Europe IoT Security Market Size, Share and Forecast Trends - Growth Analysis and Outlook Report (2026-2035)

European IoT security is increasingly being shaped by mandatory cybersecurity requirements rather than voluntary best practices. This is due to the existence of the EU Cyber Resilience Act which sets cybersecurity requirements for any product containing digital components throughout its lifespan, with the obligations set forth taking effect from 11 December 2027. In addition to this, ENISA runs the CRA Single Reporting Platform to report actively exploited vulnerabilities and incidents that occur in connection with the use of connected products. NIS2 is further strengthening this environment for organizations working within critical sectors through cybersecurity requirements and reporting obligations. According to ENISA's NIS360 assessment conducted in 2026, there was an improvement in cybersecurity maturity in EU critical sectors, although progress remained uneven because of skills shortages and differences between sectors and organisations. These developments are encouraging IoT manufacturers and operators to incorporate security into product design, vulnerability management, software updates and lifecycle support.

European organisations are increasingly directing cybersecurity expenditure toward specialised technologies and external services, creating opportunities for IoT security platforms, monitoring tools and managed protection. ENISA's 2025 NIS Investments study, based on 1,080 organisations across EU Member States and high-criticality sectors, found that information-security spending remained around 9% of IT budgets, with a median of €1.5 million. The study also found that investment was shifting from internal personnel toward technology and outsourcing. Compliance was identified as the main investment consideration by 70% of surveyed organisations. For IoT environments, this supports demand for automated vulnerability management, device monitoring, network protection and security services capable of covering large numbers of connected endpoints.

As the interconnectivity of European digital ecosystems is becoming more prevalent, continuous monitoring becomes more important than ever as opposed to temporary device protection. According to the ENISA's 2026 Threat Landscape, 73% of the targeted organisations from the 2025 incident database belong to essential and important entities in accordance with the NIS2 directive. 7% of the targeted companies worked in the manufacturing industry, while 8% in the transport industry, which have an increased number of connected devices within their operations.At the enterprise level, Eurostat reported that 22% of EU businesses experienced ICT security incidents in 2024, while 93% used at least one ICT security measure. This environment is supporting greater use of network monitoring, anomaly detection, vulnerability assessment and automated security controls for connected devices throughout their operational lifecycles.

IoT security is increasingly extending beyond individual devices to encompass suppliers, software components and connected infrastructure. NIS2 specifically encourages stronger attention to supply-chain security and vulnerability management, while the CRA introduces cybersecurity responsibilities for products with digital elements across their lifecycle. This is significant because IoT devices frequently depend on third-party firmware, cloud platforms, connectivity providers and software components. ENISA's 2026 Threat Landscape states that growing cyber dependencies are expanding the EU's attack surface. The European cybersecurity environment is therefore placing greater emphasis on identifying dependencies, managing vulnerabilities and establishing security requirements across connected-product supply chains. For IoT manufacturers, this can increase demand for software-component inventories, secure development processes, supplier assessments and vulnerability disclosure mechanisms.

Artificial intelligence is becoming increasingly relevant to European IoT security as both a defensive technology and an emerging cybersecurity threat. ENISA's 2026 Threat Landscape identified emerging AI models as an area expected to increasingly support malicious operations, adding another dimension to the threat environment. At the same time, AI-based analysis can help security teams identify unusual device behaviour, analyse large volumes of network events and prioritise vulnerabilities across extensive connected-device estates. This is particularly relevant for industrial IoT environments where organisations may need to monitor large numbers of machines, sensors and controllers continuously. As European cybersecurity investment increasingly shifts toward technology and services, AI-enabled detection and automated response capabilities are likely to become more integrated into IoT security architectures.