Google\u2019s Fitbit acquisition may be hitting another snag after the European Commission announced that it is initiating a full investigation into the merger.<\/p>\n
The European Commission on Tuesday (August 4) opened an in-depth investigation into Google\u2019s proposed acquisition of one of the world\u2019s leading producer of wearable devices.<\/p>\n
Alphabet Inc., Google\u2019s parent company\u2019s $2.1 billion Fitbit acquisition deal was announced late 2019 but has since stalled.<\/p>\n
This after antitrust regulators in the EU as well as in the United States raised concerns on its possible use of data for ad targeting.<\/p>\n
While Google has earlier pledged not to use health data from Fitbit for ads targeting, the European body thinks it still warrants closer scrutiny.<\/p>\n
The European Commission, in a statement<\/a>, said it is concerned that the proposed acquisition of Fitbit by Google \u201cwould further entrench Google\u2019s market position in the online advertising markets.\u201d<\/p>\n The antitrust body will be looking if the merger would increase the vast amount of data that Google could use for personalization of ads it serves and displays.<\/p>\n EU\u2019s competition commissioner Margrethe Vestager said:<\/p>\n 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. 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.<\/p><\/blockquote>\n<\/blockquote>\n The probe will also focus on the impact of the transaction on the supply of online search and display advertising services as well as on the supply of \u2018ad tech\u2019 services.<\/p>\n The EU\u2019s competition regulator is also concerned that the Google-Fitbit transaction would raise barriers for the entry or expansion of rival companies to the disadvantage of advertisers and publishers that would face higher prices and have less choice.<\/p>\n Also up for further examination are the effects of the merger on both company\u2019s databases and capabilities in the digital healthcare sector.<\/p>\n The probe will also scrutinize whether Google would have the ability and incentive to degrade the interoperability of rivals’ wearables with Google’s Android operating system for smartphones once it owns Fitbit.<\/p>\n The European Commission was informed of Google\u2019s proposed acquisition of Fitbit on June 15th<\/sup> and will have 90 working days or until December 9 to decide on the investigation.<\/p>\n Tech giant Google, however, stressed that upon announcement of the acquisition, they have been straightforward not to use Fitbit\u2019s data for ad targeting.<\/p>\n Rick Osterloh, Google\u2019s Vice-President for Devices and Services shared in a blog post<\/a> on Tuesday (August 4) that the $2.1 billion acquisition \u201cdeal is about devices and not data.\u201d<\/p>\n \u201cWe\u2019ve been clear from the beginning that we will not use Fitbit health and wellness data for Google ads. We recently offered to make a legally binding commitment to the European Commission regarding our use of Fitbit data”<\/p><\/blockquote>\n<\/blockquote>\n The Google executive said that they will give Fitbit users the choice to review, move, or delete their data while continuing support to wide connectivity and interoperability across Google\u2019s products.<\/p>\n \u201cWe appreciate the opportunity to work with the European Commission on an approach that addresses consumers’ expectations of their wearable devices. We\u2019re confident that by working closely with Fitbit\u2019s team of experts, and bringing together our experience in AI, software, and hardware, we can build compelling devices for people around the world,\u201d Osterloh said.<\/p>\n On November 1, 2019, Alphabet, Inc., Google\u2019s parent company, announced<\/a> having entered into a definitive agreement to acquire leading American wearables brand Fitbit.<\/p>\n Fitbit shareholders overwhelmingly approved of the deal on January 6, 2020.<\/p>\n The $2.1 billion deal is expected to close this year but it seems the full takeover will only happen by December when the EU regulator finally decides on its investigation.<\/p>\n Despite making progress with partners in wearable devices and fitness trackers with Wear OS and Google Fit, the Mountainview, California-based tech giant is looking to introduce Made by Google wearable fitness and health devices into the market with the acquisition of Fitbit.<\/p>\n \u201cWe don\u2019t currently make or sell wearable devices like these today. We believe the combination of Google and Fitbit’s hardware efforts will increase competition in the sector, making the next generation of devices better and more affordable,\u201d Osterloh said.<\/p><\/blockquote>\n<\/blockquote>\n He also stressed there is vibrant competition in the smartwatches and fitness trackers industry, citing brands such as Apple, Samsung, Garmin, Fossil, Huawei, Xiaomi, and many others offering numerous products at a range of prices.<\/p>\n Fitbit currently ranks fifth among brands with a 5% market share on wearable devices still banking on its fitness tracker to drive sales while its smartwatches have also steadily grown in demand.<\/p>\n\n
How is Google responding to the probe?<\/h2>\n
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What is stalling Fitbit\u2019s acquisition?<\/h2>\n
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