EU to Investigate Google’s Fitbit Acquisition – Know Why

Google Acquired Fitbit in November

Google has maintained that its acquisition of wearables brand Fitbit is about the devices and not an attempt to harvest more user data for advertising. However, industry experts expect the tech giant to do just that further down the track.

Last year Google announced a US$2.1 billion deal to purchase Fitbit which has some 28 million global active users. The move sparked concerns from competition regulators around the globe about how Google will use sensitive user data from the devices which could further entrench its dominance in digital advertising.

Fitbit was acquired to bolster its wearable portfolio, but the deal has been under scrutiny from the EU since day one. Several months later, it’s now looking like Google’s Fitbit deal will undergo a full investigation from the European Union.

The EU Investigation

EU will announce a full-scale investigation into the Google/Fitbit deal next week. If that’s the case, it could delay the deal from finalizing even further, preventing Google and Fitbit from working together more closely. (source: Reuters)

The investigation would reportedly take up to four months and may focus in on the use of this data in healthcare. In a statement reiterating its previous comments, a Google spokesperson said that the deal is about the devices, not the data, and how Fitbit will help Google better compete in the wearable space.

Previously, Google has pledged to the EU that it will not use Fitbit customer data — which includes some detailed heath data — to serve advertisements. That motion was made to help curb antitrust concerns from the EU, but clearly it wasn’t enough now that talks of a full investigation are on the table.

Consumer groups from across Europe, the US, Mexico, Canada, and Brazil have labeled Google’s Fitbit deal a “test case” for regulators’ abilities to prevent data monopolies. Google has been trying to appease European regulators by offering not to use Fitbit’s health data to target ads, but the Financial Times reports that this guarantee hasn’t been enough. EU officials are reportedly demanding more concessions that would guarantee Fitbit’s data would be open to third-party developers, and also seeking assurances that Google won’t use Fitbit data to improve its search engine.

What’s Happening Currently?

Currently, the European Commission and the Australian Competition and Consumer Commission (ACCC) are among those looking into the deal, with the US Department of Justice reportedly carrying out its own investigation.

Fitbit’s leading share in the wearable tech market has dwindled from 45% in 2014 to just 3% this year. Competitors such as Apple, which holds 29% of the market according to market research firm IDC, Samsung and Huawei have since emerged. Given this, experts don’t think a merged Google and Fitbit will kill competition in the tech space.

Instead, the focus has been on how the Fitbit data will be used. To ease concerns from regulators, Google has pledged to the EC it would not use Fitbit health and wellness data for Google ads, a position it’s maintained since announcing the deal last November.

“Throughout this process we have been clear about our commitment not to use Fitbit health and wellness data for Google ads and our responsibility to provide people with choice and control with their data,” a local Google spokesperson says.

“Similar to our other products, with wearables, we will be transparent about the data we collect and why. And we do not sell personal information to anyone.”

The EC is currently taking feedback on whether to accept Google’s pledge or launch a full-scale investigation, according to reports.

Industry insiders say the ACCC’s look into the deal is still in its early stages and the watchdog hasn’t yet asked for a similar pledge from Google.

However, when launching its investigation last year, ACCC chair Rod Sims notes that given Google’s history it is “a stretch to believe any commitment Google makes in relation to Fitbit users’ data will still be in place five years from now”.

Industry experts echo Sims’ thoughts on Google’s plans for Fitbit.

“Google says this acquisition won’t have any immediate impact on advertising – yet if history is anything to go by there will probably be some subtle adjustments to this stance over time,” Wavemaker head of technology Victoria Brennan tells AdNews.

“It’s a very likely first stage that users will be asked to link their Fitbit accounts to their Google accounts, so immediately those disparate data sets will be connected, and trends analysed whether they’re activated through advertising or not.

“It’s not a stretch to envisage a future where our BMI data is being used to target us with diet plans, for instance, which for many people would create useful and relevant targeting.

“Every time these headlines appear there is an uneasiness about how and where that data will be used, but the reality is that we live in an era where more of the things that make our lives easier also leave a data trail. As always it comes down to value exchange and ultimately, it’s down to the user whether their data is worth the services they gain from the tool in return.”

The ACCC noted in its statement of issues that Fitbit’s data is “unique”.

Google reiterated previous comments, saying the deal is about devices and not data.

“The wearables space is crowded, and we believe the combination of Google and Fitbit’s hardware efforts will increase competition in the sector, benefiting consumers and making the next generation of devices better and more affordable,” a spokeswoman said.

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