In the name of data protection and ensuring some level of alertness towards consumer data, the European Commission (EC) launched an inquiry into the consumer IoT sector, fearing the nascent market may already be subject to competitive distortion.
In a statement, the EC said the probe was an early-stage move designed to inform its future policy. Margrethe Vestager, EC VP and Competition Commissioner explained the sector is “expected to grow significantly in the coming years and become commonplace in the daily lives of European consumers”.
The focus will be on products including smart home appliances and wearables. Vestager explained the key to success in the sector appeared to depend on gathering “large amounts of user data”, meaning the EC must ensure “market players are not using their control over such data to distort competition, or otherwise close-off these markets for competitors”.
Early indications suggested such competitive distortion is already underway, the EC stated, citing “restrictions of data access and interoperability, as well as certain forms of self-preferencing and practices linked to the use of proprietary standards”.
“IoT ecosystems are often characterised by strong network effects and economies of scale, which might lead to the fast emergence of dominant digital ecosystems and gatekeepers, and might present tipping risks.”
The EC warned if competition concerns are identified, it could open investigations to ensure compliance to EU rules, to prevent abuse of market dominance and restrictive business practices.
It plans to publish final findings in mid-2022.