EU Probing Google’s Proposed Takeover Of Fitbit Over Data, Competition Concerns

The European Commission, the executive branch of the European Union, said on Tuesday that it has launched a full investigation into Google’s proposed acquisition of Fitbit (FIT).

Based in California, Fitbit is a fitness-tracking firm that makes wearable devices. Fitbit now has about 30 million active users and has sold more than 100 million devices.

The commission said it 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.”

Google’s parent, Alphabet (GOOG) ,agreed to acquire Fitbit last year for $2.1 billion.

“The use of wearable devices by European consumers is expected to grow significantly in the coming years,” said EU Executive Vice-President Margrethe Vestager, who is responsible for competition policy. “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.”

Vestager added that the EU investigation seeks to “ensure that control by Google over data collected through wearable devices as a result of the transaction does not distort competition.”

The commission further said it has concerns about the “impact” of the transaction on the supply of online search and display advertising services, as well as on the supply of ‘ad tech’ services.

By acquiring Fitbit, the commission determined, Google would acquire the database maintained by Fitbit about its users' health and fitness as well as the technology to develop a database similar to Fitbit's.

“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 service,” the commission added.

“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.”

The Commission said it will make a decision on the matter by Dec. 9, 2020.

BBC reported that Google responded to the probe by asserting it will cooperate with it.

"We appreciate the opportunity to work with the European Commission on an approach that addresses consumers' expectations of their wearable devices," said Google's devices chief Rick Osterloh in a blog.

Google has denied that it wants to buy Fitbit in order to amass and control more data.

"We believe the combination of Google and Fitbit's hardware efforts will increase competition in the sector, making the next generation of devices better and more affordable," wrote Osterloh. “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."

Wolfie Christl, a digital rights activist at Cracked Labs, an Austrian research institute, praised the EU for probing the deal.

"Google and its parent company Alphabet already have unprecedented control over large parts of the digital world," he told BBC. "They also want to take over digital health and insurance. Letting them acquire Fitbit without additional obligations would be a major step into this direction, and thus should not happen."

Google also has been criticized in the U.S. for its alleged antitrust activities, including allegations by Congress that the company wields too much control over the purchase and sale of online advertisements.