Antitrust regulators and consumer advocacy groups are increasing their scrutiny of Google’s planned acquisition of fitness tracker firm Fitbit.
Google announced it was buying Fitbit this past year for $2.1 billion and said it hoped to complete the offer some time in 2020. But it’s possible the acquisition will be delayed over fears about the search giant’s increased access to painful and sensitive data from Fitbit’s hardware, including users’ heart rates, 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 a acquisition will affect the digital healthcare space; whether it will disadvantage fitness tracking apps hosted in Google’s Play Store; and how Google may possibly use the data to profile users because of its search and advertising business.
EU regulators have set a deadline of July 20th for their next decision about the deal. The trading bloc can elect to approve the offer, or require 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 a long investigation might be in the works.
The EU isn’t the only real party focused on the acquisition, either. Last month, Australia’s Competition and Consumer Commission announced its 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 additionally 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, in accordance with 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 type of argument is likely to deter antitrust regulators from simply blocking the offer, reports Fortune, as Fitbit and Google aren’t direct competitors, and neither of these holds enough of the wearables market to make the argument that the offer 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.”
According to data from analysts IDC, Fitbit had less than 5 percent of the wearables market in 2019, while Apple, the greatest player, had 32 per cent. The next two biggest companies, Xiaomi and Samsung, have 12 per cent and 9 percent market share respectively. None of these firms use Google’s software within their wearable devices.
However, concerns about data access might be more persuasive considering Google’s strong position in online advertising, where it controls 90 per cent of industry for some specific tools, like those employed by publishers to offer displays adverts. This is a sensitive and painful area for Google right now, as the US Justice Department is nearing the end of its own antitrust investigation contrary to the company regarding alleged abuse of its advertising dominance.