Late last year Google announced that they were acquiring Fitbit which got us all hot and bothered given we have all been looking for a Wear OS saviour for a long time. Potentially Fitbit could be the saviour given the amount of IP and experience within the Fitbit organisation. Now it seems that the acquisition is on shaky grounds with the EU set to launch an investigation into Google’s purchase.
The EU Commission has released a statement that they have “opened an in-depth investigation to assess the proposed acquisition of Fitbit by Google under the EU Merger Regulation”. The Commission, which has had some major victories over the years, is concerned that the acquisition would give Google far too much advantage over what they already have in the online advertising markets. It suspects this would occur due to Google having access to even more data on folks.
“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.”Margrethe Vestager, Executive VP
The investigation by the EU commission will look into the:
- The effects of the transaction to determine whether its initial competition concerns regarding the online advertising markets are confirmed.
- 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
- 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.
Google have already made some concessions in the early investigations with a commitment to the silo-ing of data away from Google’s advertising program. The problem the Commission had with this proposal by Google is that they thought that it did not cover all the data that Google would access as a result of the transaction of Fitbit.
Google has responded to the Commission’s statement with a statement of their own with Rick Osterloh, Senior VP of Devices and Service, saying that they so not currently sell any smartwatches or fitness trackers and that the acquisition will only increase competition in the sector. For them the deal is about devices and making their own foray into the wearable market and not about data.
This deal is about devices, not data.
Mr Osterloh reiterated that they will “not use Fitbit health and wellness data for Google ads” and that the offer they made to the Commission regarding the data would be legally binding. Fitbit users would also have the option to review, move or delete the data that is acquired on them. Google are hopeful that they can work with the EU Commission to find an approach that is acceptable to the Commission and to the consumers.
The EU Commission has 90 days (until December 2020) to make a final decision on the acquisition and the fact that they have opened an in-depth inquiry does not mean that they have already made their minds up about the final result.
Let’s hope that the EU Commission is able to work this out with Google and come to a solution that everyone is happy with. We all thought this acquisition of Fitbit by Google could lead to a Pixel Watch, something that has been rumoured for years now. Hopefully it is given a chance to come to fruition.