On 18 June 2020, the Australian Competition and Consumer Commission (ACCC) released its Statement of Issues in relation to Google LLC's proposed acquisition of Fitbit, expressing its concerns that the acquisition may further entrench Google's dominant position in the supply of data-dependent health services and ad tech services, and adversely affect competition in those markets.
These comments from the ACCC reflect a number of key findings made in its Digital Platforms Inquiry, in which it found that Google (and Facebook) held substantial market power in a number of critical digital markets, including the markets for the provision of online search services, online search advertising, social media services, display advertising, and news media referral services and, importantly, that Google's substantial market power was built largely on its concentration of data collected via third-party apps and websites, including those which it owns and operates.
Given Google's collection of a wide range of consumer data, and position as a market leader in AI and data analytics, the ACCC's primary concern is that Google's acquisition of Fitbit would enhance Google's ability to collect consumer data (i.e. health and fitness data) This data would be a key input for the supply of data-dependent health services and ad tech services (which rely on the collection and analysis of large amounts of data to enable targeted online display advertising to consumer segments).
Furthermore, the intended acquisition would eliminate any potential competition between Google and Fitbit in the markets for health and fitness data (which might otherwise take place), a merged entity would likely act as a significant barrier to entry for firms developing new and innovative services in these markets which could otherwise partner with Fitbit.
For these reasons, the ACCC's preliminary view was that the acquisition may have the effect, or likely effect, of substantially lessening competition in those markets.
The ACCC was also of the preliminary view that the proposed acquisition would have the effect, or likely effect, of substantially lessening competition in the supply of wearables on the basis that:
- Google is a significant supplier of some key inputs which are necessary for the supply of certain wearables, including Wear OS, Google Maps, the Google Play Store, and the Android smartphone operating system; and
- Google's acquisition of Fitbit could encourage it to foreclose or otherwise inhibit access to these products in order to increase the sales of its own wearables.
The views expressed by the ACCC in its Statement of Issues make it clear that the importance of data in digital markets and the threat of 'killer acquisitions' by dominant players in these markets are clearly concerning for the regulator.
In mid-August the ACCC will make a decision on whether or not to allow the proposed merger to proceed.
For more information contact Thomas Jones and Tom Macken