At the beginning of August, the European Commission opened an in-depth investigation into the acquisition of Fitbit by Google.
The transaction was notified to the Commission on 15 June 2020 and Google proposed commitments to address the Commission's preliminary concerns on 13 July 2020. However, the Commission was not convinced of the effectiveness of the creation of a ‘data silo’ as proposed by Google. Due to the stringent deadlines in merger control cases, the Commission decided to open a second phase investigation.
From the start of the notification procedure, the Commission has raised several concerns regarding this transaction. Its main worries are the effect of the transaction on Google's position in the online advertising markets as well in relation to “ad tech” services (analytics and digital tools used to facilitate the programmatic sale and purchase of digital advertising). Fitbit, a producer of (wrist-)wearable tech devices, collects a huge amount of data. Due to the transaction, Google would get ownership of this data and could add it to the already vast amounts of data it collects on consumers using Google services. On top of that, Google would also acquire the technology to develop a database similar to the one Fitbit already has.
Fitbit collects a wealth of information on the activity and health of its users. According to the Commission, the addition of this data to Google's data would give Google an important advantage in the personalisation of its online advertising. It would raise the barriers for potential competitors of Google on the online advertising market to match Google's services. The Commission preliminary considers Google to be dominant or to have a strong market position for the supply of online search advertising and display services (e.g. the sale of advertising space on the internet) and for the supply of ad tech services (e.g. analytics tools).
Next to the effect of the data increase on the advertising market, the Commission is also looking into the effect on the digital health care sector, which is still a relatively new and emerging industry. Needless to say, the Commission has also not forgotten its previous Google Android case, so it is analysing Google's ability and incentive to degrade the interoperability of rivals' wearables with Google's Android operating system for smartphones.
It is now up to Google to come up with a remedy taking into account all the Commission's concerns while respecting the protection of personal data. This is an example of a case in which a structural remedy is not the ideal solution because it would diminish a big part of the transaction's value. Google already proposed a virtual hold-separate. The Commission is set to take a decision by 9 December 2020, however that deadline can be extended depending on the timing of any newly proposed remedies.