and service providers need to customise their products 
and  services  according  to  the  APIs,  SDKs  and  hardware  technical  specifications 
released by the voice assistant or operating system provider.  

(383) From a contractual point of view, participation in these certification processes involves 
the  acceptance  of  non-negotiable  standard  terms  and  conditions  imposed  by  the 
technology  platform  providers.  Respondents  indicate  that  a  refusal  to  accept  these 
standardised agreements is generally not an option, since the majority of manufacturers 
and  service  providers  lack  bargaining  power  to  negotiate  contractual  and  technical 
requirements with the leading technology platform providers.  

(384) Generally, certification also requires creation of developers’ accounts and/or agreeing to 
license  and  development  agreements.  Some  certification  processes  also  require 
payment.  

(385) Some  comments  received  in  the  context  of  the  public  consultation  on  the  preliminary 
report indicate that these mandatory terms and certification processes ensure the quality 
of  apps,  security  within  IoT  ecosystems,  and  consumers´  trust.  The  Commission 
acknowledges the benefits of standardised terms and certification processes, especially 
in  the  case  of  platforms  that  attract  a  large  number  of  developers.  Nevertheless,  the 
findings  of  this  sector  inquiry  show  that  such  terms  and  conditions  as  well  as 
certification  processes  imposed  by  some  consumer  IoT  technology  platform  owners 
may be disproportionate towards smaller players. For instance, the concern was raised 
in the public consultation on the preliminary report that some consumer IoT technology 
platform  providers  require  access  to  smart  home  devices’  data  for  their  own  usage, 
restrict  access  to  real-time  data  to  service  providers  as  part  of  their  interoperability 
certification  programs  and/or  limit  the  functionalities  of  third-party  products  through 
technical  constraints.  Many  respondents  to  this  sector  inquiry  and  stakeholders 
participating  in  the  public  consultation  on  the  preliminary  report  consider  such 
requirements as unfair.  

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8.2.1.2  Diversity of technical requirements for integration with consumer IoT technology 

platforms 

(386) As explained in Chapter 5, technology platform providers develop and make available 
APIs,  SDKs  and  hardware  specifications  to  third  parties  for  developing  technical 
integration, subject to compliance with the specific guidelines imposed by each provider 
and to gaining approval through the appropriate certification process.  

(387) Due to the lack of widely adopted common standards or unified technical solutions for 
integration  with  voice  assistants  and  smart  device  operating  systems,  smart  device 
manufacturers  and  consumer  IoT  service  providers  are  required  to  customise  their 
products  and  services  to  make  them  compatible  with  each  different  consumer  IoT 
technology platform into which they wish to integrate. Respondents indicate that this is 
costly  and  time-consuming  given  the  heterogeneity  between  APIs  available  for  each 
proprietary  technology  platform79.  Respondents  also  indicate  that  they  need  to  follow 
parallel  certification processes, involving different steps and timelines, and adapt their 
integrations following updates by the technology platform.  

(388) As indicated by one consumer IoT service provider in relation to smart device operating 
systems,  “each  smart  device  manufacturer  has  their  own  proprietary  technology  for 
integration  and  therefore  we  have  to  work  with  them  to  customize  our  integration  for 
each  one”.  In  the  same  vein,  a  smart  device  manufacturer  respondent  explains  with 
respect to voice assistants that “interoperability with the different voice assistants need 
a  specific  development  in  order  to  be  compatible  one  by  one  to  each  proprietary 
description (one for Google Assistant, one for Alexa…)”. Some respondents indicate, in 
this regard, that their devices and/or services need to be accessible at least via Google 
Assistant and Alexa, given that their user base interacts with both. 

(389) Respondents explain that they must dedicate resources and specialised technical teams 
to  work  on  the  implementation  and  maintenance  of  such  integrations.  The  costs  of 
hardware  resources  needed  for  API  integration  (that  is  memory  size,  low  power 
optimisation, CPU chipsets, microphones, encryption materials, and connectors) further 
increases the burden placed on manufacturers. Hardware requirements may even require 
changes to products during the development or production process.  

(390) In  the  case  of  technical  integration  with  smart  device  operating  systems,  respondents 
explain that there are multiple operating system versions and each device has its own set 
of release cycles (with different timelines and software updates – see Section 8.7.3.) and 
requirements  with  which  interoperability  has  to  be  maintained.  In  addition,  the 

79 One  stakeholder  indicates,  in  the  context  of  the  public  consultation  on  the  preliminary  report,  that  APIs 
allowing  interoperability  are  necessarily  heterogeneous  (i.e.  technically  different),  since  “homogeneous”  APIs 
are neither practical nor technically feasible. However, the Commission uses “heterogeneity” to refer to the lack 
of standardised APIs that leads to a significant diversity of technical solutions in the consumer IoT sector, that 
are not compatible with one another.  

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requirements  for  interoperability  can  also  change  over  time,  affecting  the  ongoing 
development and updating of products.  

(391) Specifically  in  relation  to  applications,  some  respondents  indicate  that  the  app  store 
review  process  is  complicated;  that  there  is  limited  feedback  available  in  case  of 
technical issues; and that the appeal process in case of disagreements is slow and non-
transparent. 

(392) Respondents also indicate that they generally lack technical support and guidance from 
the leading providers of consumer IoT technology platforms in the integration process. 
Some  explain  that  they  even  need  to  resort  to  software  development  agencies  to 
outsource  application  development  and  the  conduct  of  certification  processes.  Other 
respondents indicate that platform providers impose intermediary “integration partners” 
for  developing  interoperability  and  do  not  allow  respondents  to  do  the  integration 
themselves, which increases their costs. 

(393) Ultimately, the majority of respondents submit that this situation increases the costs and 
complexity  of  interoperability,  since  they  cannot  develop  software  solutions  or 
applications  exploiting  multiple  technology  platforms.  This  scarce  reusability  of 
technical  solutions  not  only  hinders  interoperability  but  also  slows  down  the 
introduction of new consumer IoT products and services.  

8.2.1.3  Divergent user experiences across consumer IoT technology platforms 

(394) Smart device manufacturers and consumer IoT service providers explain that due to the 
disparity  of  requirements  of  providers  of  consumer  IoT  technology  platforms  when 
approving  or  certifying  integrations,  they  need  to  adapt  the  features  of  their  products 
and services to  many different  technical  environments.  There is  a significant  diversity 
among the APIs and functionalities available for each voice assistant and smart device 
operating system, which leads to a divergence of user experiences across consumer IoT 
technology platforms. 

(395) Indeed, many respondents report that the customisation requirements and functionality 
limitations  imposed  by  each  provider  make  it  impossible  to  offer  the  same 
functionalities to the user across various consumer IoT technology platforms.  

(396) Comments  from  various  respondents  capture  this  consideration:  “technological 
fragmentation of these platforms in the market makes it practically impossible to offer 
one´s own services equally to the entire retail market”; “heterogeneity exists in between 
APIs  available  among  the  different  OS  which  leads  to  complexity  to  provide  a 
homogeneous  and  coherent  user  experience”;  “each  IoT  device  comes  with  its 
limitations  and  functionalities.  The  hardest  part  is  to  find  the  best  possible  user 
experience for the customer while acknowledging the limitations of the device itself. The 
development efforts can vary from project to project and from device to device”. 

(397) These constraints could prevent providers of consumer IoT products and services from 
offering  a consistent  and homogeneous user  experience  across different  consumer  IoT 

99 

 
 
technology  platforms,  which  reportedly  leads  to  consumer  frustration  when  the  user 
cannot access specific features of certain consumer IoT services or smart devices on a 
particular technology platform.  

