Ofcom to probe smart-device markets

  • September 28, 2022
  • William Payne

UK telecoms regulator Ofcom is launching a market study of smart devices to see if the market in such devices is working efficiently and is of the maximum benefit to businesses and consumers in the United Kingdom. The study of smart devices will focus in particular on how they interact with cloud services, and with messaging and conferencing services, and whether there are any distortions in the market caused by these interactions that might affect either consumers or businesses.

The market study will be conducted under the terms of the UK Enterprise Act 2002, which covers competition policy, competitiveness and pricing.

The regulator is concerned to examine IoT and smart devices in the light of the convergence of online and traditional networks.

The study into smart devices forms part of a larger study into online services, including video and encrypted messaging services, to assess how effectively the market for online services is functioning, especially those services that are becoming essential to business in the light of greater home and remote working in the aftermath of the Covid-19 pandemic.

The regulator is also launching a market study into the market positioning and economic efficiency of Amazon, Microsoft and Google in providing cloud services. The UK cloud services market is worth £15 billion. Ofcom’s concern over cloud provision is that it has now become such an essential part of business and critical infrastructure in the United Kingdom in the last two years that a market review is required to study its market efficiency and functioning.

Ofcom will probably adopt a somewhat different approach to that adopted by the EU which passed the Digital Markets Act and the Digital Services Act in July. These acts attempt to regulate what it terms “gatekeepers” with aggressive ex-ante legislation including immediate recourse to structural remedies.

According to Ofcom, its study will formally assess how well markets are working. They will examine the strength of competition and the position major vendors hold in each market. The regulator will also consider any market features that might limit innovation and growth by making it difficult for other companies to enter the market and expand their share.

Each market study is likely to include invitations to comment on the market from market players and other interested parties. The regulator will also consult on its initial findings, and will publish a final report, together with any recommendation, typically within twelve months.