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  COM(2022) 19 final  REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Final report - sector inquiry into consumer Internet of Things {SWD(2022) 10 final}  
 
 
1  Introduction and main steps of the sector inquiry 

(1)  On 16 July 2020, the Commission launched a sector inquiry into the consumer Internet of 
Things (IoT) in the EU. The aim was to gain a better understanding of the consumer IoT 
sector 1,  its  competitive  landscape,  emerging  trends  and  potential  competition  issues. 
While  the  consumer  IoT  sector  is  still  developing,  the  sector  inquiry  was  prompted  by 
indications of company behaviour that may be conducive to distortion of competition in 
this sector.  

(2)  As the use of consumer IoT products is increasingly becoming part of  everyday life for 
Europeans,  the  consumer  IoT  sector  is  expected  to  grow  significantly  in  the  coming 
years. It is predicted that overall consumer IoT revenue worldwide will grow from EUR 
105.7  billion  in  2019  to  approximately  EUR  404.6  billion  by  20302.  European  smart 
home revenue will also  more than double between 2020 and 2025 (from approximately 
EUR 17 billion to approximately EUR 38.1 billion)3. 

(3)  For  the  purposes  of  the  sector  inquiry,  requests  for  information  (‘questionnaires’)  were 
sent to stakeholders in July 2020. Different questionnaires were addressed to companies 
active  in  four  consumer  IoT  segments  in  the  EU:  (i)  the  manufacturing  of  smart  home 
devices; (ii) the provision of voice assistants; (iii) the provision of consumer IoT services; 
and  (iv)  the  manufacturing  of  wearable  devices.  A  fifth  questionnaire  was  sent  to 
standard-setting and industry organisations.  

(4)  The type and number of questions varied  across the five questionnaires, but focused on 
the following topics of particular interest in examining possible competition issues in the 
consumer IoT sector: 

a.  The characteristics of respondents’ consumer IoT products and services; 

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); 

1 Industrial IoT is not within the scope of the sector inquiry. One of the special characteristics of consumer IoT is 
that the type of data collected by smart devices typically includes personal data. The development of this sector 
can therefore be expected to have a particularly significant impact both directly on consumers and on society as a 
whole.  Connected  cars  are  also  not  part  of  this  sector  inquiry  due  to  their  distinctive  regulatory  and  factual 
characteristics. 
2 Transforma Insights (22 December 2020), ‘Internet of Things (IoT) revenue worldwide from 2019 to 2030 (in 
billion  U.S.  dollars),  by  vertical’ 
from 
https://www.statista.com/statistics/1183471/iot-revenue-worldwide-by-vertical/ 
3 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 

retrieved  on  23  March  2021, 

[Graph],  Statista, 

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d.  The  interaction  between  devices,  services  and  voice  assistants  in  the  consumer  IoT 
sector,  including  questions  on  interoperability,  pre-installation  and  default  settings, 
exclusivity and other preferential treatment;  

e.  The  role  of  data  in  terms  of  the  consumer  IoT  sector,  including  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. 

(5)  While  the  selection  of  addressees  was  not  intended  to  correspond  to  a  statistically 
representative sample  of the EU consumer  IoT sector,  it  covered  a variety  of consumer 
IoT products and services and represented different types of companies in terms of size, 
activities and range of products offered. 

(6)  The Commission received responses to the questionnaires from more than 200 companies 
active in the manufacturing of smart devices, the provision of voice assistants and/or the 
provision  of  consumer  IoT  services,  as  well  as  from  14  standard-setting  and  industry 
organisations.  These  responses  constituted  the  main  source  of  information  for  the 
preliminary  report  on  the  sector  inquiry,  which  was  published  on  9  June  2021 4 and 
presented the Commission’s preliminary findings.   

(7)   The publication of the preliminary report was followed by a public consultation open to 
all interested stakeholders. It ended on 1 September 2021, with 26 submissions received5. 

(8)  This  report  is  accompanied  by  a  staff  working  document  that  summarises  the  main 
findings  of  the  Consumer  IoT  sector  inquiry  and  incorporates  comments  submitted  by 
stakeholders during the public consultation.  

