Google’s Fitbit Acquisition Hits EU Roadblock

Europe isn’t letting up on antitrust scrutiny of tech behemoths like Google.

The European Commission said Tuesday it has opened an “in-depth investigation” into Google’s acquisition of Fitbit, which makes and sells smartwatches focused on activity tracking. Google said in November that it was paying $2.1 billion for the company, giving Google an immediate foothold in the wearables market, which is dominated by rival Apple with its popular Apple Watch.

“The data collected via wrist-worn wearable devices appears, at this stage of the commission’s review of the transaction, to be an important advantage in the online advertising markets,” the regulators wrote in a statement. “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. 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.”

Rick Osterloh, Google’s senor vice president of devices and services, wrote in a blog post that there is “vibrant competition when it comes to smartwatches and fitness trackers,” naming Apple, along with Samsung and Fossil as examples.

He added that Google’s acquisition of Fitbit “is about devices, not data,” but alluded to working with the commission to address “consumer expectations” on wearable devices.

“We’ve been clear from the beginning that we will not use Fitbit health and wellness data for Google ads,” Osterloh wrote. “As we do with all of our products, we will give Fitbit users the choice to review, move or delete their data.”

The commission, with antitrust investigations led by Margrethe Vestager, has launched nine investigations into Google in the last decade. Three have resulted in fines, with a record fine coming in 2017 of 2.4 billion euros. Most investigations have centered around Google’s dominance as an Internet search platform and, within that, its large influence over online advertising. And it’s advertising again at the center of the new investigation into the Fitbit acquisition.

In a statement, Vestager said the adoption of tech wearables by people in Europe is expected to “grow significantly in coming years,” leaving Google with another way to target and serve up ads to the public. Europe has some of the strictest laws and regulations on consumer data, how it can be collected, used and stored by companies, and has taken an aggressive stance in regulating the biggest and most popular tech operators, including Apple, Amazon, Facebook and Twitter.

 Vestager said the rise of wearable tech “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,” she added. “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.”

Although Google is said by regulators to have already agreed to put Fitbit data in a “silo” where it would not be allowed to be used for advertising purposes, the commission found that move not enough, mainly because the data in the silo would be limited. The commission now has three months to reach a decision on whether to approve the Fitbit acquisition.  

The European investigation comes as tech operators Google, Amazon, Apple and Facebook are facing a growing level of antitrust scrutiny by U.S. lawmakers. Chief executive officers of those four companies appeared last week before members of Congress in what was billed as a hearing on their potentially anti-competitive practices and acquisitions. While some of the five hours was spent asking the executives about their business practices, the hearing frequently devolved into accusations from Republicans that conservative opinions were being undermined by Google and Facebook. A full report on the hearing is expected sometime later this year.

But regulators in the EU have been pressuring, investigating and often fining these dominant tech companies for years. One current investigation is into Facebook and its advertising practices, as well as its handling of user data. Facebook decided to push back on that investigation last month by filing a legal challenge to the commission, arguing that its requests of data are too broad. Ireland also has a number of separate open investigations into Facebook and its data practices.

The commission in June launched an antitrust probe into Amazon and its treatment of third-party sellers, which make up the vast majority of the available product on its core marketplace platform. The same month the commission started two investigations into Apple, one focused on its App Store practices, including the 30 percent cut it’s said to take from many sellers that use the platform, and the other on Apple Pay, which may cross EU banking rules. But Apple last month won a major victory when the EU’s second-highest court overturned the union’s 13 billion euro tax bill that its antitrust officials said the American company owed to Ireland.

Sign up for WWD’s Newsletter. For the latest news, follow us on Twitter, Facebook, and Instagram.

Source Article

Next Post

The United States Is Reopening Many of the Wrong Schools

Tue Aug 4 , 2020
With coronavirus cases spiking in dozens of states, the prospect of anything resembling a normal school year is fading fast. Schools can’t safely reopen if infections are exploding in the communities they serve. But in regions where the pandemic appears to be under control, it is most important to get […]