The European Commission (EC) has launched a full investigation into Google’s $2.1 billion acquisition of Fitbit over concerns it could damage competition in the online advertising market.
The competition watchdog said in a press release that it feared the takeover would further entrench Google’s market position in the online advertising markets by increasing the already vast amount of data that the tech giant could use for personalised ads.
The EC said that “data collected via wrist-worn wearable devices appears, at this stage of the Commission’s review of the transaction, to be an important advantage in the online advertising markets”, adding that this would make it more difficult for rivals to compete against Google’s online advertising service.
“Thus, 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 regulator said.
Although Google has previously pledged to keep data acquired from Fitbit separate from any other dataset within Google, the EC said this assurance was “insufficient” as the silo “did not cover all the data that Google would access as a result of the transaction and would be valuable for advertising purposes.”
The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns regarding the online advertising markets are confirmed. It has
Executive Vice-President Margrethe Vestager, responsible for competition policy, said: “The use of wearable devices by European consumers is expected to grow significantly in the coming years. This will go hand in hand with an exponential growth of data generated through these devices. This data provides key insights about the life and the health situation of the users of these 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.”
In response, Google SVP of hardware Rick Osterloh stressed that there was “vibrant competition” to Fitbit’s devices, and said the company believes the combination of Google and Fitbit’s hardware efforts will “increase competition in the sector, making the next generation of devices better and more affordable.”
“We appreciate the opportunity to work with the European Commission on an approach that addresses consumers’ expectations of their wearable devices,” he added. “This deal is about devices, not data. We’ve been clear from the beginning that we will not use Fitbit health and wellness data for Google ads.”
The European Commission now has 90 days, until 9th December 2020, to conclude its investigation into the merger.
