Today the Bundeskartellamt has published the final report on its sector inquiry into smart TVs. Smart TVs are web-enabled TV sets allowing consumers to use many more information channels, functions and online services like video streaming in addition to the traditional television programme. They are representative of many other devices in the context of the so-called Internet of Things (IoT).

Andreas Mundt, President of the Bundeskartellamt: “It is essential to help users of smart TVs – and IoT devices obtain considerably more general control over their own data. Almost every new TV set sold today is a smart TV. Unlike conventional TV sets smart TVs feature a wide variety of functions consumers can use in their digital everyday lives. However, consumers often leave digital traces when using the smart functions. The recipients of the data use them for business purposes, more often than not without duly informing the consumers about such use beforehand. This ought to change.”

The sector inquiry has shown that smart TVs can collect personal data in many forms. Companies have been collecting data to varying extents so far. A person’s individual viewing habits, app use, surfing and click behaviour or biometric data like voice or cursor movements as well as contents played via the TV set can be recorded and evaluated. Consumers can often prevent the collection of such detailed personal user data and, possibly, their use for personalised marketing by setting up their TV sets accordingly.

It is either not possible at all or very difficult for consumers to find information on the use of their data prior to purchasing the TV set. Once the purchase has been made, consumers usually consent to the data protection provisions and terms of use displayed during the initial setup of their device as they do not see any alternatives.

The Bundeskartellamt has established that almost all smart TV manufacturers active on the German market use privacy policies that have serious shortcomings in terms of transparency and thus violate the General Data Protection Regulation (GDPR). Consumers find it especially difficult to understand privacy policies because they apply to a large variety of services and use processes. This “one fits all” approach leaves consumers deprived of reliable information on what type of personal data is processed, which use processes trigger which type of data processing, which data are transferred to third parties and for how long their data are stored. As a consequence, consumers cannot change their use behaviour to reduce the amount of personal data shared to a minimum.

The Bundeskartellamt also examined software data security risks of smart TVs. After past reports of shortcomings the sector inquiry has shown that manufacturers’ efforts to ensure a high level of data security vary. A lot of manufactures do not ensure that their devices’ security standards are maintained through software updates in the years after the purchase. No company provides reliable information on how long security updates will be available for its products. However, this information is indispensable for consumers to assess the time period during which they can use the device without risks. With regard to software updates the legislator should improve the consumers’ legal position, especially towards manufacturers.

The Bundeskartellamt also analysed further problem areas affecting consumers using IoT products from a legal perspective, for example the legality of advertisements in the TV portal.

Andreas Mundt continued: “Data protection must become a real competition parameter for smart TVs and other communication-enabled IoT devices. If consumers are effectively able to assess the quality of data protection and security of a device, they are also able to consciously demand devices with better data protection. The Bundeskartellamt recommends decision-makers, companies and scientists to work towards meaningful, comprehensible and easy-to-access data protection information that is available prior to the purchase of a device.”

Based on its report the Bundeskartellamt recommends:

• Consumers should find even better and more to-the-point information about how smart TVs and IoT devices in general can extensively collect and process data.
• Liability issues arising from the interaction of various players in the IoT business should be clarified through corresponding legal regulations.
• Consumers should have a clearly defined legal claim to software updates, also towards the manufacturer.
• The responsible companies should be obliged to provide necessary information (product information, data protection, setting options, etc.) in a clearer and simpler way.
• It should be made easier for consumers to take data protection standards into account when making a buying decision, in particular through easily understandable pictograms.

The Bundeskartellamt can carry out investigations in the area of consumer protection and identify shortcomings. However, it does not have the power to order the termination of infringements by official decree (see press release of 12 June 2017).

In December 2017 the Bundeskartellamt started the sector inquiry into smart TVs based on its new competencies in the area of consumer protection, which it has held since mid-2017 (see press release of 13 December 2017). Its investigations concerned approximately 20 providers selling smart TVs in Germany under their own brand names. The Bundeskartellamt also consulted with specialised business practitioners and academic experts.

The report is available (in German) here.

In addition, the main content of the Smart TV sector investigation is illustrated on the following slides:

• Consumer protection and smart TVs - An investigation by the Bundeskartellamt
  
  
• Consumer protection and smart TVs - Recommendations of the Bundeskartellamt
  
  
• Buying and using smart TVs - Tips for consumers