The European Commission has opened an in-depth investigation to assess the proposed acquisition of Fitbit by Google under the EU Merger Regulation.
The Commission is concerned that the proposed transaction 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 personalization of the ads it serves and displays.
By increasing the data advantage of Google in the personalization 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, raising barriers to entry to the ultimate detriment of advertisers and publishers that would face higher prices and have less choice.
In addition, the Commission will also further examine the effects of the combination of Fitbit's and Google's databases and capabilities in the digital healthcare sector and 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.
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 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 Commission's preliminary competition concerns
Following its first phase investigation, the Commission has concerns about the impact of the transaction on the supply of online search and display advertising services (the sale of advertising space on, respectively, the result page of an internet search engine or other internet pages), as well as on the supply of ”ad tech” services (analytics and digital tools used to facilitate the programmatic sale and purchase of digital advertising). By acquiring Fitbit, Google would acquire (i) the database maintained by Fitbit about its users' health and fitness; and (ii) the technology to develop a database similar to Fitbit's one.
The 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. 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. 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.