8.2.2  Limited  functionalities  on  consumer  IoT  technology  platforms  for  third-party 

products and services 

(398) Many  respondents  indicate  that  the  good  performance  of  their  consumer  IoT  products 
and services on relevant voice assistants and smart device operating systems is essential 
for competing in the consumer IoT sector.  

(399) However, as explained in Chapter 5, the leading consumer IoT technology platforms are 
generally vertically integrated companies (Google, Amazon, Apple) that also offer first-
party smart devices and consumer IoT services in competition with third parties present 
on their technology platforms. These leading consumer IoT players may therefore have 
incentives to restrict the operability of third-party products and services by limiting their 
access  to  the  full  functionalities  of  their  technology  platforms,  thus  influencing  the 
functionalities and user experience they are able to provide. One respondent summarises 
this  concern  as  follows:  “competition  threats  arise  from  the  fact  that  access  to  such 
interfaces  can  be  hindered  or  limited  discriminating  negatively  those  companies  that 
compete with voice assistant providers in other markets. For example, a company that 
manages Voice Assistants or other Interfaces can refrain others from full access to all 
its  features  or  from  customization  possibilities,  which  would  reduce  competition 
possibilities”. 

(400) From  a  technical  perspective,  respondents  explain  that  providers  of  consumer  IoT 
technology  platforms  permit  fewer  capabilities  and  features  for  third-party  smart 
devices  and  consumer  IoT  services  (compared  with  their  first-party  products  and 
services) by exposing fewer functionalities through the APIs available for third parties. 
Meanwhile, technology platform providers have unrestricted access to their own APIs, 
which makes interoperability with their first-party products more reliable and enables a 
richer  user  experience  and  smoother  functioning.  Although  certain  restrictions  at  the 
API level might be justified by security aspects, the Commission notes that the majority 
of respondents believe that many interoperability limitations are unjustified or could at 
least  be  significantly  reduced  without  affecting  security.  In  addition,  the  set-up 
processes and on-boarding experiences of first-party products and services are generally 
more straightforward than for third parties.  

(401) With  respect  to  voice  assistants  in  particular,  third  parties  may  have  limited  access  to 
the voice assistant’s APIs, reducing the richness of voice-control functionalities for their 
products and services as compared to the first-party offer.  

(402) Similarly,  some  wearable  device  manufacturers  submit  that  providers  of  smart  mobile 
device  operating  systems  provide  limited  access  to  APIs  for  the  companion  apps  on 
which  their  wearable  devices  rely.  At  the  same  time,  smart  mobile  device  operating 
system  providers  themselves  have  unrestricted  access  to  APIs  with  respect  to  the 

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companion  apps  for  the  wearable  devices  that  they  offer  in  competition  with  third 
parties.  

(403) One stakeholder argues, in its submission to the public consultation on the preliminary 
report  that  preferential  access  to  the  consumer  IoT  technology  platform  for  the 
technology platform’s own services tends to be a temporary phenomenon and should be 
expected to cease at a certain point, since consumer IoT technology platforms are more 
attractive  to  consumers  when  they  host  third  parties.  However,  overall,  respondents 
indicate  in  their  replies  that  it  is  generally  not  possible  to  provide  richer  functionality 
and user experiences through third-party consumer IoT technology platforms than that 
provided  by  the  first-party  products  offered  by  these  technology  platform  providers 
themselves. This makes it difficult to compete directly with many of the consumer IoT 
services and smart devices provided by leading providers of consumer IoT technology 
platforms.  

(404) These limitations risk disincentivising innovative efforts by smart device manufactures 
and  consumer  IoT  service  providers,  which  might  not  be  able  to  offer  innovative 
products  or  ground-breaking  functionalities 
third-party  consumer  IoT 
technology platforms. This could ultimately limit intra-platform competition within the 
consumer IoT sector and impede product and service differentiation.  

through 

8.3  STANDARDISATION RELATED CONCERNS 

(405) Respondents  to  the  questionnaires  identify  a  number  of  concerns  in  relation  to 
standardisation. These relate in particular to the standardisation process, to SDOs’ rules 
on membership and participation, SEP declarations, IPR policies and licensing terms80. 
While  these  respondents  consider  that  such  elements  may  have  an  impact  on  the 
evolution of standardisation, they are not specific to the segments covered by the sector 
inquiry, and may thus impact standard-setting more broadly.  

8.3.1  The high number of standardisation bodies and competing standards 

(406) The high number of SDOs and private partnerships/industry organisations active in the 
segments covered by the sector inquiry is identified by many respondents as potentially 
problematic for the future evolution of these segments, as it may (i) become a barrier to 
reaching  a  broader  user  base,  and  so  result  in  the  wide  acceptance  of  a  more  limited 
number  of  technologies;  and  (ii)  generate  a  lack  of  transparency  in  terms  of  the 
organisations  and  alliances  relevant  for  hardware  manufacturers  and  software 
developers, in particular for SMEs and new entrants. 

(407) Respondents  also  highlight  the  existence  of  various  standards  for  largely  identical 
technological  results.  These  partially  and  fully  overlapping  standards  are  reported  to 

80 Similar, and other related concerns have been identified by a Group of Experts on Licensing and Valuation of 
Standard  Essential  Patents  (‘SEP  Expert  Group’,  E03600)  that  published  its  findings  and  proposals  on  10 
February 2021. 

101 

 
 
                                                 
generate  a  lack  of  transparency  in  the  standards  and  protocols  relevant  for  hardware 
manufacturers and software developers, in particular for SMEs and new entrants.  

(408) In  addition,  the  lack  of  clarity  in  terms  of  the  potential  open  source,  royalty-free  or 
royalty-bearing IPR embedded in a standard or specification is reported to further add to 
the  lack  of  transparency  in  terms  of  the  IPR  related  obligations  for  new  devices  and 
applications. 

(409) Various  respondents  put  forward  the  need  to  consolidate  the  existing  standards. 
However,  the  highly  complex  standardisation  landscape  in  the  consumer  IoT  sector 
generates a barrier to such consolidation, as it hampers the ability of a smaller number 
of standards to reach a broader user base and thus a wide acceptance.  

(410) Certain  respondents  consider  that  the  complex  standardisation  landscape,  combined 
with a similarly fragmented landscape of proprietary technologies, negatively effects the 
growth potential of consumer IoT segments, where a seamless consumer experience in 
navigation  through  the  various  smart  devices  and  applications  is  crucial.  Such  easy 
integration  of,  and  smooth  communication  between,  devices  and  applications  is  being 
hampered by the above fragmented landscape, thereby endangering consumer trust. 

(411) Many respondents, throughout the different questionnaires, single out the Matter Project 
as a promising attempt to consolidate existing technologies, in view of the co-leadership 
by  Google,  Amazon,  Apple  and  Samsung,  the  open  source  implementation,  and  the 
resulting potential of the future standard to reach a broad user-base. 

(412) In addition, Amazon’s VII is also seen as having the potential to bring together a broad 
user-base and grow into a leading proprietary technology (de facto standard), as a result 
of the interest of many industry players and consumers to allow for a swift interaction 
with more than one voice assistant on the same device.  

(413) The  high  number  of  SDOs  and  standards  is  at  the  same  time  put  forward  in  a  few 
submissions  to  the  public  consultation  on  the  preliminary  report  as  a  sign  of  healthy 
competition  between  standardisation  efforts,  which  may  also  contribute  to  the 
development of better and more successful standardised solutions. 

