Google’s acquisition of Fitbit has hit a roadblock as the European Commission opens an in-depth investigation. The Commission’s concern is that the 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 personalisation of the ads it serves and displays.’
Margrethe Vestager, executive vice president for competition at the European Commission 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 Commission’s first phase investigation finds that personal data from wearable devices, like those produced by Fitbit, would increase Google’s data advantage and therefore give the search engine an ‘important advantage in the online advertising markets’. The acquisition of Fitbit would therefore be ‘to the ultimate detriment of advertisers and publishers that would face higher prices and have less choice.’
In coming to its conclusion, the Commission has deemed that Google is dominant in the supply of online search advertising services in the EEA countries; and holds a strong market position in the supply of both online display advertising services, and ad tech services.
In July, Google committed to creating a data silo, ringfencing wearables’ data from other datasets within Google, and restricting it from use for advertising purposes. However, the Commission considered the proposed remedy to be insufficient.
The Commission now has 90 days to carry out an in-depth investigation and to decide on the merger. In addition to the concerns regarding online advertising markets, the enquiry will also 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.’