Vestager launches investigation into internet of things

European Commission press conference on sector inquiry on competition [EPA-EFE/STEPHANIE LECOCQ]

The European Commission has launched a broad antitrust inquiry into internet of things technologies such as voice assistants and connected mobile devices, the EU’s competition chief Margrethe Vestager announced on Thursday (16 July).

The probe will hone in on consumer products in the internet of things ecosystem, seeking to unearth details on how such devices collect and monetise the data exchanged as part of their use.

Vestager noted that voice assistants, including Apple’s Siri, Amazon’s Alexa, and Google Assistant will be examined as part of the investigation.

“One of the key issues here is data. Voice assistance and smart devices can collect vast amounts of data about our habits,” she told reporters on Thursday. “There is a risk that companies can misuse this data that they collect through such devices to cement their position in the marketplace.”

“They might even misuse their knowledge of how we access our services, to enter the market of those services and take it over,” she added.

The probe will also investigate smart home appliances and wearable technologies to see whether or not the data harvested as part of their use offers companies an unfair market advantage.

“The trouble is that competition in digital markets can be fragile once big companies misuse their power,” Vestager noted, adding that such situations can result in market tipping, a situation where one company obtains high monopoly profits and market share, creating an anti-competitive environment for other firms.

“We’ve seen that happen before. If we don’t act in good time, there is a serious risk that this will happen again, with the Internet of Things,” the EU’s competition chief said.

Sector inquiries are launched when the Commission judges market distortions to potentially occur as a result of unfair practices that could breach EU competition rules.

As part of the investigation, the Commission will seek feedback from 400 companies across Europe, Asia, and America, in a bid to understand what the firms do with the data retrieved in the use of their products.

A key question for the Commission to address is also the extent to which such devices are interoperable, maintaining a level-playing field for new market entrants.

Commission charts new competition tool 'fit for the digital age'

A new competition tool ‘fit for the digital age’ is set to be unveiled by the European Commission before the end of this year, which has prompted stakeholders to begin analysing the wider impact that it could have on fostering competition across the EU’s market economies.

New Competition Tool

More broadly, earlier this year the Commission announced they would unveil a new competition tool ‘fit for the digital age’ before the close of 2020.

The tool will be designed to mitigate structural risks in markets as well as intervene in situations whereby a market is close to tipping.

The Commission envisages that the tool would impose structural remedies to competition imbalances, but will not rule on infringements or establish fines.

While the Commission’s DG COMP is pitching the new tool as a general-purpose instrument, its application is likely to be most evident across the platform economy – digital markets harbouring many of the characteristics such as ‘extreme economies of scale and scope, strong network effects, zero pricing and data dependency’ that the Commission would like to address.

Vestager noted in May that the tool would feature prominently in the EU’s package of reforms which will attempt to regulate the online ecosystem.

[Edited by Zoran Radosavljevic]

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