8.3.2  The  cost  of  standardisation  –  the  leadership  of  large  technology  companies  in 

standardisation 

(414) Several  respondents  put  forward  the  argument  that  membership  fees  in  the  relevant 
SDOs and independent alliances are very high and even prohibitive for smaller players, 
which  makes  it  more  difficult  to  enter  the  consumer  IoT  sector,  where  reliance  on 
widely adopted technologies is crucial. Large technology companies are reported to be 
much better placed to sustain active memberships in most of the relevant organisations. 

(415) The  cost  of  SEP  licensing  for  all  relevant  standards,  as  well  as  the  costs  of  other 
specifications  (for  non-members),  is  also  seen  by  various  respondents  as  a  potential 
barrier  to  entry  by  smaller  entities.  Implementers  of  standards  face  substantial 

102 

 
 
transaction  costs  when  they  need  to  deal  simultaneously  with  numerous  SEP  owners. 
For  some  standards,  there  are  hundreds  of  patent  owners  to  deal  with.  Entering  into 
licensing  negotiations  with  all  these  owners  requires  considerable  resources  and  time 
that smaller structures may not be able to afford. 

(416) Overall, respondents express the view that, whether via standardisation or independent 
alliances,  major  technology  companies  mostly  take  the  lead  and  impose  their  own 
technology  solutions.  This,  in  turn,  hampers  the  general  willingness  of  other,  smaller, 
companies  to  invest  in  collaborative  innovation,  and  may  enable  major  technology 
companies to leverage their market power as patent owners into downstream markets. 

8.3.3  Differences between the rules of SDOs relating to membership and participation / 

lack of transparency regarding relevant SEPs 

(417) Various respondents, including a number of SDOs, identify the differences between the 
IPR  policies  of  SDOs  and  the  lack  of  transparency  of  IPR  obligations  relating  to  the 
implementation of a given technology as a barrier to a faster and broader development 
of standards in the consumer IoT sector.  

(418) Some SDOs’ SEP declarations do not  provide any  information  with  regard to  specific 
SEPs. Other SDOs, such as ETSI, require more detailed declarations, but these are also 
not regularly updated to reflect changes to the SEPs (such as invalidations, changes to 
the  patent,  expiry).  In  practice,  the  difficulties  in  identifying  the  actual  licensing 
obligations  and  costs  relating  to  the  implementation  of  a  given  technology  in  a  new 
smart device or application reportedly increase the barriers for new entry. 

(419) SDOs  and  other  respondents  also  point  to  tensions  between  SDOs/major  independent 
alliances, potential contributors and/or licensees. These tensions exist as a result of: (i) 
the  exclusion  by  some  SDOs/major  independent  alliances  of  contributions  where  the 
contributor  would  not  commit  to  royalty-free  licensing;  and  (ii)  the  requirement  of 
FRAND  commitment  for  the  developed  standard,  where  the  actual  terms  of  such 
commitment are subject to diverging interpretations (see Section 8.3.4 below). 

(420) In  particular,  the  Connectivity  Standards  Alliance  (especially  in  view  of  the  Matter 
Project) is identified by several respondents for its IPR policy that also applies to SEPs 
for standards that relate to the Connectivity Standards Alliance specifications, including 
standards  and  SEPs  for  which  IPR  policies  of  other  SDOs  and  independent  alliances 
would apply, thereby de facto overwriting those IPR policies of related SEPs. 

(421) In  addition,  IP  enforcement  of  SEPs  by  Non-Practicing  Entities 81  is  another  factor 
identified by respondents that may negatively affect stakeholders’ willingness to rely on 
standardised technologies. 

81 Non-Practicing Entities are companies that  hold and  manage  patents or patent portfolios for the purposes of 
collecting patent fees, but without the intention of using the inventions those patents protect. Patent litigations by 
Non-Practicing Entities, including litigation over SEPs, may represent a threat to practicing businesses. 

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(422) According to a number of respondents, the above factors could limit the full potential of 

standardisation in consumer IoT sector. 

8.3.4  Diverging views in relation to FRAND licensing 

(423) Various respondents to the sector inquiry and the public consultation on the preliminary 
report,  including  large  associations  of  companies  active  in  consumer  IoT  and  related 
standardisation,  also  express  concerns  resulting  from  the  diverging  interpretations  of 
FRAND licensing terms, in particular with respect to the royalty base or the level in the 
value  chain  at  which  the  royalties  would  be  due,  and  the  valuation  of  SEPs  and  SEP 
portfolios.  These  potentially  significant  differences  of  interpretation  and  related 
litigation risks reportedly have a chilling effect on future standardisation.  

8.3.5  Growing proprietary ecosystems vs standardisation 

(424) Many respondents emphasise the importance of further standardisation in the consumer 
IoT  sector.  As  one  respondent  active  in  the  smart  home  sector  put  it,  “the  lack  of  a 
standard  communication  protocol  between  different  appliances  directly  influences  the 
choices  of  the  final  customer:  if  many  different  devices  are  compatible  between  them, 
the user would be more willing to integrate new products under various brands in their 
own home systems”.  

(425) In  the  same  vein,  respondents  also  report  that  there  is  currently  no  industry-wide 
standard on data format, for the collection and sharing of data between companies active 
in  consumer  IoT  sector.  According  to  some  respondents,  effective  data  sharing  would 
require  the  adoption  not  only  of  standardised  data  formats,  but  also  of  a  system  with 
unified  and  common  user,  device  and  possibly  content  identifiers,  to  “pseudonymise” 
such  data.  Because  of  the  current  lack  of  standards  in  relation  to  data  formats, 
respondents  fear  that  owners  of  the  most  widely  used  proprietary  technologies  would 
end  up  imposing  their  data  formats  to  the  industry.  In  addition,  further  concerns  are 
reported in relation to seamless data-flows between devices and applications of various 
stakeholders, as a result of the lack of standard naming or referencing of similar types of 
data by the different stakeholders. 

(426) More generally, SDOs reportedly often lag behind proprietary technical development by 
major  consumer  IoT  technology  platforms,  which  may  lock  users  into  proprietary 
ecosystems. Many respondents claim that such lock-in may lead to a perpetuation of a 
fragmented  technology  landscape  that  largely  relies  on  proprietary  solutions  by  the 
parallel  ecosystems,  thus  increasing  the  barriers  to  inter-system  communication.  In 
addition, many respondents put forward that such a perpetuation of parallel ecosystems 
would allow large ecosystems a significant margin of control over the level and quality 
of inter-system interoperability. 

(427) Apple  expresses  the  view  that  it  is  nonetheless  important  to  distinguish  between 
enforcing commitments  to  license SEPs on FRAND terms  that were voluntarily  given 
by  participants  in  collaborative  standard-setting,  and  forcing  owners  of  a  proprietary 

104 

 
 
technology  to  license  their  IP.  While  owners  of  proprietary  technology  may  find  it  in 
their  interest  to  license  their  IP  and  enable  interoperability  to  make  their  products  or 
services more attractive, a mandatory licensing to enable “full interoperability” may risk 
stifling innovation. 

(428) SDOs on the other hand argue that they typically need more time and a more advanced 
level  of  technological  framework  in  the  specific  industries  to  identify  and  understand 
the exact use cases that can be best addressed by standards. Standards may thus develop 
and replace previous proprietary technologies at a later stage in the technical progress of 
the different consumer IoT applications.  

