Google insists Fitbit deal about “devices, not data” after EU launches probe
After Google’s $2.1bn acquisition of Fitbit was announced in November 2019, it has faced opposition – most notably after the European Commission opened an investigation into the possession and use of Fitbit data by Google.
The EU has raised concerns regarding how the acquisition of the American fitness tracker company impacts Google’s position in both the wearables market and its powerful search advantage in advertising: a so-called “data advantage1”.
Google’s targeting of Fitbit comes from both a reflection of their own poor performance in the smart watch market, and an opportunity to utilise Fitbit’s established position.
However, the once prospering Fitbit has itself struggled in recent years: the acquisition price of $2.1bn represents only a small proportion of Fitbit’s stock market value when it went public in 20154.
The acquisition would provide a lifeline for Fitbit – and give Google an opportunity to project itself back into the market alongside the likes of Apple and Samsung.
Consumer groups such as the Consumer Federation of America have strongly warned against the deal5, suggesting that Google will use datasets from Fitbit to develop its own datasets using Fitbit’s structure, and strengthen their own tools in advertisement targeting.
In addition to the EU, the Australian Competition and Consumer Commission (ACCC) has decided to push back its own ruling on the acquisition by another four months – giving rise to speculation that the ACCC and EC will consult on their decisions2.
However, Google has denied the claims that the acquisition is driven by the desire to obtain data from Fitbit’s 28 million worldwide users6. In a statement, Google said:
“Throughout this process we have been clear about our commitment not to use Fitbit health and wellness data for Google ads and our responsibility to provide people with choice and control with their data. Similar to our other products, with wearables, we will be transparent about the data we collect and why. And we do not sell personal information to anyone5.”
Google further argues that it faces intense competition from the likes of Apple, Samsung and Garmin, and that their deal with Fitbit will not give them a hold over their competition as critics suggest. Moreover, the technology giant had promised not to use health data collected by Fitbit to improve its own advertising.
In an effort to combat EU criticism and an extension of the current investigation, Google has proposed a data silo, in which they would promise to keep a proportion of Fitbit data separate from Google data. In theory, this would prevent Google exploiting Fitbit users, such as using the data to provide personalised advertisements1.
Yet, the EU is not satisfied. EU regulators did not view the silo as sufficiently preventing Google from using the entirety of Fitbit data in their advertising efforts.
Looking into the future beyond the completion of the transaction, the EU expresses further concerns over new competition entering the market. The European Commission states:
“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 choice3.”
The EU has even sent a 60-page questionnaire to rivals of Google and Fitbit to ascertain their views on the deal4.
An initial deadline for the probe is set for 9th December. Should the EU decide that the acquisition of Fitbit poses too much of a risk to the industry and data concerns, then a veto could be implemented.
The European Commission’s stance on this topic is surely encouraging for many companies and consumers alike, as it represents authorities beginning to take data seriously as a commodity and a force for strength and growth within a company – and the knock-on effect this ownership of data has on its competitors. Transferred ownership and subsequent misuse of data is an ever-expanding issue and needs to be treated as such.
Privacy, and consumers’ ownership over their own data, is a hotly contested issue. With data becoming such a powerful tool in influencing consumer behaviour, having Brussels stand up for not only the competition of Google, but Fitbit’s own users, is a welcome investigation for many concerned about the whereabouts of their intimate data and how it is used. Regulators have never been so suspicious of technology giants’ proposed takeovers.
Without probes such as this one by the European Commission, the lure of our data will drive technology giants such as Google and Facebook into freely acquiring vast data sets, strengthening their data advantage to unprecedented levels. Certainly, while Google may argue that this deal is not about data, the prospect must make the deal infinitely more attractive.
The outcome of this investigation will set a precedent for data deals such as this, leading an example for what is – and isn’t – acceptable.
By Constance Willett
Second Year Economics
Bibliography
1. Bloomberg.com. 2020. Google-Fitbit Probe Shows EU Is Wising Up To Value Of Data. [online] Available at: <https://www.bloomberg.com/amp/news/articles/2020-08-04/google-s-fitbit-deal-gets-eu-probe-targeting-online-ad-power?__twitter_impression=true&fbclid=IwAR2qyVc0JTSiio9LKl58hh8JDSYn8e5D9gq2E4Ng2udnXj81lv4wj_9fgxI> [Accessed 15 August 2020].
2. Competition Policy International. 2020. ACCC Delays Decision On $3B Google, Fitbit Merger - Competition Policy International. [online] Available at: <https://www.competitionpolicyinternational.com/accc-delays-decision-on-3b-google-fitbit-merger/> [Accessed 15 August 2020].
3. European Commission - European Commission. 2020. Press Corner. [online] Available at: <https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1446> [Accessed 15 August 2020].
4. Fortune. 2020. Why Google's Fitbit Acquisition Will Be Tough To Stop. [online] Available at: <https://fortune.com/2020/07/02/google-fitbit-acquisition-european-union-regulators/> [Accessed 15 August 2020].
5. FT.com. 2020. EU Demands Major Concessions From Google Over Fitbit Deal. [online] Available at: <https://www.ft.com/content/9391ddb7-8e18-4415-8de0-8fba42b456e4> [Accessed 15 August 2020].
6. Los Angeles Times. 2020. Google Is Buying Fitbit For $2.1 Billion, Betting On Fitness Wearables. [online] Available at: <https://www.latimes.com/business/story/2019-11-01/google-to-buy-fitness-wearables-giant-fitbit-for-about-2-1-billion> [Accessed 15 August 2020].
Comments