UPDATED 13:02 EDT / AUGUST 04 2020

POLICY

EU formally opens investigation into Google’s $2.1B Fitbit bid

Confirming recent reports, the European Union today launched an antitrust investigation to determine if Google LLC’s planned $2.1 billion acquisition of Fitbit Inc. would harm competitors.

Regulators could decide to block the transaction at the end of the probe. However, such a decision is far from certain and Google has been actively working to address the key concerns around the deal. 

Fitbit makes smartwatches that help users track their sleep quality and exercise sessions. The California company has sold more than 100 million devices to date, though it lags bigger names such as Apple Inc. in wearables market share.

The European Commission, the EU’s executive branch, is worried that Google may use consumer data collected by Fitbit devices for ad targeting. Fitbit’s smartwatches can track the wearer’s heart rate, blood oxygen levels and sleep schedule, as well as other health-related details. Officials are concerned that this information could enable Google to improve ad personalization to a degree that competing digital advertising providers would have a hard time matching. 

“This data provides key insights about the life and the health situation of the users of these devices,” European Commission executive vice president Margrethe Vestager said in a statement. “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.”

For its part, Google has said that obtaining Fitbit’s user data isn’t the motivation behind the deal. Rick Osterloh, the search giant’s senior vice president of devices and services, reiterated that point in a blog post today. “This deal is about devices, not data,” he wrote. “We’ve been clear from the beginning that we will not use Fitbit health and wellness data for Google ads.”

The executive also shared new details about Google’s efforts to address EU concerns. “We recently offered to make a legally binding commitment to the European Commission regarding our use of Fitbit data,” Osterloh wrote. “As we do with all our products, we will give Fitbit users the choice to review, move or delete their data.”

The European Commission’s announcement of the probe likewise provided a glimpse into Google’s talks with regulators. It appears that the search giant proposed to store Fitbit user information in a data silo that would be kept separate from “any other dataset” within the company. However, regulators deemed the offer insufficient.

One of the reasons the idea wasn’t accepted is that Google’s proposed data silo wouldn’t cover all the Fitbit data that is useful  for advertising purposes. That’s an issue which, at the technical level at least, Google could easily address given its vast engineering resources. The search giant has also signaled it’s looking to address another key point in the antitrust probe.

“We’ll continue to support wide connectivity and interoperability across our and other companies’ products,” Osterloh wrote in the blog post. In addition to the use of Fitbit’s data, the probe will investigate if the deal would give Google an incentive to reduce support for competing Android-powered wearables.

The European Commission will bring a decision about the acquisition by Dec. 9. 

Photo: Fitbit

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