(429) As  a  limit  to  standardisation,  various  respondents  however  make  the  point  that  large 
platforms have a higher incentive to capture users for their proprietary ecosystem rather 
than to promote standardised technologies. They would have a more limited interest in 
investing in standardised technologies, thereby not only limiting the future evolution of 
standardisation, but also leaving a number of already existing standards poorly deployed 
and, in view of their limited user-base, not “giving them a chance” to grow into broadly 
deployed standardised technologies. 

8.4  DATA RELATED CONCERNS 

(430) A concern frequently raised by respondents to the sector inquiry, and in submissions to 
the public consultation on the preliminary report, relates to do with the accumulation of 
data by voice assistant providers82.  

(431) More  specifically,  smart  device  manufacturers  and  consumer  IoT  service  providers 
express  concerns  about  the  voice  assistant  providers’  access  to  certain  types  of  data. 
Typically, voice assistant providers are the only ones to have full access to users’ voice 
queries. Moreover, and linked to the search and recommendation functions of the voice 
assistant,  voice  assistant  providers  also  typically  need  detailed  knowledge  of  the 
consumer  IoT  services  they  make  accessible,  such  as  catalogue  data.  Finally,  a  voice 
assistant  provider  generally  has  access  to  this  type  of  data  for  several  consumer  IoT 
service providers, with the ability to gather data across services.  

(432) One particular concern raised in relation to this is that voice assistant providers may be 
able to use the data that they collect on the use of third-party consumer IoT products and 
services to develop or improve their own competing offers in those segments.  

(433) As one  respondent explains,  “access  to  relevant  data  is  key  to  sustain the  design  and 
development  of  new  (…)  devices  or  solutions.  Being  able  to  access  to  customer 
behaviour  data  and  operational  data  from  the  market  itself  and  related  markets  from 
different products and brands constitutes a huge competitive advantage. The advantage 

82 In relation to personal data processing through voice assistants, the European Data Protection Board published 
Guidelines  on  virtual  voice  assistants  in  July  2021,  which  are  retrievable  via  https://edpb.europa.eu/our-work-
tools/our-documents/guidelines/guidelines-022021-virtual-voice-assistants_en 

105 

 
 
                                                 
in this regard offered to companies in a gateway function (…) such as Voice Assistants 
is enormous. It is clear that these companies have a paramount competitive advantage 
over, not only new entrants, but over the rest of the players in the sector that will not be 
able to access to such sources of information in a similar way”. 

(434) In their contractual agreements with third parties, the leading consumer IoT technology 
platforms  often  seem  to  reserve  for  themselves  very  broad  rights  in  relation  to  data 
collected from other consumer IoT segments, which according to some clauses, can be 
used and monetised by any department of the company.  

(435) According to some replies, this competitive advantage is amplified by the fact that third-
party manufacturers and service providers often only obtain anonymous usage data from 
the leading voice assistant providers, which in some respondents’ view, in turn, hinders 
them in their future business development. 

(436) In addition to this concern, a few respondents raise privacy and/or security concerns in 
relation  to  the  extent  to  which  the  data  that  they  collect  is  accessible  to  third  parties. 
More  specifically,  a  few  smart  home  device  manufacturers  mention  these  concerns  in 
relation  to  the  continuous  sharing  of  device  status  data  with  voice  assistant  providers. 
One  respondent  quotes  the  imposition  of  this  requirement  as  a  contributing  factor 
leading to the company’s abandonment of its full integration with some of the leading 
voice assistant providers.  In terms of data sharing, privacy considerations are important 
to take into account as a means of maintaining consumer trust, confidentiality, access to 
and integrity of data. However, privacy protection claims may also be used by market 
players to justify “locking up” certain data for themselves. 

(437) Another  data-related  concern  is  linked  to  data  monetisation.  Even  if  the  majority  of 
respondents  consider  that  sharing  and  using  data  for  digital  advertising  purposes  does 
not constitute a direct way to monetise data, they do consider that data collected through 
smart  devices,  consumer  IoT  services  and  voice  assistants  is  a  valuable  input  for 
providing  digital  advertising  services  to  third  parties.  Allegedly,  this  benefits  in 
particular  the  few  companies  that  were  already  present  in  the  digital  advertising 
business  and  expanded  to  the  consumer  IoT  sector,  thereby  raising  the  already  high 
barriers to entry into the digital advertising market. 

(438) Moreover,  some  smaller  IoT  players  consider  that  leading  providers  of  consumer  IoT 
technology  platforms  are  able  to  use  their  digital  advertising  business  to  monetise  the 
data  they  collect  from  users  through  various  consumer  IoT  products  and  services.  In 
their view, these bigger firms draw economic benefits from advertising, allowing them 
to subsidise their consumer IoT products and services, thus expanding their presence in 
all consumer IoT segments. According to some respondents, these strategies put smaller 
players at a disadvantage and raise barriers to entry.  

(439) In  their  comments  to  the  public  consultation  on  the  preliminary  report,  a  few  content 
service  providers  have  pointed  to  the  risk  that  voice  assistant  providers  insert 
sponsorship or advertising around third-party content without the consumer IoT service 

106 

 
 
provider´s  consent.  Voice  assistant  providers’  position  as  intermediaries  and  related 
competition concerns are discussed further in Section 8.7.  

8.5  CONCERNS IN RELATION TO PRE-INSTALLATION, DEFAULT-

SETTINGS AND PROMINENCE  

(440) Respondents raise a number of potential competition concerns in relation to the out-of-
the-box  features  that  are  available  to  users.  The  issues  raised  relate  predominantly  to 
consumer  IoT  services  and  their  integration  on  smart  devices  and/or  voice  assistants. 
Respondents  indicate  that  pre-installation,  default-setting  and  prominence  practices 
impact  the  discoverability  of  consumer  IoT  services  to  the  extent  that  it  becomes  a 
competitive  (dis-)advantage.  The  large  creative  content  service  providers,  active  on  a 
global  scale,  are  said  to  particularly  benefit  from  this  situation.  However,  other 
respondents do not seem very concerned by these practices, often because they perceive 
the  importance  of  consumer  IoT  -  including  voice  assistants  in  particular  -    for  their 
business to still be relatively limited.  

(441) Comments submitted in the context of the public consultation on the preliminary report 
confirm diverging views on these practices, with a number of submissions repeating the 
concerns  that  certain  (voice  assistant)  providers  may  use  default  settings,  pre-
installation or prominence to promote their own services or the services of selected third 
parties.  Other  submissions  emphasise  the  potential  benefits  that  such  practices  – 
dependent on the circumstances – may have, referring to their “standard and legitimate” 
nature,  noting  more  generally  the  usefulness  of  recommendation  systems  to  the  user 
and/or emphasising the options available to the user to override these settings.  

8.5.1  Pre-installation and default settings for voice assistants 

(442) Smart  device  manufacturers  that  also  offer  a  voice  assistant  typically  build  that  first-
party voice assistant into their smart devices. Although a few manufacturers build in a 
third-party general-purpose voice assistant on some of their devices in addition to their 
own voice assistant, the first-party voice assistant is reportedly always set as the default. 

(443) Likewise, only  a few third-party smart  devices  offer several  voice assistants  built  into 

their device, allowing the user to choose which voice assistant is the default.  