2  Characteristics of consumer IoT products and services 

(9)  The findings of the sector inquiry confirm that, overall, an increasing number of devices 
and  services  are  becoming  ‘smart’6.  This  enables  users  to  access  a  progressively  wider 
range  of  interconnected  devices  and  services  in  and  outside  their  homes.  The 
respondents’ replies also point towards a trend of further increasing the overall number of 
consumer  IoT  services  available  on  smart  home  and  wearable  devices  and  via  voice 
assistants.  In  addition,  the  respondents  indicate  a  trend  towards  greater  availability  of 

4  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 
5 European  Commission,  Public  consultations  -  Commission  Staff  working  document  -  Preliminary  Report  - 
Sector Inquiry on Consumer Internet of Things, retrievable from https://ec.europa.eu/competition-policy/public-
consultations/2021-internet-things_en 
6 For example, “smart devices” have been defined for the purposes of this  sector inquiry as 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). 

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voice assistants as a user interface enabling interaction with smart devices and consumer 
IoT services.  

(10) The leading voice assistants in the EU are Amazon’s Alexa, Google’s Google Assistant, 
and Apple’s Siri. They are general-purpose voice assistants as they enable users to access 
a broad range of features such as playing music, listening to the radio, news or podcasts, 
controlling  smart  home  devices,  providing  information  or  helping  in  planning  and 
executing daily routines.  

(11) Other  voice  assistants  are  considered  specialised  voice  assistants  as  they  have  more 
limited  functionalities.  They  mostly  allow  access  to  and  interaction  with  the  provider’s 
own smart devices and/or services. 

(12) Despite  the  growing  popularity  of  voice  assistants,  smart  mobile  applications  or 
companion  apps  remain  the  most  popular  user  interfaces  to  access  smart  devices  and 
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. 

3  Main features of competition 

(13) The  majority  of  respondents  point  to  the  cost  of  the  technology  investment  and  the 
competitive  situation  as  the  main  barriers  to  entry  or  expansion  in  the  consumer  IoT 
sector,  alongside  various  interoperability  issues,  the  lack  of  access  to  data  as  well  as 
regulatory barriers. 

(14) The cost of the technology investment is seen as a particularly important barrier to entry 
and/or expansion in the market for voice assistants.  In fact,  respondents  find it unlikely 
that there would be new entrants in the market for general-purpose voice assistants in the 
short term,  given that the costs of developing and operating new  general-purpose voice 
assistants are seen as almost prohibitively high.  

(15) As a result, most respondents’ business strategies for the near future focus on expanding 
their  consumer  IoT  offering,  in  particular  the  accessibility  of  their  smart  devices  and 
consumer  IoT  services,  via  the  leading  general-purpose  voice  assistants7.  The  general 
expectation  is  one  of  continued  or  increasing  growth  in  the  consumer  IoT  services,  the 
smart home device and the wearable device segments. 

(16) On  the  competitive  situation,  a  large  number  of  respondents  consider  the  inability  to 
compete  effectively  with  the  leading  providers  of  smart  (mobile)  device  operating 
systems  and  voice  assistants  to  be  the  main  obstacle  to  developing  new  products  and 
services.  This  is  because  these  companies  are  vertically  integrated  and  have  built  their 

7 General-purpose  voice  assistants  enable  users  to  access  a  broad  range  of  functions,  for  example  listening  to 
music,  controlling  smart  home  devices,  providing  information,  or  helping  in  planning  and  executing  daily 
routines.  

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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.  

4  Interoperability in consumer IoT ecosystems 

(17) The  ability  to  interconnect  and  communicate  with  the  different  components  of  an 
ecosystem,  that  is  interoperability  among  smart  devices,  voice  assistants  and  consumer 
IoT  services,  is  essential  for  the  full  deployment  of  functionalities  that  a  consumer  IoT 
ecosystem  can  offer  to  users.  Interoperability  between  different  brands  is  equally 
important  as  it  allows  users  to  build  consumer  IoT  ecosystems  with  heterogeneous 
products,  thereby  improving  consumer  choice  and  preventing  lock-in  into  a  certain 
provider’s products.  

(18) Two important nodes for connecting the different hardware and software components of a 
consumer IoT ecosystem are a) the operating system, which runs on the smart devices or 
their  user  interfaces  and  b)  voice  assistants,  through  which  users  can  access  different 
consumer  IoT  services  and  devices.  Both  are  consumer  IoT  technology  platforms 8 , 
enabling  communication  between  those  hardware  and  software  components  and 
increasing  their  complementarity.  These  consumer  IoT  technology  platforms  also  allow 
for centralised access to and control of the products and services that they integrate and as 
such have played a significant role in advancing technology integration. 

