EU Investigates Voice AI Competition Concerns

EU Scrutinizes AI Voice Assistants and IoT Competition

For nearly a year, the European Union has been investigating the competitive effects of AI-driven voice assistants and interconnected Internet of Things (IoT) technologies. Today, the EU has released an initial report outlining potential issues that will guide future digital policy development.

Digital Services Act and Gatekeeper Platforms

Legislation introduced late last year is poised to impose regulations on so-called “gatekeeper” platforms operating within the EU. This forthcoming pan-EU Digital Services Act will detail a list of acceptable and unacceptable business practices for dominant, intermediary platforms.

However, technological advancements are continuous. Margrethe Vestager, the EU’s competition chief, has been monitoring AI voice assistant technologies for some time, expressing concerns about the challenges to user choice as early as 2019. She noted her department was working to understand how data access would reshape the marketplace.

Sectoral Inquiry into IoT Competition

A concrete step was taken last July with the announcement of a sectoral inquiry to thoroughly examine competition concerns within the IoT sector.

The Commission has now published a preliminary report, based on surveys of over 200 companies in consumer IoT product and service markets across Europe, Asia, and the U.S. Further feedback is being solicited on the findings (until September 1st) before a final report is issued in the first half of next year.

Key Competition Concerns Identified

The main areas of potential competition concern include:

• Exclusivity and tying practices related to voice assistants, limiting the use of different voice assistants on a single smart device.
• The intermediary role of voice assistants and mobile operating systems between users and the broader device and services market, potentially allowing platform owners to control user relationships and impact the visibility of competing IoT services.

Survey participants indicated that platform and voice assistant operators gain substantial access to user data, including information on interactions with third-party smart devices and IoT services.

Data Access and Leverage: The Commission states that this access to extensive data could provide voice assistant providers with advantages in improving their services and market position, as well as facilitating expansion into related markets.

This concern mirrors an ongoing EU antitrust investigation into Amazon’s use of data from third-party merchants on its e-commerce marketplace, which the Commission believes may be illegally distorting online retail competition.

Interoperability and Control

A lack of interoperability in the consumer IoT sector is another flagged concern. It’s suggested that a few providers of voice assistants and operating systems unilaterally control integration processes and can limit the functionality of third-party devices compared to their own.

While not entirely unexpected, the Commission’s proactive approach to identifying and addressing competitive risks at this relatively early stage of voice assistant AI adoption is noteworthy.

Growth of Voice Assistant Technology

The Commission notes that the use of voice assistant technology is growing globally, projected to double between 2020 and 2024 (from 4.2 billion to 8.4 billion). However, only 11% of EU citizens surveyed last year had used a voice assistant, according to Eurostat data.

EU lawmakers have learned from past failures to adequately regulate digital developments and contain the dominance of tech giants. These giants—Amazon (Alexa), Google (Google Assistant), and Apple (Siri)—currently dominate the voice AI market, making the competitive risks apparent.

Challenges and Potential Remedies

Addressing competitive lock-in around voice AIs, which often rely on user convenience and branding, presents a challenge. Enforcing interoperability could increase complexity and potentially raise privacy concerns.

Empowering users with more control over their consumer technology is a positive step, provided that platform presentations of choices are not manipulative.

While there are potential pitfalls in the IoT sector, proactive regulation could create opportunities for startups and smaller players, preventing dominant platforms from establishing all the defaults.

Vestager’s Statement

In a statement, Vestager said: “When we launched this sector inquiry, we were concerned that there might be a risk of gatekeepers emerging in this sector. We were worried that they could use their power to harm competition, to the detriment of developing businesses and consumers. From the first results published today, it appears that many in the sector share our concerns. And fair competition is needed to make the most of the great potential of the Internet of Things for consumers in their daily lives. This analysis will feed into our future enforcement and regulatory action, so we look forward to receiving further feedback from all interested stakeholders in the coming months.”

The full sectoral report is available here.

Potential for New Competition Cases

Update: During a speech discussing the findings, Vestager indicated that some practices could lead to new competition cases, pending confirmation. She emphasized that it’s still early in the process and that the Commission needs to further understand the extent of the concerns.

“So far, the results of the sector enquiry confirm the central role of operating systems and voice assistants in the interconnection of different smart devices and services. Respondents flag that this may give providers of operating systems and voice assistants opportunities to engage in behaviors that negatively affect competition,” she also said. “In the EU, Google Assistant, Amazon’s Alexa and Apple’s Siri are the leading voice assistants. In addition, Google, Amazon and Apple provide the main operating systems for smart home and wearable devices, they offer digital services and they manufacture smart devices.”

“In practice, these companies determine how the different devices and services can communicate and inter-operate with one another. In addition, voice assistants learn a lot about their users. Smart devices and Internet of Things services generate a huge amount of data about what we do in our homes.”

“Many of the issues identified so far, such as access to data, access to users or barriers to switching, are familiar themes from our enforcement work in digital markets,” she added. “In fact, a number of the practices reported in the enquiry feature in the Do’s and Don’ts of the Commission’s proposal for the Digital Markets Act. With today’s preliminary findings and the future work to be done in the coming months, the sector enquiry will certainly contribute to the debate on the scope of the Digital Markets Act.”

“Through competition enforcement and complementary legislative action, we aim at creating a digital economy that works for everyone. To do so, we must make sure that our digital markets, including the consumer Internet of Things, are open and fair for consumers, with room for businesses of all sizes to innovate and grow.”

Update: Amazon provided the following statement in response to the Commission’s report: