Antitrust and customer protection organisations expand their criticism of the proposed acquisition of Fitbit by Google.
Google revealed last year’s acquisition of Fitbit for 2,1 billion dollars and expected to close the transaction in 2020. But the planned acquisition might be delayed since there is sensitive data to be give away, including the heart levels of customers, their exercise habits, and their sleep cycles.
The Financial Times says that EU regulators submitted 60-page questionnaires to competitors of Google and Fitbit asking that they examine whether the merger impacts their digital healthcare space; the way that Google can use the data for profiling customers in its ads and search services.
For their next decision on the deal, EU regulators have set a deadline for 20 July. The trade bloc will either accept the offer, seek compromises from Google (for example on the usage of Fitbit data) to begin a four-month inquiry to investigate issues in full. In the latest questionnaires to the competitors the FT claims the degree of information indicates that a wide-ranging investigation may be underway.
The EU is also not the only party concerned about the acquisition. The Competition and Consumer Commission of Australia have their own concerns too. “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 CEO Rod Sims.
Market advocate organizations have aligned with the concerns of regulators. Last week, a total of 20 business groups from the US, the EU, Mexico , Canada and Brazil wrote to authorities to say the contract was a “test case,” for Google to see if they can 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,” says the community, according to the CNET article. “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.”
In its response to a letter sent by consumer advocates, Google claimed the transaction is ‘products, not information,’ noting that wearables is ‘extremely competitive’ and that the purchase of Fitbit would only intensify competitiveness. The firm stated it had made several compromises to alleviate those concerns, announcing last year that Fitbit health and wellness data will not be used for Google ads.’
That claim is likely to discourage anti-trust authorities from simply stopping the transaction, Fortune says, since Fitbit and Google are not clear rivals and none of them has a enough of the wearbles to suggest that the agreement establishes a monopoly.
The competition prosecutor David Balto, who was legal officer of the FTC at the Microsoft antitrust cases, advised Fortune, “it will be incredibly challenging to put up a lawsuit.” “There are no successful oppositions to vertical mergers like this.”
In 2019, Fitbit had fewer than 5% of wearables, according to data from analysts IDC, while Apple, the biggest participant, had 32%. Xiaomi and Samsung are the two leading firms at 12% and 9% respectively. None of the businesses in the connected systems utilize Google’s apps.
The argument that Google is a powerful internet advertisement, where it dominates 90 % of the market for particular media like those used by newspapers to offer displays advertisements, may nevertheless be much more convincing regarding the data access issue. This is currently a sensitive area to Google, given that the U.S. Department of Justice is about to finish its own antitrust investigation into the presumed abuse of the company’s publicity dominance.