EC to probe Google acquisition of wearables giant Fitbit
The European Commission has opened an investigation over the proposed acquisition of Fitbit by Google, it announced on Tuesday, under the EU’s merger regulations.
It said it was concerned that the proposed transaction would further entrench Google's market position in the online advertising markets, by increasing the “already vast” amount of data that Google could use for personalisation of the ads it serves and displays.
Following its first phase investigation, the EC said it had concerns over the impact of the transaction on the supply of online search and display advertising services, as well as on the supply of advertising technology services.
It said that, by acquiring Fitbit, Google would acquire the database maintained by Fitbit about its users' health and fitness, as well as the technology to develop a database similar to Fitbit's one.
The data collected via wrist-worn wearable devices appeared to be “an important advantage” in the online advertising markets, the EC said.
By increasing the data advantage of Google in the personalisation of the ads it serves, the commission said it would be more difficult for rivals to match Google's online advertising services.
Thus, the transaction would raise barriers to entry and expansion for Google's competitors for those services, to “the ultimate detriment” of advertisers and publishers that would face higher prices and have less choice.
The commission said it would now carry out an in-depth investigation into the effects of the transaction, to determine whether its initial competition concerns around the online advertising markets would hold true.
In addition, the EC said it would also further examine the effects of the combination of Fitbit's and Google's databases and capabilities in the digital healthcare sector, which is still at a “nascent stage” in Europe.
It would also look at 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.
“The use of wearable devices by European consumers is expected to grow significantly in the coming years,” said Margrethe Vestager, EC executive vice-president and commissioner for competition.
“This will go hand in hand with an exponential growth of data generated through these devices.”
Vestager said the data provided “key insights” about the life and the health situation of the users of those 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.”
At 1609 BST (1109 EDT), shares in Google’s parent Alphabet were 0.24% on the Nasdaq in New York, at $1,470.96, while Fitbit was off 0.62% at $6.44 on the New York Stock Exchange.