Google's $2.1 Billion Fitbit Deal Faces Troubles in Europe, Australia
August 04 2020 - 9:39AM
Dow Jones News
By Valentina Pop
BRUSSELS -- Google's plan to buy health tracker Fitbit is facing
monthslong delays after the European Union's antitrust enforcer
launched an in-depth inquiry, echoing recent concerns raised by
Australian regulators.
Google's planned $2.1 billion bid for the California-based
fitness-and-health data tracker was announced in November 2019, as
the search engine seeks to increase its market share in the
wearable and health data businesses. The announcement caused uproar
among privacy and consumer protection groups, who have raised
concerns over the prospect of Google adding sensitive health data
to the personal profiles it aggregates from its services, including
online searches and emails.
In a bid to allay those concerns, Google, which is owned
Alphabet Inc., has pledged to refrain from using any of the Fitbit
data for advertising purposes.
But the European Commission, the European Union's top antitrust
enforcer, on Tuesday said those assurances are insufficient to
safeguard competition and started an in-depth inquiry into the
planned deal. The Commission's main issue is with health data
consolidating Google's dominant position in the online advertising
business, despite its commitment to keep Fitbit data separate.
The Commission said the probe would examine the potential data
aggregation issues the tie up would have on the digital healthcare
sector and the impact it would have on rivals' wearable devices
that use Google's Android operating system.
Google disputed that the deal would harm competition. "This deal
is about devices, not data," Google Senior Vice President Rick
Osterloh wrote in a blog post, noting that there is a "vibrant
competition when it comes to smartwatches and fitness trackers." He
said the company will continue to work with regulators to answer
their questions.
The European probe comes just days before the Australian
Competition and Consumer Commission is due to give its verdict on
the transaction. In June, the ACCC said the proposed deal could
harm competition in health data services and in the supply of
wearable devices, while at the same time consolidating Google's
dominant position in the online advertising market.
The U.S. Justice Department is also reviewing the planned
acquisition of Fitbit, amid congressional scrutiny over Google's
secret project to collect and analyze the medical health data of
millions of Americans, as revealed by the Journal last year. The
Justice Department is separately preparing a range of antitrust
lawsuits, with several state attorneys general, against the search
engine.
Buying Fitbit would help Google catch up with Apple Inc., who
owns a third of the wearable device market, followed by its Chinese
rival Xiaomi Corp., Samsung Electronics and Huawei Technologies Co.
Fitbit used to be the market leader, but by March 2020 it ranked
fifth globally, according to data analytics firm IDC.
The EU probe comes as regulators around the world face mounting
public pressure over their enforcement record, and suggestions that
competition authorities should do more to reign in Big Tech from
growing even bigger, said Verity Egerton-Doyle, a competition
lawyer with London-based law firm Linklaters LLP. Both the EU and
the UK competition authorities came under fire in recent years for
giving their green light to Facebook's acquisitions of WhatsApp and
Instagram.
"They now have to run the ruler over every aspect of a deal that
may be problematic," she said.
Europe's competition czar Margrethe Vestager, who has fined
Google a total of $9.4 billion for alleged anticompetitive
behavior, in a recent interview with The Wall Street Journal said
that mergers of companies handling sensitive data would receive
extra scrutiny.
"The more sensitive and specific the data, the bigger the risk
that it will give rise to competition problems," Ms. Vestager
said.
Write to Valentina Pop at valentina.pop@wsj.com
(END) Dow Jones Newswires
August 04, 2020 09:24 ET (13:24 GMT)
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