The European Commission has launched an investigation into the proposed acquisition of wearable fitness accessory company Fitbit by search engine giant Google.
Google announced in November 2019 that it would seek to acquire Fitbit. The company noted at the time that for the deal to be successful, the privacy and security of Fitbit users would have to be considered. It therefore declared that Fitbit health and wellness data would not be used for Google ads.
On Tuesday, however, the Commission said it was still concerned that the deal would not only provide Google a vast amount of data, but would also give Google access to Fitbit’s technology, enabling Google to launch a similar product in the future . Further the data specifically collected from the wearable devices could be used by Google to allow future advertisers to make more customer centric commercials. The concentration of such otherwise unavailable data would further consolidate the position of google in the ad-space market, creating barriers to new entrants and competitors. With google being in a dominant position in the market the final consumers would be deprived of competitive prices that could be offered by competitors against services of google.
” The data collected via wrist-worn wearable devices appears, at this stage of the Commission’s review of the transaction, to be an important advantage in the online advertising markets. By increasing the data advantage of Google in the personalisation of the ads it serves via its search engine and displays on other internet pages, it would be more difficult for rivals to match Google’s online advertising services. Thus, the transaction would raise barriers to entry and expansion for Google’s competitors for these services, to the ultimate detriment of advertisers and publishers that would face higher prices and have less choice. “
EU merger regulations allow the Commission to assess mergers and acquisitions involving companies valued above certain financial thresholds.
EC Executive Vice-President, Margrethe Vestager said:
The use of wearable devices by European consumers is expected to grow significantly in the coming years. This will go hand in hand with the exponential growth of data generated through these devices. This data provides key insights about the life and the health situation of the users of these devices. Our investigation aims to ensure that control by Google over data collected through wearable devices as a result of the transaction does not distort competition.
The Commission has until December 9th to decide if it will block the deal.
Please see the press release and The Merger Regulations