(19) Access to leading consumer IoT technology platforms and good performance on them is 
considered essential to compete. The findings of the sector inquiry show that, in practice, 
integration  processes  that  enable  interoperability  between  different  components  of  a 
consumer  IoT  ecosystem  are  largely  driven  by  the  leading  providers  of  smart  (mobile) 
device operating systems and voice assistants, namely Amazon, Google and Apple. These 
providers  govern  integration  with  their  products  by  imposing  certification  processes, 
which  they  control  unilaterally  in  most  cases.  The  various  specifications  and  types  of 
software9 that  enable  interoperability  with  the  leading  operating  systems  and/or  voice 
assistants  are  typically  made  available  to  third  parties  subject  to  the  conclusion  of 
agreements.  Such  agreements  are  usually  standardised  terms  and  conditions,  and  are 
generally  not  open  to  negotiation  with  counterparties,  with  the  exception  of  prominent 
players with strong negotiating power.  

8 For  the  purposes  of  this  sector  inquiry,  a  consumer  IoT  technology  platform  is  the  underlying  technological 
solution  for  integrating  consumer  IoT  services  and  smart  devices  in  a  connected  system,  in  particular  voice 
assistants and smart device operating systems. Consumer IoT players develop specific applications to make their 
services and devices compatible with these consumer IoT technology platforms.  
9  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  the  exchanges  of  data  and  functionalities  through  software  interfaces.  Parties  frequently 
make  software  development  kits  (SDKs)  and  hardware  technical  specifications  available  to  facilitate 
implementation. 

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5  Standards and the standard-setting process 

(20) Standards  in  the  consumer  IoT  sector  include  those  needed  to  integrate  and  connect 
devices and applications, as well as standards that ensure the quality and security of the 
IoT communications.  

(21) An important number of formal Standards Developing Organisations (SDOs), such as the 
the  European  Committee  for 
European  Committee  for  Standardization  (CEN), 
Electrotechnical  Standardization  (CENELEC) 10 ,  the  European  Telecommunications 
Standards  Institute  (ETSI)11,  as  well  as  private  partnerships/independent  alliances,  are 
currently  active  in  the  development  of  technologies  that  consumer  IoT  devices  and 
services  may  rely  on  to  ensure  and  facilitate  interoperability  in  the  sector.  The  leading 
players in  the consumer IoT sector are  typically  involved in  formal SDOs as well as in 
private partnerships/independent  alliances such  as  Matter12 or the Voice  Interoperability 
Initiative.  

(22) These  SDOs  and  private  partnerships/independent  alliances  apply  different  intellectual 
property rights (IPR) policies for the licensing of the specifications they develop. While 
many organisations, including the formal SDOs, stick to high-level definitions, typically 
limited to a general FRAND13 licensing commitment, 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 covenant14)15.  

(23)  The  findings  of  the  sector  inquiry  indicate  that  the  consumer  IoT  sector  is  a  highly 
heterogeneous  environment  when  it  comes  to  standards:  devices  and  services  rely  on  a 
combination  of  open  standards,  protocols,  and  proprietary 16  and  open  source 
technologies.  The  combination  of  standards,  proprietary  and  open  source  technologies 

10 CEN  and  CENELEC  are  two  distinct  private  non-profit  international  organisations.  They  are  also  official 
European  standardisation  organisations  recognised  by  the  EU  and  by  the  European  Free  Trade  Association 
(EFTA) as being responsible for developing and defining voluntary standards at 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.  
11  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 
small and large private companies, research bodies, academia, and government and public organisations.  
12 Previously known as the CHIP Project. 
13 Fair, reasonable, and non-discriminatory licensing. Licensing is also commonly granted on RAND (reasonable 
and non-discriminatory) terms.  
14 Agreement not to seek to enforce a patent or other intellectual property right against another party or parties. 
15 The most typical approaches of SDOs are (i) FRAND/RAND or other reasonable non-discriminatory licensing 
commitment,  (ii)  royalty-free  licensing  only,  typically  with  other  terms  being  (F)RAND,  (iii)  royalty-free 
licensing with possibility to opt out and (iv) commitment to either FRAND/RAND, or royalty-free licensing, or 
non-assertion covenant. 
16 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.  

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largely  varies  depending  on  the  different  technology  layers  incorporated  in  devices  and 
software programmes. 

