Google announced last year that it would buy Fitbit, a wearables supplier, for $2.1 billion and said it hoped to complete the deal by 2020. But antitrust regulators and consumer groups around the world are stepping up scrutiny of Google’s acquisition of Fitbit, a fitness tracker company, amid concerns that Google will take more sensitive data from Fitbit’s wearabledevices, such as user heart rate, fitness activity and sleep habits.
EU regulators are understood to have sent a 60-page questionnaire to Google and Fitbit’s respective rivals asking them to assess how the acquisition will affect the digital healthcare sector, whether it will adversely affect fitness tracking apps in Google’s app store, and how Google will use the user data in its search and advertising businesses.
EU regulators have set a July 20 deadline to decide whether the deal should proceed. At that point, the EU could choose to approve the deal, or ask Google to make concessions on how to use Fitbit device data, or launch a four-month investigation to fully explore concerns raised. Recent questionnaires sent to rivals in both companies are reported to be very detailed, suggesting that a broader investigation may be under way.
Nor is the EU the only one worried about the acquisition. Last month, the Australian Competition and Consumer Commission publicly expressed its concerns about the deal. “The acquisition of Fitbit will help Google build a more comprehensive set of user data, further strengthen its market position and increase barriers to entry for potential competitors,” said Rod Sims, chairman of the committee. “
Consumer groups are also concerned about the deal. This week, 20 consumer groups from the United States, the European Union, Mexico, Canada and Brazil wrote to regulators calling the deal a “test case” to see if technology companies can effectively monopolize data.
“Google is likely to leverage Fitbit’s valuable health and location data sets and the latter’s powerful data collection capabilities to further strengthen the company’s already dominant position in markets such as digital advertising,” the groups said. “Google can also use Fitbit’s data to gain a dominant position in the digital healthcare market, depriving competitors of the ability to compete effectively.”
Google has also made some concessions to allay industry and public concerns. Last year Google made it clear that “Fitbit’s health and wellness data will not be used in Google’s advertising business.” In its response to the letter from consumer groups, the company said the deal was “about equipment, not data.” Google added that the wearables market is “pretty crowded” and that buying Fitbit will only increase competition.
Some media said that such a statement may avoid the antitrust regulator arbitrary call off the deal. Because Fitbit and Google are not direct competitors, and their share of the wearables market is not enough for antitrust regulators to see the deal as a de facto monopoly.
“It would be extremely difficult to bring a lawsuit, ” said David Balto, an antitrust lawyer. Barto served as head of policy at the Federal Trade Commission during microsoft’s antitrust trial. “Vertical mergers like this will not be successful by opponents.”
Fitbit’s share of the wearables market is less than 5 percent in 2019, according to IDC, a market research firm, followed by Apple with 32 percent, followed by Xiaomi and Samsung with 12 percent and 9 percent of the market, respectively. None of these companies use Google’s software on their own wearable devices.
However, given Google’s strong position in digital advertising, concerns about data access may be more compelling. Google, which controls 90 percent of the market in areas such as the tools that media uses to sell display ads, is a sensitive point for Google, and the U.S. Justice Department’s antitrust investigation into alleged abuse of the dominant position in the advertising market is about to reach a final conclusion.