8.5.2  Pre-installation and default-setting of consumer IoT services 

(444) The  voice  assistant,  and/or  the  operating  system  on  which  it  runs,  often  come  with  a 
number of proprietary applications integrated or “pre-installed”. For example, Amazon 
positions  its  consumer  IoT  services  relating  to  e-books  and  shopping  as  a  feature  of 
Alexa.  

(445) The  pre-installation  of  consumer  IoT  service  applications  also  occurs  quite  frequently 
on  third-party  smart  devices.  Some  types  of  devices  lend  themselves  more  to  this 
practice,  namely,  smart  TVs,  streaming  players  and  wearable  devices,  but  other 
examples  have  occasionally  been  mentioned  as  well.  A  few  respondents  describe 

107 

 
 
specific promotional actions that involve their consumer IoT service’s application being 
pre-installed on a device for a limited amount of time. The pre-installation of a service’s 
application on a smart device is usually reflected in contractual agreements.  

(446) The technical form of the pre-installation practices may differ. For example, in the case 
of smart TVs, some respondents distinguish between the presence on the device of pre-
loaded  applications  and  pre-downloaded  applications.  Whereas  the  latter  are  fully 
downloaded  or  installed  on  the  smart  device,  using  a  pre-loaded  application  requires 
user action, i.e. downloading.  

(447) Not all consumer IoT service providers have the opportunity for their applications to be 
pre-installed  on  a  smart  device  and/or  voice  assistant.  Very  often,  voice  applications 
have to be added by the user manually. A few respondents indicate that the decision to 
pre-install  an  application  lies  solely  in  the  hands  of  the  relevant  smart  device 
manufacturer. A few others explain that pre-installation comes at a price (that is a flat 
fee or and/or revenue sharing), which at least some consider to be too high.  

(448) Consumers  expect  certain  devices  to  come  with  certain  functionalities  pre-installed. 
Moreover, pre-installation of a consumer IoT service does not necessarily mean that the 
service is the default accessed by the  smart device or voice assistant, nor that it is the 
only  one  available  “out  of  the  box”.  In  fact,  several  respondents  have  provided 
examples of multiple applications being pre-installed on a smart device. Pre-installation 
may also provide nascent or lesser-known competitors with an opportunity to reach new 
audiences.  

(449) Nevertheless,  a  few  respondents  explain  that  pre-installation  constitutes  a  competitive 
disadvantage  for  consumer  IoT  service  providers  whose  applications  are  not  pre-
installed, as a user has to take additional steps to access a service that is not included in 
the “out of the box” offer. In contrast, pre-installed services profit from higher levels of 
user discoverability.  

(450) Most  smart  devices  -  especially  when  accessed  via  a  voice  assistant  -  are  inherently 
limited in the number of options they can present to the user. That explains in part why 
many  respondents  single  out  default  settings  as  an  important  competitive  (dis-) 
advantage. Indeed, whereas several pre-installed applications on the same device/voice 
assistant may benefit from an equal level of visibility, this is different in the case of a 
default position, which provides an advantage to a single player.  

(451) Default-setting practices of consumer IoT services on smart devices are widespread. For 
example, Apple, Amazon and Google seem, generally, to set their own music services 
as default on their smart speakers. Only a  few respondents provide examples of smart 
devices directing the user to a third-party default service provider when a user performs 
a  certain  action.  This  may  also  be  temporary,  in  the  context  of  a  promotional  offer, 
and/or only on specific (co-branded) devices. 

108 

 
 
(452) Typically,  however,  default  settings  seem  to  be  managed  via  the  provider  of  the  user 
interface (such as voice assistants). For smart devices that cannot be accessed via voice 
commands,  this  is  often  the  mobile  device  application.  When  voice  activation  is 
possible,  the  voice  assistant  provider  will  determine  the  default  settings  in  relation  to 
specific  user  actions.  This  may  be  dependent  on  the  user’s  registration  of  an  account 
with those providers.  

(453) In  general  terms,  the  leading  voice  assistant  providers  direct  the  user  to  their  own 
consumer  IoT  services  if  they  offer  one  in  the  relevant  service  category  (for  example 
music, podcasts, books, audiovisual content, shopping).  

(454) In the absence of a proprietary service of their own, these voice assistant providers may 
agree to direct the user to a third-party  consumer IoT service for that category of user 
request.  This  sometimes happens  for  a limited period,  for example in  the context  of a 
marketing  campaign  or  may  occur  on  a  more  structural  basis.  From  the  replies  of 
consumer  IoT  service  providers,  it  seems  that  such  arrangements  have  been  made, 
particularly for information or creative content services. Default settings do not always 
seem to be reflected in written arrangements.   

(455) The  reasons  for  selecting  one  third-party  consumer  IoT  service  provider  over  another 
are  not  always  clear.  One  respondent  indicates  that  in  their  case  it  was  based  on  a 
competitive  selection  process,  whereas  another  explains  it  had  been  contacted  by  the 
voice assistant provider, but did not know based on which criteria its services had been 
chosen.  A  few  other  service  providers  point  out  the  quality  of  their  service  as  a 
determining  factor, while others  explain that other considerations may play  a  role,  for 
example  the  content  popularity  in  the  user’s  location,  past  user  preferences,  or  the 
exclusive availability of certain content.  

(456) Some of the responses to the questionnaires and submissions to the public consultation 
on the preliminary report emphasise that, despite default settings, users continue to have 
the choice to switch to an alternative service using, for example, voice commands or a 
mobile  device  application.  In  this  context,  users  may  have  various  levels  of 
opportunities  to  override  the  default  settings  established  for  their  smart  device  and/or 
voice assistant, for example during set-up and/or in the device settings.  

(457) In  any  case,  some  respondents  emphasise  that  accessing  a  non-default  consumer  IoT 
service  involves  at  least  some  effort  from  the  user:  this  is  the  case  for  example  if  the 
user wants to select a different default service during the set-up process, but also more 
generally,  for  example  through  required  additional  account  association/authentication 
steps. As a whole, the user experience for non-default services is said to be considerably 
worse than for the default service.  

(458) It  is  also  alleged  that  defaults  are  ‘stickier’,  meaning  that  they  result  in  users  staying 

with the default service for longer.   

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(459) Moreover, many respondents explain that, to access a non-default consumer IoT service 
provider  via  a  voice  assistant,  a  user  will  typically  have  to  add  a  specific  invocation 
name to their voice commands (for example “listen to song x on service y”):  

“We  have  learned  that  voice  command  users  use  very  generic  commands  and  seldom 
include brands in their commands. In our case, ‘generic’ searches for music channels 
are  directed  to  the  ‘preferential’  […]  app.  Only  when  consumers  ask  very  specific 
questions  for  our  services,  they  get  directed  to  us,  making  ‘discoverability’  of  our 
services very hard.” 

(460) Some  consumer  IoT  service  providers  report  that  the  invocation  of  third-party  voice 
applications  is  generally  poorer  than  the  invocation  of  first-party  and/or  default  voice 
applications and functionalities.  

(461) As  a  result,  default-setting  practices  are  said  to  generate  extra  traffic  for  the  default 
service(s)  in  question  and  make  multi-homing,  that  is  switching  between  different 
consumer IoT service providers, more difficult.  

(462) Moreover, a few respondents link default-setting practices to competitive disadvantages 
in terms of data access (see also Section 8.4), as the non-default service provider does 
not know the user as well as the default service provider, making it difficult to offer an 
equally attractive user experience. 