(24) Typically, standardised technologies in the consumer IoT sector still prevail at the level 
of  basic  enabling  technologies  (such  as  connectivity  standards  like  WiFi  or  Bluetooth), 
while  formal  standards  are  currently  not  in  a  position  to  effectively  compete  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.  Moreover,  certain  proprietary  technologies  in  the  areas  covered  by 
the  sector  inquiry  have  been  highlighted  as  de  facto  standards,  including  certain  voice 
assistants,  smart  home  devices  and  wearable  devices.  Nearly  all  respondents  find  full 
interoperability with these technologies and ecosystems essential to compete.  

(25) However,  the  owners  of  these  ‘must-have’  technologies  generally  stress  that  their 
proprietary  nature  does  not  mean  that  any  IP  rights  would  prevent  third  parties  from 
developing and/or implementing technologies with comparable functionality. 

(26) In  terms  of  the  future  evolution  of  standards  in  the  consumer  IoT  sector,  stakeholders’ 
views differ. Some call for further standardisation, while others argue that standardisation 
is not necessarily the best solution for interoperability in this sector17. 

6  Consumer IoT data: user- and business-related aspects 

(27) Manufacturers and providers of consumer IoT products and services collect a wide range 
of data, through the manual input of a user, in the context of the use of a specific device 
or service, or automatically, for example as part of them functioning in the background. 

(28) The  types  of  data  collected  vary  per  consumer  IoT  segment.  This  data  can  include 
personal or other user data, whether in the form of information input by users, or of user 
behaviour  information  collected  by  operating  the  device  or  accessing  the  service.  In 
addition, smart devices and consumer  IoT services gather data about how they  function 
themselves  and  about  their  surroundings.  For  example,  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. In 
many cases, the data collected falls under the definition of personal data for the purposes 
of  the  EU  General  Data  Protection  Regulation  (GDPR)18.  The  collection  of  data  from 

17  Approximately  60%  of  the  respondents  to  the  different  questionnaires  express  the  need  for  further 
standardisation  in  consumer  IoT  (such  as  typically  the  telecommunication  service  providers,  but  also  various 
smart  device  manufacturers  and  IoT  service  providers),  while  approximately  40%  would  not  prioritise  further 
standardisation over proprietary developments (such as typically the owners of major proprietary technologies, 
but also various other respondents). 
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. 

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terminal  equipment,  that  is  a  device  connected  to  a  public  communications  network,  is 
subject to the rules of Article 5(3) of the ePrivacy Directive19.  

(29) The findings of the sector inquiry show that companies give users access to their data in 
different  ways  (for  example  via  user  accounts,  user  interfaces,  or  via  specific  tools  or 
technology),  depending  on  factors  such  as  the  type  of  smart  device  or  consumer  IoT 
service  that  the  company  provides  and  its  intended  use.  The  majority  of  consumer  IoT 
service providers and smart device manufacturers surveyed indicate that they allow users 
to  access  and  download  their  personal  data  so  they  can  port  them  to  other  service 
providers and device manufacturers under Article 20 GDPR.   

(30) A  few  providers  of  consumer  IoT  services  also  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, in line with Article 20(2) GDPR. 
However, such direct portability of data between different companies (or data controllers) 
is not common. 

(31) In particular, data portability possibilities appear to be more limited for data collected via 
voice  assistants.  One  reason  put  forward  is  that  voice  commands  may  not  be  easily 
imported  into  other  voice  assistants.  Moreover,  several  respondents  explain  that  voice 
assistant providers are part of their own ecosystem and limit the transfer and portability 
of data outside of this ecosystem. 

(32) With  regard  to  business-related  aspects 20  of  consumer  IoT  data,  the  sector  inquiry 
findings indicate that data flows between the different parts of a consumer IoT ecosystem 
typically  have  a  very  functional  nature.  They  are  designed  to  make  the  system  work 
properly for the user, for example by processing and executing a voice command. 

(33) Other types of data that may be shared between companies include non-aggregated data 
in  relation  to  errors  and  aggregate  performance  data.  When  data  collected  by  one 
company can be accessed by a third party, this data is usually made available via central 
dashboards. When personal data is shared, for example by linking several user accounts, 
the consent of that user is required.  

(34) Even  in  the  absence  of  active  data  sharing,  some  consumer  IoT  players  have  access  to 
data in relation to a third party’s activities. These are typically the smart device operating 
system  provider  and/or  the  voice  assistant  provider,  which  are  able  to  collect  certain 

19  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. 
20 Such business-related aspects include (i) the circumstances in which data  flows  between third-party devices, 
services  and/or  voice  assistants,  (ii)  how  the  data  is  processed  and  what  format  it  takes,  (iii)  the  purposes  for 
which the respondent companies use the data, and (iv) whether and to what extent respondents monetise the data 
they collect. 

