European Commission concerned takeover could “further entrench Google’s market position in the online advertising markets”
Google’s £2.1 billion takeover of Fitbit is to be probed by the European Commission amid fears that the acquisition would give the combined company an unfair advantage in the online advertising space.
The Commission has opened an in-depth investigation into the proposed deal, announced last November, under EU merger regulations.
Google said it was pursuing the deal for Fitbit, which makes a range of fitness trackers, to gain a foothold in the wearables market, rather than because of any data-related advantage it might gain.
Concerns have been raised that the takeover 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,” the Commission said.
Deal must not “distort competition”
Executive vice-president Margrethe Vestager, who is 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.”
The decision to open an in-depth investigation follows a first-phase study of the impact of the deal on online advertising, as well as the supply of ad-tech services.
According to the Commission, Google getting its hands on Fitbit’s database of information about users health and fitness habits could be problematic. Furthermore, new data gathered via the fitness devices would allow Google to serve up more accurately targeted ads in future.
Fitbit is thought to have more than 29 million active users around the world.
“By increasing the data advantage of Google in the personalisation of the ads it serves via its search engine and displays on other internet pages, it would be more difficult for rivals to match Google’s online advertising services,” the Commission statement said.
“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.”
Devices, not data
Rick Osterloh, senior vice president for devices and services at Google, said: “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. We recently offered to make a legally binding commitment to the European Commission regarding our use of Fitbit data. As we do with all our products, we will give Fitbit users the choice to review, move or delete their data. And we’ll continue to support wide connectivity and interoperability across our and other companies’ products.”
The investigation, which will last for up to 90 days, will also look at other aspects of the deal, including whether owning Fitbit would incentivise Google to decrease interoperability between its Android operating system and third-party wearables.
A decision is expected by December 9.