(463) For those consumer IoT service providers that are part of an aggregated (bundled) offer, 
as is mostly the case for creative content services, the default position of that aggregated 
offer  may  be  an  advantage,  while  at  the  same  time  reinforcing  certain  alleged 
disadvantages  -  linked  to  the  relinquishment  of  control  vis-à-vis  the  aggregator  (for 
example over the user relationship and advertising) - that seem to be a consequence of 
entering into this type of partnership.   

8.5.3  Prominence of consumer IoT services and voice assistants 

(464) Some  respondents  indicate  prominence  arrangements  as  among  the  most  often 
negotiated  clauses  in  applicable  agreements  and  sometimes  the  most  difficult  ones  to 
find an agreement on.  

(465) These prominence arrangements are singled out by respondents as important factors that 
determine the visibility and findability of a service. While most of the remarks made by 
the respondents  in  this  respect  relate to  audiovisual  services  and, to  a lesser extent, to 
music/radio content, other consumer IoT services as well as voice assistants may also be 
concerned by such settings. 

(466) Firstly, these may include parity settings in relation to advertising of the smart devices 
concerned:  some  consumer  IoT  service  and  voice  assistant  providers  request  that 
manufacturers  of  smart  devices  advertise  the  availability  of  their  service  or  voice 
assistant on the device(s) by, for example, including their logo, comparably or at least as 

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favourably as compared to other competing services or voice assistants available on the 
smart device.  

(467) Secondly, once a user has purchased a smart device, the latter may display some of its 
accessible  consumer  IoT  services  or  features  in  a  more  prominent  way,  using  various 
practices, for example in the context of smart TVs: 

a. 

b. 

Typically,  in  the  context  of  the  pre-installation  of  applications,  consumer  IoT 
service  providers  may  negotiate  with  smart  device  manufacturers  how  their 
service is  presented.  For example, the presence  of an audiovisual  service can be 
presented  more  or  less  prominently  in  app  galleries  or  other  types  of  content 
menus  on  smart  TVs.  In  this  sense,  according  to  one  respondent,  international 
players  typically  have  stronger  bargaining  power,  as  they  can  negotiate  multi-
national agreements. This would mean that local content service providers usually 
compete for less attractive positions. One smart device manufacturer emphasises 
that  users  can  nevertheless  override  the  order  of  consumer  IoT  services  in  the 
smart television’s menu. 

Prominence arrangements play a role when it comes to displaying search results. 
The  order  of  these  search  results  may  be  determined,  unilaterally  or  based  on 
agreements,  on  the  basis  of  various  factors  in  relation  to  for  example  the  user 
profile,  the  service  characteristics  and/or  usage  history.  A  respondent  has 
suggested  that  leading  providers  of  consumer  IoT  technology  platforms  may  be 
able  to  exploit  applicable  algorithms  to  their  own  advantage,  for  example  by 
associating  specific  search  terms  to  their  first-party  content  so  that  it  appears 
higher up in the ranking. 

c.  Additional prominence can be achieved for certain consumer IoT services via on-

device marketing, for example via featured reels on smart TVs. 

(468) Finally,  in  addition  to  the  above  types  of  prominence  practices  in  relation  to  the 
positioning  of  content  and/or  applications  of  consumer  IoT  services,  the  replies  also 
identify  a  prominence  practice  that  builds  upon  hardware  features.  Indeed,  certain 
consumer IoT services and voice assistants may be given enhanced visual prominence 
or placement on smart devices or their user interfaces, such as dedicated remote buttons 
on connected video entertainment devices that provide direct access to certain consumer 
IoT  services  or  voice  assistants.  As  they  are  hardware-based,  they  typically  cannot  be 
reconfigured by users.  

(469) Prominence-related  provisions  are 

typically  part  of  contractual  agreements. 
Respondents indicate that some of these agreements involve direct monetary payments 
or other revenue-sharing arrangements.  

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8.6  EXCLUSIVITY, TYING AND CONCURRENCY CONCERNS 

8.6.1  Exclusivity requirements  

(470) As  mentioned  in  Chapter  2,  the  findings  of  the  sector  inquiry  reveal  that  most  smart 
devices have a single voice assistant built-in, and that this is true both for voice assistant 
providers’ own smart devices and for third-party devices. Some manufacturers of smart 
devices seem content with offering users devices with only one built-in voice assistant. 
Others  explain  that  they  would  prefer  that  their  devices  could  carry  more  than  one 
general-purpose  voice  assistant,  and  that  there  is  customer  demand  for  such  dual 
assistant devices. In addition, they would like to be able to compete on equal terms with 
the handful of manufacturers of smart devices that have been able to negotiate deals to 
have two general-purpose voice assistants built-in on their devices.  

(471) The  results  of  the  sector  inquiry  indicate  that  attempts  to  secure  exclusivity  of  voice 
assistant presence on smart devices could potentially raise competition concerns if they 
prevent  other  competing  voice  assistants  from  being  built-in  simultaneously  on  the 
devices.  In  order  to  meet  user  demand  for  smart  devices  with  the  leading  voice 
assistants built-in, some device manufacturers have chosen to develop separate product 
lines, each supporting a different voice assistant.   

8.6.2  Concurrent use of voice assistants 

(472) As  explained  in  Chapter  2,  concurrent  use  of  voice  assistants,  namely  switching 
between voice assistants by using a specific activation word to activate one of the voice 
assistants,  is  possible only on  a limited number  of smart  devices manufactured by the 
respondents.  Certain  concerns  about  the  inability  to  allow  for  concurrent  use  of  voice 
assistants on smart devices were raised during the sector inquiry83.  

8.6.3  Tying 

(473) Smart  device  manufacturers  raise  concerns  about  voice  assistant  providers  bundling 
different types of software, technology and applications, including voice assistants.  

8.7  DISINTERMEDIATION  

(474) As  explained  in  Chapter  5,  the  majority  of  respondents  offer  their  consumer  IoT 
services  and  enable  control  of  their  smart  devices  through  third-party  general-purpose 

83 Similar  concerns  have  also  been  raised  in  the  US.  See,  for  example,  Written  Testimony  of  Patrick  Spence, 
Chief  Executive  Officer  of  Sonos,  to  the  U.S.  House  Judiciary  Committee,  Antitrust,  Commercial  and 
Administrative Law Subcommittee, 17 January 2020, retrievable from 
https://docs.house.gov/meetings/JU/JU05/20200117/110386/HHRG-116-JU05-Wstate-SpenceP-20200117.pdf ; 
United  States  of  America  U.S.  Department  of  Justice  v  Google  LLC,  Case  1:20-cv-03010,  Filed  20  October 
2020, points 141 and 163-164. 

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voice  assistants  and/or  smart  device  operating  systems,  provided  by  a  few  leading 
providers of consumer IoT technology platforms.  

(475) Consequently,  some  respondents  indicate  that  they  depend  largely  on  these  leading 
providers  of  voice  assistants  and  smart  device  operating  systems  when  featuring  as 
intermediaries between the smart device manufacturer or consumer IoT service provider 
and the user. Respondents to the sector inquiry raise the following concerns with respect 
to intermediation.  

8.7.1  Controlling the user relationship and user experience 

(476) Overall, some respondents express fear of losing their brand recognition and their direct 
relationship with  the user, since  the voice assistant and smart  device operating system 
providers  usually  have  the  most  direct  relationship  with  users.  For  instance,  a  few 
respondents  express  concerns  that    the  increasing  use  of  general-purpose  voice 
assistants to control smart home devices might lead to the loss of brand visibility, since 
users  activate  consumer  IoT  services  and  smart  device  functionalities  using  the  voice 
assistant’s  activation  word,  sometimes  even  without  referring  to  the  brand  of  the 
appliance  that  executes  the  voice  command.  In  practice,  this  reportedly  reduces 
visibility  of  smart  device  manufacturers’  brands  while  enhancing  users’  perception  of 
voice assistants as the centre of the smart home. 

