The vast and intelligent connection of physical devices, known as the Internet of Things (IoT), is increasingly bolstering productivity and communication levels across businesses globally. This also enables various numbers of functions in enterprises. The augmenting use of IoT devices have taken both consumers and organizations by storm, unfortunately, it also possesses specific security concerns to them. Rather, an organization can only reap the promise of IoT’s capabilities if it contemplates the security elements as a vital component of their IoT deployment.

IoT-powered solutions cover a large area of businesses and commercial applications. Their use cases driven by the ability to connect, monitor, and control tens of millions of Internet-connected devices, exchange information, and take autonomous action based on continuous input. These applications and solutions are evident across diverse industries, ranging from manufacturing, healthcare, and transportation to oil and gas, utilities, and energy.

Many IoT devices encompass back doors and software flaws that make them vulnerable and easy to hack. On the other hand, several companies can face challenges of storing and managing the troves of data that these devices produce. In this case, enterprises need to figure out a way to store, track, assess and make sense of the vast amounts of data that will be generated. Thus, it will require a host of innovative solutions to meet these challenges and capitalize on the coming opportunities.

While it is anticipated that the world will have 43 billion IoT-connected devices by 2023, the technological advancements will make it easier to implement, opening the door for a wider variety of companies to benefit from its applications. Large businesses have already begun to invest their sizable resources in IoT technologies over the years ago. This level of uptake results in an impetus of the developing technologies that underpin the IoT.

Moreover, advanced principal technologies and a proliferation of devices have also assisted in fuelling the growth of IoT solutions. It is anticipated that investments in this technology will grow by 13.6 percent per year through 2022. And thanks to new sensors, more computing power, and reliable mobile connectivity, further growth will be evident in IoT in years to come.

An IoT platform not only serves as a middleware that connects devices and sensors but also delivers a large number of functions such as controllers and sensors, a communication network, a gateway device, interpreting and data analysis software along with end application services. The market for IoT will continue to grow as existing IT devices will need to be linked to the technology.

As a whole, IoT has an assortment of applications in enterprise settings, and its adoption is not limited to large companies. Early adopters have shifted beyond pilots to scale IoT solutions across their businesses. In fact, the technology has already made a significant rise in a number of applications across diverse sectors including Industry 4.0, connected cars, smart cities, smart homes, and digital health. IoT has been one such technology that is going to have an enormous impact not only today but also in the future.

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The European Commission today launched an antitrust competition inquiry into the sector of Internet of Things (IoT) for consumer-related products and services in the European Union.

The sector inquiry will focus on consumer-related products and services that are connected to a network and can be controlled at a distance, for example via a voice assistant or mobile device. These include smart home appliances and wearable devices. Knowledge about the market gained through the inquiry will contribute to the Commission’s enforcement of competition law in this sector.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The consumer Internet of Things is expected to grow significantly in the coming years and become commonplace in the daily lives of European consumers. Imagine a smart fridge making your grocery list, you pulling up that grocery list onto your smart device and order a delivery from a shop that sends the groceries to your door that unlocks automatically with a word. The possibilities seem endless. But access to large amounts of user data appears to be the key for success in this sector, so we have to make sure that market players are not using their control over such data to distort competition, or otherwise close off these markets for competitors.This sector inquiry will help us better understand the nature and likely effects of the possible competition problems in this sector.”

Despite the relatively early stage of development of the sector for the Internet of Things for consumer-related products and services in the European Union, there are indications that certain company practices may structurally distort competition. In particular, there are indications relating to restrictions of data access and interoperability, as well as certain forms of self-preferencing and practices linked to the use of proprietary standards. Internet of Things 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.

Therefore, through this competition sector inquiry, the Commission will gather market information to better understand the nature, prevalence and effects of these potential competition issues, and to assess them in light of EU antitrust rules.

The sector inquiry will cover products such as wearable devices (e.g. smart watches or fitness trackers) and connected consumer devices used in the smart home context, such as fridges, washing machines, smart TVs, smart speakers and lighting systems. The sector inquiry will also collect information about the services available via smart devices, such as music and video streaming services and about the voice assistants used to access them.

If, after analysing the results, the Commission identified specific competition concerns, it could open case investigations to ensure compliance with EU rules on restrictive business practices and abuse of dominant market positions (Articles 101 and 102 of the Treaty on the Functioning of the European Union – TFEU).

The inquiry complements other actions launched within the framework of the Commission’s digital strategy, in particular regulatory initiatives related to artificial intelligence (AI), data and digital platforms.

Next steps

In the coming weeks, the Commission will send requests for information to a range of players active in the Internet of Things for consumer-related products and services throughout the EU. The companies concerned may include, for example, smart device manufacturers, software developers and related service providers. Under EU antitrust rules the Commission can require companies and trade associations to supply information, documents or statements as part of a sector inquiry.

The Commission expects to publish a preliminary report on the replies for consultation in the spring of 2021. The final report would follow in the summer of 2022.

For further background, please see the sector inquiry website.

This sector inquiry follows a number of other antitrust sector inquiries carried out in recent years in fields including financial services, energy pharmaceuticals, and e-commerce. More information can be found on DG Competition’s sector inquiry website.

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