Antitrust regulators and consumer advocacy groups are increasing scrutiny of the planned acquisition of fitness tracker company Fitbit by Google.
Google announced last year that it was buying Fitbit for $2.1 billion, and said it was hoping to complete the deal by 2020. But the acquisition may be delayed due to fears about the increased access of the search giant to sensitive data from the hardware of Fitbit, including the heart rates of users, their fitness activity, and their sleep patterns.
The Financial Times reports that EU regulators have sent 60-page questionnaires to Google and Fitbit’s rivals, asking them to assess how the acquisition will affect the digital healthcare space; whether it will disadvantage fitness tracking apps hosted in Google’s Play Store; and how Google might use the data to profile users for its search and advertising business.
EU regulators have set a deadline of July 20th for their next decision regarding the deal. The trading bloc can choose to approve the deal, or ask for concessions from Google (regarding how Fitbit’s data is used, for example), or open a four-month investigation to fully explore concerns. The FT says the level of detail in the recent questionnaires sent to the companies’ rivals suggests an extended investigation could be in the works.
The EU isn’t the only party worried about the acquisition, either. Last month, Australia’s Competition and Consumer Commission announced its own concerns. “Buying Fitbit will allow Google to build an even more comprehensive set of user data, further cementing its position and raising barriers to entry to potential rivals,” said ACCC Chairman Rod Sims.
Worry from regulators has also been matched by consumer advocacy groups. This week, 20 consumer groups, from the US, EU, Mexico, Canada, and Brazil, wrote to regulators saying the deal was a “test case” to see if they could effectively reign in data monopolies.
“Google could exploit Fitbit’s exceptionally valuable health and location datasets, and data collection capabilities, to strengthen its already dominant position in digital markets such as online advertising,” said the group, according to a report from CNET. “Google could also use Fitbit’s data to establish a commanding position in digital and related health markets, depriving competitors of the ability to compete effectively.”
Google has made some concessions to allay these fears, saying last year that “Fitbit health and wellness data will not be used for Google ads.” In reaction to the letter from consumer groups, the company said the deal is “about devices, not data,” adding that the wearables space is “highly crowded” and that the acquisition of Fitbit will only increase competition.
This line of argument is likely to deter antitrust regulators from simply blocking the deal, reports Fortune, as Fitbit and Google aren’t direct competitors, and neither of them holds enough of the wearables market to make the argument that the deal creates a monopoly.
“It would be extraordinarily difficult to bring a case,” antitrust attorney David Balto, who was policy director at the FTC during Microsoft’s antitrust trials, told Fortune. “There are no successful oppositions to vertical mergers like this.”
In 2019, Fitbit had less than 5 per cent of the wearables market, while Apple, the largest player, had 32 per cent, according to analysts IDC data. The next two biggest companies, Xiaomi and Samsung, respectively have a market share of 12 per cent and 9 per cent. Neither company uses Google’s software in its wearable devices.
However, concerns about data access may be more persuasive given the strong position of Google in online advertising, where it controls 90 percent of the market for certain specific tools, such as those used by publishers to sell display ads.