Editor’s Blog: Produced in collaboration with the EU Buzz team
Interconnected systems such as phones, smart speakers, lighting fixtures, thermostats, appliances, home security systems and cameras, and even cars today often use our personal data to operate. Many organisations are sharing this personal data with governments and other institutions, and with businesses, without any international standards nor common rules of privacy and security. As a result, the European Commission is coming under increasing pressure to review the situation and address consumer protection.
Like it or not, we are all becoming more and more inextricably linked to physical objects around us through technology. This concept is known as the “Internet of things (IoT)” and is a network of physical objects which are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet.
Worldwide consumer IoT revenue is predicted to increase from approximately €107.2 billion in 2019 to around €408.7 billion by 2030 and has increasingly become part of everyday life for EU citizens. In 2020, 51% of individuals in the EU reported that they used the internet on a smart TV, games console, home audio system, or smart speaker. 11% of EU citizens surveyed in 2020 said they had used a voice assistant.
Voice assistants are key gateways to our new smart homes, allowing companies to establish interoperability and to build a smart home environment based on products from different manufacturers. The number of voice assistants in use worldwide is expected to double between 2020 and 2024, from 4.2 billion to 8.4 billion. However, whilst voice assistants enable users to access a broad range of functionalities in response to voice commands, civil society organisations have raised their concerns with respect to the intrusion, capture of personal data, and even potential spying activities regarding the “listening” capabilities of these systems.
The IoT has been welcomed and encouraged by the European Commission despite the European Union having little control over the developments and data which drive the complexities behind the convergence of multiple technologies, real-time analytics, machine learning, ubiquitous computing, commodity sensors, and embedded systems. In theory, the lives of citizens lives in Europe should become more efficient and “smarter” through these embedded systems, wireless sensor networks, control systems, and automation which power the IoT, but in practice there is silence on the disclosure of what is really happening behind these networks.
As part of the European Commission’s Digital Strategy it has carried out a Sector Inquiry to better understand the consumer IoT sector, its competitive landscape, developing trends and potential competition issues. The main respondents to the Sector Inquiry were large corporations, located across Europe, the US and Asia, highlighting the dominance of a limited number of operators in the sector. The leading players Google, Amazon and Apple control the market by building their own ecosystems, selecting preferred partners and having access to a large number of users through brand recognition. The Sector Inquiry findings noted that the cost of the technology investment and the competitive situation in the sector, were prohibitive to new entrants and smaller companies – Especially true for voice assistants, “the cost of developing and operating general-purpose voice assistants is almost prohibitively high and there is a general belief that there will not be new entrants in the short term.”
The Preliminary Report found that restrictive measures for consumers and businesses created somewhat of a private club operation: Exclusivity and tying concerns in relation to voice assistants, as well as practices limiting the possibility to use different voice assistants on the same smart device were raised. Several concerns regarding the role of the leading providers of voice assistants and smart device operating systems as intermediaries between the user and smart devices or consumer IoT services, including their control over the user relationship were also highlighted. In this context, concerns were mentioned about the pre-installation, default-setting and prominent placement of consumer IoT services on smart devices or in relation to voice assistants.
Furthermore, data concerns were reported, including the access to and accumulation of large amounts of data by voice assistant providers, which allegedly enables them not only to control the data flows and user relationships but also to leverage into adjacent markets. The lack of interoperability due to technology fragmentation, the lack of common standards and the prevalence of proprietary technology, as well as the control over interoperability and integration processes by a few providers of voice assistants and operating systems were flagged up as areas for the European Commission to monitor.
Whilst there is no monopoly for the IoT, and whilst we all welcome the “smart” applications which have allowed us to individualise our lives as we would want, the European Commission, and indeed international bodies, have a responsibility to ensure that the users of such technologies are protected and that consumer products are safe, as well as ensuring competition and innovation in the sector is not stifled or eliminated. In order to address its mandate in this field, the European Commission will need to increase its speed of working to match the velocity of transformational change witnessed in the sphere of the Internet of Things, otherwise legislation introduced by the European Union will be outdated even before being implemented.