Google Faces European Inquiry Into Fitbit Acquisition

Business|Google Faces European Inquiry Into Fitbit Acquisition

Authorities are investigating how Google will use health and wellness data collected from Fitbit’s fitness tracking devices.

LONDON — European Union authorities on Tuesday announced an investigation into Google’s $2.1 billion purchase of the fitness-tracking company Fitbit, raising alarms about the health data the internet giant would be acquiring as part of the deal.

The inquiry shows the increased scrutiny Google and other large technology companies are facing from regulators in Europe and the United States about their growing dominance of the digital economy. Officials have raised concerns that the biggest tech platforms buy smaller companies to solidify their dominance and limit competition.

Margrethe Vestager, the European Commission’s top antitrust regulator, said a preliminary investigation of the Fitbit deal had raised concerns about how Google would use data collected from Fitbit for its online advertising services, a market where Google is already dominant. The health and fitness data could be used to more narrowly target ads, she said.

“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,” the commission said in a statement announcing the investigation.

The commission, the executive body of the European Union, said the investigation would be completed by Dec. 9.

Google defended the acquisition, saying it competes with companies like Apple, Samsung and Garmin that offer fitness tracking devices.

“This deal is about devices, not data,” Rick Osterloh, senior vice president for devices and services, said in a blog post. The company said it would not use Fitbit health and wellness data for advertising services and offered to make a legally binding commitment to the commission to limit its use of the data.

Google said last year that it was buying Fitbit to gain a foothold in the market for wearable devices. One of the earliest companies in the segment, Fitbit helped popularize the goal of logging 10,000 steps a day. More recently, the San Francisco-based company has faced stiff competition from Apple and other makers of so-called smartwatches that blend some of the functionality of a smartphone with tracking of fitness activity.

Acquiring Fitbit would give Google another brand of hardware products. In recent years, the tech giant has introduced a series of Pixel smartphones and home appliances like its Nest thermostats and security cameras. On Tuesday, Google also announced that it was buying a $450 million stake in the home alarm company ADT.

The Fitbit deal had been expected to face government scrutiny as regulators look more closely at tech-industry acquisitions. In hindsight, many regulators view approval of past deals like Facebook’s acquisitions of Instagram and WhatsApp, or Google’s purchase of the online advertising platform DoubleClick, as having undermined competition in the market.

The European investigation adds to the regulatory challenges facing Google.

Last week, Sundar Pichai, the chief executive of Google’s parent company, Alphabet, was grilled by members of Congress over the company’s business practices, along with the top executives from Amazon, Apple and Facebook. Google is facing a possible antitrust suit from the Justice Department, along with an investigation from a collection of state attorneys general.

Google has long been a target of the European Union. From 2017 to 2019, Ms. Vestager’s office issued fines totaling roughly 8.25 billion euros, or about $9.7 billion, in three separate cases related to its online shopping service, Android mobile software and online advertising business. The penalties are now under appeal.

The European Consumer Organization, a Brussels-based group pushing for more oversight of the tech industry, cheered the Fitbit investigation.

“This takeover is likely to be a worrying game changer not only for how consumers interact with the online world but also for how their health data is used,” Monique Goyens, the group’s director general, said in a statement. “It is hugely important that the E.U. carries out this in-depth examination because wearable devices like Fitbit’s could in future give companies details of essentially everything consumers do 24/7.”

August 10, 2020
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