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information about a user’s interaction with for example a consumer IoT service by virtue 
of their position in a consumer IoT ecosystem. 

(35) There are no industry-wide standardised formats for collecting and sharing data between 
consumer  IoT  companies.  Data  is  typically  processed  either  in  a  company-specific 
proprietary  format  or  in  a  non-standardised  but  commonly  used  non-proprietary  file 
format.  The  APIs21 and/or  SDKs22   of  one  company  (for  example  the  voice  assistant 
provider)  often  determine  which  data  formats  should  be  used  and  may  also  contain 
relevant data processing and data sharing provisions.  

(36) Several contractual provisions seem to govern business-related aspects of consumer IoT 
data.  Such  agreements  may  include  clauses  in  relation  to  personal  data  protection, 
processing,  storage  and  use.  Each  company’s  privacy  policy  is  also  relevant  for  data 
(flow)  management.  Overall,  the  findings  of  the  sector  inquiry  indicate  that  certain 
consumer  IoT  players,  in  particular  the  leading  voice  assistant  providers,  can  impose 
standard  terms  and  conditions  that  limit  data  access  and  use  for  third  parties,  while 
themselves having extensive data access and associated use possibilities. 

(37) 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).  

(38) Respondents  report  that  they  do  not  charge  third  parties  for  making  data  available. 
However, they refer to digital advertising and user profiling as 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. However, 
respondents  indicate  that  this  business  opportunity  is  not  very  advanced  yet  and  would 
need to comply with data protection rules.   

7  Main competition-related and other concerns identified 

(39) The  responses  to  the  sector  inquiry  point  to  a  variety  of  concerns  about  practices  that 
could potentially have a negative impact on competition, innovation and consumer choice 
in the consumer IoT sector in the EU.  

(40) First, in relation to interoperability, respondents have raised specific concerns in relation 
to two main issues. Firstly, integration processes are largely determined by the presence 
of a few providers of leading proprietary voice assistants and operating systems relevant 

21 See footnote 9. 
22 See footnote 9. 

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for  the  consumer  IoT  sector.  These  companies  are  able  to  determine  independently  the 
requirements needed to achieve interoperability with their proprietary technology through 
unilaterally  governed  terms  and  conditions,  technical  requirements  and  certification 
processes. Secondly and in relation to this, by unilaterally governing the interoperability 
and integration processes, they 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. 

(41) Second,  respondents  to  the  various  questionnaires  identified  concerns  in  relation  to 
standardisation. These relate in particular to the standardisation process, SDOs’ rules on 
membership  and  participation,  standard  essential  patent23 declarations,  IPR  policies  and 
licensing  terms.  While  these  concerns  are  not  specific  to  the  segments  covered  by  the 
sector  inquiry,  the  complex  standardisation  landscape  together  with  a  similarly 
fragmented  landscape  of  proprietary  technologies  is  reported  to  adversely  affect  the 
growth potential of consumer  IoT segments. Overall, respondents  express  the view that 
major technology companies mostly take the lead when it comes to technology solutions. 
This may enable them to leverage their market power as patent owners into downstream 
markets and may lock users into proprietary ecosystems. This may lead to a perpetuation 
of  a  fragmented  technology  landscape  and  increase  the  barriers  to  inter-system 
communication.  In  addition,  many  respondents  suggest  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. 

(42) Third, in relation to data, smart device manufacturers and consumer IoT service providers 
express concerns about the position of voice assistants at the centre of data collection in 
the consumer IoT. One particular concern is that voice assistant providers can control not 
only data flows and user relationships, but are also able to leverage these advantages into 
adjacent  markets,  that  is  the  provision  of  other  consumer  IoT  products  and  services. 
Moreover, third-party manufacturers and service providers consider that the limits on the 
data  they  receive  from  the  leading  voice  assistant  providers  hinder  them  in  their  own 
business development.  

(43) In terms of data sharing, it is important to take privacy considerations into account as a 
means  to  maintain  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. 

