Google set out to acquire fitness company Fitbit in November of last year, but the deal hasn’t gone through all the required regulatory approvals yet. There have been concerns that the acquisition could lead to reduced competition and Google extending its apparatus of data-collecting for targeted advertisements, and now advocacy groups around the world are urging governments to closely investigate the deal.
A total of 20 advocacy groups based in Europe, the United States, Latin America, and other regions signed a joint statement urging government regulators to be careful about Google’s acquisition of Fitbit. The group included Public Citizen in the US, Access Now in Europe, Privacy International, the Brazilian Institute of Consumer Defense.
“Past experience shows that regulators must be very wary of any promises made by merging parties about restricting the use of the acquisition target’s data,” the groups said. “Regulators must assume that Google will in practice utilize the entirety of Fitbit’s currently independent unique, highly sensitive data set in combination with its own.”
Google says the deal is about devices, not data.
In a statement provided to Reuters, a Google spokesperson said, “This deal is about devices, not data. We believe the combination of Google’s and Fitbit’s hardware efforts will increase competition in the sector.”
Meanwhile, regulators in Europe are investigating if the deal would drive other wearable manufacturers out of the market or boost Google’s dominance in online advertising and search. A 47-page questionnaire was reportedly sent to rival companies by EU regulators, with questions like “In your view, would the aggregation of Fitbit’s data to Google’s database strengthen Google’s position in the supply of online search advertising services?”
The European Commission is expected to decide on the deal by July 20th. Australia’s antitrust regulator has warned against the deal, but won’t make a final judgment until August.
CONSUMER AND CITIZEN GROUPS HAVE SERIOUS CONCERNS ABOUT GOOGLE FITBIT TAKEOVER
Consumer and citizen groups have significant concerns that Google’s proposed takeover of wearables manufacturer Fitbit would be a game-changer not only for how people interact with the online world but also for digital and related health markets. Regulators around the world –in particular those concerned with antitrust compliance and data privacy –must therefore give it their utmost attention. This will be a test case for how regulators address the immense power the tech giants exert over the digital economy and their ability to expand their ecosystems unchecked.
More specifically, this merger is a test of regulators’ resolve to analyse the effects on competition of a tech giant acquiring a vast amount of highly valuable data through a takeover. Google could exploit Fitbit’s exceptionally valuable health and location datasets, and data collection capabilities, to strengthen its already dominant position in digital markets such as online advertising. Google could also use Fitbit’s data to establish a commanding position in digital and related health markets, depriving competitors of the ability to compete effectively. This would reduce consumer welfare (including degrading data privacy options), limit innovation and raise prices.
Past experience shows that regulators must be very wary of any promises made by merging parties about restricting the use of the acquisition target’s data. Regulators must assume that Google will in practice utilise the entirety of Fitbit’s currently independent unique, highly sensitive data set in combination with its own, particularly as this could increase its profits, or they must impose strict and enforceable limitations on data use.
Wearable devices could replace smartphones as the main gateway to the internet, just as smartphones replaced personal computers. Google’s expansion into this market, edging out other competitors would thus be significant. Wearables like Fitbit’s could in future give companies details of essentially everything consumers do 24/7 and allow them to feed digital services back to consumers. The way wearables are being used to track COVID-19 infections and give access to doctors and health information is a timely illustration of this. Although, perhaps justified, subject to strong safeguards, in a public health emergency, the exploitation of such data in a commercial context is an important concern that demands close scrutiny by regulators both for its anticompetitive effects (where huge bundles make it near-impossible for entrants to compete against incumbents) and anti-consumer effects (creating ever bigger bundles that undermine consumer choice).
The acquisition of Fitbit could expand Google’s immense power in digital markets into the $8.7 trillion global healthcare market1through its strength in data and data analytics. Google has already made significant inroads into healthcare. Regulators must carefully assess the proposed deal’s implications for innovation and its potential to undermine the ability of companies to bring new products to consumers in the area of digital healthcare.
The results of unfortunate merger control decisions in the past have likely contributed to the rise of tech giants. Subsequent concerns now have to be addressed through more costly and lengthy ex-postantitrust enforcement proceedings and other competition interventions. Such harms to consumers are far better prevented than cured. Therefore, before deciding whether this takeover can proceed or not, regulators must carefully analyse its full implications for consumers and consider its potential for far-reaching and dynamic effects on digital and health markets.