EU launches in-depth investigation into Google's acquisition of Fitbit
What's the story
The European Commission has launched an in-depth investigation into Google's acquisition of wearable company Fitbit. The action comes following a preliminary review by the Commission and may end up derailing the November 2019 deal under which Google had agreed to pay $2.1 billion to take over the entire business of Fitbit. Here's more on the probe and the reason behind it.
Concern
Concern: Deal could entrench Google's position in ad market
In a statement announcing the probe, the Commission said it is investigating the deal over concerns that it could entrench Google's position in the online ad space by significantly increasing the trove of data it uses for ad-targeting. "Our investigation aims to ensure that control by Google over data collected through wearable devices...does not distort competition," said Margrethe Vestager, the Commission's executive VP.
Advantage
Data from wrist-worn devices an important advantage
The Commission has emphasized that the deal would not just give Google access to Fitbit's existing database on people's health/fitness but also the technology needed to deliver a similar database into the hands of the internet giant. This, it said, would give Google "an important advantage" in the market of online advertising and make it more difficult for rivals to compete.
Quote
This would hit advertisers and publishers, the Commission added
"The transaction would raise barriers to entry and expansion for Google's competitors for these services, to the ultimate detriment of advertisers and publishers that would face higher prices and have less choice," the Commission added in the statement detailing its concerns.
Other concerns
Other things will also be assessed
Along with the undue advantage of data in the ad markets, the Commission will also examine the effects of the deal on the digital healthcare sector in Europe. Plus, it will also look into whether "Google would have the ability and incentive to degrade the interoperability of rivals' wearables with Google's Android operating system" once it owns Fitbit.
Response
What Google says on the matter?
In response to the probe, Google's hardware SVP Rick Osterloh said Fitbit faces 'vibrant competition' in the market and Google would be happy to make legally binding commitments on how it would use data from the company's devices following the deal. "We appreciate the opportunity to work with the European Commission on an approach that addresses consumers' expectations of their wearable devices," Osterloh noted.