(477) Several  submissions  to  the  public  consultation  on  the  preliminary  report  by  consumer 
IoT  service  providers,  in  particular  radio  broadcasters,  put  forward  similar  concerns 
regarding  voice  assistants  controlling  the  user’s  experience,  resulting  in  the  loss  of 
brand attribution or recognition, as well as the direct relationship with the user. 

(478) Furthermore, many respondents indicate that some of the leading providers of consumer 
IoT  technology  platforms  impose  their  own  set-up  and  user  on-boarding  processes  on 
third  parties,  for  when  users  connect  smart  devices  or  access  consumer  IoT  services 
through their voice assistants and smart device operating systems for the first time.  

(479) Concerning  the  set-up  process,  some  respondents  explain  that  in  order  to  make  their 
consumer  IoT products  and services interoperable with,  and accessible via, third-party 
voice assistants, users are forced to set up their smart devices through the voice assistant 
provider’s application. Furthermore, according to some replies, it is common practice to 
require that the user have an account or ID supplied by the voice assistant provider to 
authenticate and access third-party consumer IoT services and smart devices. 

(480) As  a  result,  smart  device  manufacturers  and  consumer  IoT  service  providers  are 
reportedly  prevented  from  controlling  the  user’s  on-boarding  experience,  that  is,  the 
user  experience  from  the  moment  when  the  user  accesses  their  products  for  the  first 
time,  if  this  is  done  through  a  third-party  user  interface  or  smart  device  operating 
system.  This  could  prevent  smart  device  manufacturers  and  consumer  IoT  service 
providers from collecting relevant data from users, such as contact details and personal 
information, which might be valuable to ensure proper after sales communication and to 

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require consent from users to send relevant marketing content and offers. Additionally, 
smart  device  manufacturers  and  consumer  IoT  service  providers  report  that  they 
sometimes face authentication issues that they cannot solve without the intervention of 
the platform provider (since the ID used to access the service or device functionality is 
provided  by  a  third  party).  In  contrast,  the  leading  providers  of  consumer  IoT 
technology  platforms  fully  control  the  experience  relating  to  their  first-party  products 
from  the very beginning of the user interaction,  collect  relevant  user data and in  most 
cases do not depend on a third party to solve technical accessibility issues. 

8.7.2  Controlling the access to consumer IoT services and related data 

(481) Some  respondents,  and  in  particular  consumer  IoT  service  providers,  explain  that  the 
visibility  of  their  services  on  smart  devices  and  voice  assistants  depends  to  a  great 
extent  on  discoverability  rules  set  up  by  providers  of  consumer  IoT  technology 
platforms,  as  already  discussed  in  Section  8.5.  In  this  regard,  many  consumer  IoT 
service providers indicate that the discoverability of voice applications is controlled by 
the leading general-purpose voice assistant providers, who do not disclose such rules to 
third  parties.  One  creative  content  service  provider  explains  that  “Integrated  service 
providers have the short-term advantage of being easily retrievable via the integration 
on the voice assistant. However, in the long run, such integration makes these services 
this 
dependent 
intermediation  happens  with  no  algorithmic  transparency,  eventually  forcing  service 
providers to pay if they want their content to be visible to consumers.”  

the  voice  assistant.  Also, 

intermediation  power  of 

from 

the 

(482) Moreover,  many  consumer  IoT  service  providers  seem  to  be  unable  to  negotiate 
discoverability conditions with providers of consumer IoT technology platforms, which 
only  make  exceptions  to  their  general  contractual  terms  and  conditions  for  large 
counterparties with significant leverage to negotiate.  Some stakeholders fear that voice 
assistant  providers  would  –  going  forward  -  agree  to  carry  only  those  consumer  IoT 
services  in  exchange  for  payment,  thus  affecting  the  profitability  of  consumer  IoT 
service providers.   

(483) Furthermore,  some  responses  to  the  questionnaires  and  submissions  to  the  public 
consultation  on  the  preliminary  report  claim  that,  due  to  the  intermediation  of  the 
leading  providers  of  consumer  IoT  technology  platforms,  they  do  not  have  consistent 
and immediate access to relevant data on the use of their services and smart devices on 
third-party  voice  assistants  and  smart  device  operating  systems  (see  also  Section  8.4). 
As  indicated  by  one  respondent,  voice  assistant  providers  “have  full  consumer  data 
access  while  third-party  developers  need  to  deal  with  a  really  complicated  setup 
procedure  before  the  user  can  give  us  their  data  e.g.  their  location  to  receive  more 
relevant  information”.  This  lack  of  automatic  data  gathering  prevents  third-party 
consumer IoT service providers from customising the user experience in real time and 
reportedly  puts  them  at  a  competitive  disadvantage  with  respect  to  the  first-party 
services offered by leading general-purpose voice assistant providers.  

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8.7.3  Controlling technical performance and related processes 

(484) In  general,  respondents,  regardless  of  their  background  or  size,  are  dependent  on  the 
technical  support  provided  by  voice  assistants  and  smart  device  operating  system 
providers.  As  a  consequence,  unresponsiveness  regarding  technical  issues  concerning 
accessibility  or  functioning  of  third-party  consumer  IoT  products  and  services 
reportedly  affects  the  quality  and  the  brand  image  of  third  parties  operating  via  voice 
assistants  and  smart  device  operating  systems.  For  instance,  respondents  explain  that 
they rely on the voice assistant providers to sort out problems with the activation word 
and voice command for accessing a consumer IoT  service or starting a smart device’s 
function. In this regard, some smart device manufacturers indicate that technical support 
from  voice  assistant  providers  is  insufficient  and  that  communication  with  technical 
teams  when  issues  arise  is  not  timely  enough.  However,  the  majority  of  players 
reportedly lack sufficient leverage to negotiate the inclusion of contractual obligations 
concerning  timely  technical  support  in  their  largely  standardised  agreements  with  the 
voice assistant providers.  

(485) With  respect  to  technical  support,  a  number  of  smart  device  manufacturers  and 
consumer IoT service providers indicate that they are dependent on the timely advance 
notice  of  software  updates  by  smart  device  operating  system  and  voice  assistant 
providers,  in  order  to  adapt  their  consumer  IoT  products  and  services  in  time  for  the 
upcoming  changes  to  the  underlying  system.  Nevertheless,  some  express  the  concern 
that  they  suffer  delays  that  affect  their  business  planning  (that  is  on  the  launching  of 
new products not yet adapted to new operating system versions) and even the continuity 
of their service on third-party voice assistants and operating systems.  

(486) Some  wearable  device  manufacturers  raise  concerns  about  not  receiving  full 
information  from  smart  mobile  device  operating  system  providers  regarding  new 
devices,  operating  system  updates  or  privacy  policies,  which  sometimes  results  in 
technical problems on the side of the wearable device manufacturers. In this respect, it 
is  reported  that  unresponsiveness  or  delayed  notifications  of  updates  to  smart  mobile 
device operating systems (for example iOS and Android) create difficulties for wearable 
manufacturers.  For  instance,  some  features  might  be  disabled  following  an  operating 
system  update,  which  creates  consumer  confusion.  In  other  cases,  the  update  might 
cause bugs and connectivity problems. 