(44) In  addition,  this  privileged  access  to  huge  data  volumes  might  enable  leading  voice 
assistant  providers  to  improve  the  quality  of  their  voice  assistant/voice  recognition 
technology more easily via algorithmic training and machine learning. Not having access 
to such data can raise barriers to new entrants on the voice assistant market and hinder the 
development  of  smaller  competitors  on  that  market.  As  a  final  data-related  concern,  a 

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

10 

 
 
                                                 
number  of  respondents  indicated  that  the  identified  data  monetisation  opportunities  are 
expected  to  benefit  the  leading  consumer  IoT  technology  platform  providers  and,  in 
particular, the few consumer IoT players that are already present in the digital advertising 
market. 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. 

(45) Fourth,  some  respondents  have  raised  a  number  of  potential  competition  concerns  in 
relation  to  the  out-of-the-box  features  that  are  available  to  users.  The  findings  of  the 
sector inquiry 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. While such practices may have potential benefits for users (for example 
in terms of convenience), they may  also determine to  a large extent the discoverability, 
visibility and findability of a consumer IoT service, and give competitive advantages to 
the  provider  of  a  service  that  is  pre-installed,  set  as  a  default,  or  otherwise  given 
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.  

(46) Fifth,  concerns  have  been  raised  over  attempts  by  leading  voice  assistant  providers  to 
secure  exclusivity  of  their  voice  assistant  on  certain  smart  devices  or  to  prevent  the 
concurrent  use  of  voice  assistants.  Some  smart  device  manufacturers  also  report  that 
voice assistant providers will only license their voice assistants together with other types 
of software, technology or applications and not on a stand-alone basis.  

(47) Sixth, respondents have raised several concerns over 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. A first set of concerns relates to the 
control these providers have over the user relationship and user experience.  As a result, 
respondents  fear  that  they  will  lose  their  brand  recognition  and  their  direct  relationship 
with users. A second set of concerns relates to how these providers control the access to 
consumer  IoT  services  and  related  data.  A  third  set  of  concerns  relates  to  technical 
performance and processes. For example, respondents indicate that they are dependent on 
the technical support provided by voice assistants and operating system providers as well 
as  the  timely  advance  notice  of  software  updates  and  other  updates.  By  contrast,  the 
leading  providers  of  consumer  IoT  technology  platforms  fully  control  the  experience 
relating  to  their  first-party  products  and  services  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 issues.  

(48) Furthermore,  the  results  of  the  sector  inquiry  show  that  the  relevant  consumer  IoT 
agreements contain a variety of clauses, for example in relation to termination. According 

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to  respondents,  these  amplify  commercial  imbalances  between  smaller  players  and  the 
leading consumer IoT technology platform providers. 

8  Policy conclusions on the consumer IoT sector inquiry 

(49) The findings of the sector inquiry confirm the rapid growth of consumer IoT markets, but 
also  identify potential concerns put  forward by the respondents  to  the  questionnaires as 
well as in the submissions to the public consultation.  

(50) In terms of potential follow-up action to address  those concerns, several submissions to 
the public consultation have emphasised the need for both competition law enforcement 
and regulation in relation to the identified concerns.  

(51) Where  the  concerns  identified  appear  to  be  the  result  of  potentially  anti-competitive 
practices, the Commission may decide to open case-specific investigations under Articles 
101  and  102  Treaty  on  the  Functioning  of  the  European  Union.  Any  competition 
enforcement  measure  stemming  from  the  sector  inquiry  would  have  to  be  based  on  a 
case-by-case assessment. 

(52) The  results  of  the  sector  inquiry  also  inform  the  Commission’s  further  work  in 
implementing its digital strategy24. In particular, they will contribute to the Commission’s 
standardisation  strategy25 and  upcoming  legislative  and  non-legislative  initiatives  aimed 
at clarifying and improving the standard essential patent (SEP) framework26. The findings 
of the sector inquiry will also feed into the ongoing legislative debate on the scope of the 
Digital Markets Act27 (DMA) and specifically into some of the obligations proposed. 

of 

the 

Office 

European 

Publications 

24 The sector inquiry was announced in the Commission’s  Communication on Shaping Europe’s digital  future,  
Luxembourg, 
from 
https://ec.europa.eu/info/sites/default/files/communication-shaping-europes-digital-future-feb2020_en_4.pdf 
25 In  June  2021,  the  Commission  published  its  roadmap  for  the  upcoming  standardisation  strategy,  retrievable 
from  https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13099-Standardisation-strategy_en 
26  For  additional  information  on  these  initiatives:  https://ec.europa.eu/growth/industry/policy/intellectual-
property/patents/standards_en 
27  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 

15  December 

retrievable 

retrievable 

Union, 

2020, 

from 

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