(487) Several  respondents  raise  concerns  in  particular  in  relation  to  one  leading  operating 
system  and  the  fact  that  new  operating  system  updates  sometimes  require  expensive 
engineering  work  to  make  all  the  wearable  device  functionalities  compatible  with  the 
system.  Concerns  are  also  raised  in  relation  to  operating  system  providers  for  being 
unresponsive and delaying approval of new applications or updates. This is said to harm 
both  consumers,  which  have  limited functionalities on their wearable devices, and  the 
wearable device manufacturers, which see their reputation suffer as a result.  

(488) Lastly, some wearable manufacturers have  also experienced difficulties with app store 
providers  that  block,  remove  or  delay  the  approval  of  their  companion  apps.  These 

115 

 
 
respondents  complain  that  communication  with  the  app  store  providers  during  the 
application  review  process  is  difficult  and  when  a  certain  application  or  update  is  not 
approved, the feedback is very limited. 

8.8  CONTRACTUAL ISSUES  

(489) Respondents  to  the  Commission’s  questionnaires,  as  well  as  some  submissions  to  the 
public consultation on the preliminary report,  have drawn attention to the fact that some 
companies’  agreements  contain  clauses  that  amplify  commercial  imbalances  between 
them and the weaker contractual party. 

(490) For example, some agreements reportedly include clauses enabling one of the parties to 
terminate  an  agreement  with  its  contractual  parties  at  its  sole  discretion  or  without 
informing  the  contractual  party  beforehand.  Other  agreements  reportedly  to  contain 
clauses allowing one of the parties to terminate an agreement should the counter-party 
introduce infringement proceedings against it concerning intellectual property rights.  

(491) Another  example is that the scope of the agreements can be very large and apply to  a 
“company” at group level, including all affiliates of the company. This, combined with 
certain  other provisions of the agreement, can  give some companies broad rights  with 
respect  to,  for  example,  data  access  and  usage,  which  extend  beyond  the  business 
division concerned by the agreement.  

8.9  KEY  FINDINGS 

(492) As set out above, the replies to questionnaires, the submitted agreements, as well as the 

submissions to the public consultation, reveal a certain number of potential concerns.  

8.9.1  Pre-installation, default-setting and prominence 

(493) The  responses  to  the  questionnaires  and  the  submissions  to  the  public  consultation 
reveal  the  existence  of  practices  regarding  pre-installation,  default-setting  and 
prominent placement of consumer IoT services on smart devices or in relation to voice 
assistants.  These  practices  can  be  decisive  for  the  discoverability,  visibility  and 
findability  of  a  consumer  IoT  service,  and  can  give  competitive  advantages  to  the 
provider  of  a  service  that  is  pre-installed  or  set  as  default  or  is  otherwise  given  a 
prominent  placement.  The  services  allegedly  favoured  in  this  way  are  often  the 
proprietary services of the leading providers of consumer IoT technology platforms, or 
those  of  large  international  creative  content  service  providers,  to  the  detriment  of 
smaller and/or local players.  

8.9.2  Exclusivity, concurrency and tying concerns in relation to voice assistants  

(494) Attempts  by  leading  voice  assistant  providers  to  secure  exclusivity  of  voice  assistant 
presence on certain smart devices or, where dual assistant support is allowed, to prevent 
the  concurrent  use  of  the  voice  assistants,  have  been  reported.  Smart  device 

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manufacturers  also  raise  concerns  about  voice  assistant  providers  bundling  different 
types of software, technology and applications, including voice assistants. 

8.9.3  Data 

(495) The  sector  inquiry  findings  indicate  that  voice  assistants  are  at  the  centre  of  data 
collection  in  the  consumer  IoT  sector  and  that  this  allows  the  leading  voice  assistant 
providers  to  accumulate  large  amounts  of  data,  enabling  them  not  only  to  control  the 
data flows and user relationships  but also  to leverage into adjacent  markets  that is  the 
provision of IoT services and products. The results of the sector inquiry indicate that not 
having access to data can raise barriers to new entrants on the voice assistant market and 
hinder the development of smaller competitors on that market. Moreover, because of the 
privileged access to volumes of data the leading voice assistant providers can reportedly 
more easily improve the quality of their voice assistant/voice recognition technology via 
algorithmic training and machine learning. Finally, some respondents claim that due to 
the intermediation of the leading ecosystem providers they do not have  consistent and 
immediate  access  to  relevant  data  on  the  use  of  their  services  and  smart  devices  on 
third-party voice assistants and smart device operating systems. 

8.9.4  Standardisation and interoperability 

(496) The  majority  of  respondents  observe  a  lack  of  interoperability  in  the  consumer  IoT 
sector due to technology fragmentation, lack of common standards and the prevalence 
of proprietary technology (becoming “de facto” standards in the sector). This situation 
reportedly  hinders  compatibility  and  interoperability  between  products,  services  and 
technology of different brands, which could lock users into the products and services of 
the same provider and limit consumer choice. Open standardised solutions are reported 
to  develop  slowly  and  to  lack  the  necessary  user  base  to  catch  up  with  proprietary 
innovation.  

(497) However,  the  development  of  proprietary  technologies  is  at  the  same  time  largely 
welcomed  by  some  respondents,  as  long  as  they  are  well  documented,  with  effective 
access terms, and allow for broad and full interoperability. It is reported that the current 
fragmented  landscape,  in  terms  of  access  to  the  different  standards  and  proprietary 
technologies, could lead to significant practical difficulties for stakeholders to identify 
the precise licensing obligations and licensing costs their devices and applications may 
generate.  

(498) Interoperability requires technical and business engagement among companies active in 
the  consumer  IoT  sector  in  order  to  achieve  meaningful  integration  between  the 
different parts of an IoT ecosystem. In practice, however, such integration processes are 
largely  determined  by  the  presence  of  a  few  providers  of  leading  proprietary  voice 
assistants and operating systems relevant for the consumer IoT sector. These companies 
are  able  to  determine  independently  the  requirements  to  achieve  interoperability  with 
their  proprietary  technology  through  unilaterally  governed  terms  and  conditions, 
technical  requirements  and  certification  processes.  By  unilaterally  governing  the 

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interoperability  and  integration  processes,  some  respondents  to  the  sector  inquiry 
indicate  that  the  leading  voice  assistant  providers  may  also  be  able  to  limit  the 
functionalities  of  third-party  smart  devices  and  consumer  IoT  services,  compared  to 
their own, by imposing technical constraints, such as limited APIs. 

8.9.5  Disintermediation 

(499) Respondents raise several concerns regarding the role of the leading providers of voice 
assistants and smart device operating systems as intermediaries between the user and the 
smart devices or consumer IoT services that are controllable and accessible through the 
voice assistant and/or operating system. Respondents fear that they will lose their brand 
recognition and their direct relationship with the user, as it is voice assistants and smart 
device  operating  system  providers  that  usually  have  the  most  direct  relationship  with 
users  through  their  user  interfaces.  Also,  some  of  the  leading  ecosystem  providers 
require  that  their  set-up  and  user  on-boarding  processes  are  followed  when  the  user 
connects  to  smart  devices or accesses consumer  IoT services via  their voice assistants 
and  smart  device  operating  systems.  Finally,  several  smart  device  manufacturers  and 
consumer IoT service providers report difficulties with app store providers who block, 
remove or delay updates of their apps, and add that there is little or no communication 
about the reasons for such blockages or delays.  

118