The US Justice Department (DOJ) will reportedly investigate Google’s acquisition of Fitbit on data privacy issues and anti-trust concerns.
Essential reading: Top fitness trackers and health gadgets
The acquisition was announced at the start of November. Google will pay $7.35 per share for Fitbit in an all-cash deal totalling around $2.1 billion. The transaction is expected to close in 2020, but this is subject to regulatory approvals. Google apparently fought off a number of bidders to secure the deal, including Facebook.
As first reported by New York Post and now confirmed by Reuters, DOJ has opened an investigation into whether the deal should be allowed to go through. Apparently there was a tussle with the Federal Trade Commission (FTC) on which of the two bodies had authority. But DOJ won as it had opened a broader anti-trust and data privacy review of the search giant a couple of months prior.
The DOJ review will look into whether the acquisition will lead to anti-competitive behaviour. Fitbit is one of the big players on the wearable market. If the deal happens that would mean one less independent player. There’s also the possibility its operating system will be merged into WearOS.
The other, perhaps bigger, issue is to do with data privacy – targeted advertising comes to mind. A number of consumer groups, including Public Citizen, Center for Digital Democracy and Consumer Federation of America, have asked regulators and lawmakers to block the merger. A letter that was posted to the FTC by a number of these bodies states that “Google will further consolidate its monopoly power over Internet-based services” and that “It will increase its already massive store of consumer data.”
DOJ antitrust chief Makan Delrahim confirmed at a conference in November, data privacy is part of their investigation.
“It would be a grave mistake to believe that privacy concerns can never play a role in antitrust analysis,” he said.
“Without competition, a dominant firm can more easily reduce quality — such as by decreasing privacy protections — without losing a significant number of users.”
Google already has lots of data on each and every one of us. The acquisition will also give it access to sensitive health and fitness data from about 28 million Fitbit users. If you are are one of these and you share these concerns, it’s good to know there are options on what to do with your data before the acquisition goes through.
James Park did try to alleviate data privacy fears immediately after the news of the acquisition was made public. He said that “Strong privacy and security guidelines have been part of Fitbit’s DNA since day one”, and that “this will not change.” Google also promised it its original blog post that “privacy and security are paramount” and that they “will never sell personal information to anyone” or use it for advertising purposes.
An investigation of the deal by government watchdogs was always on the cards. After all, most big acquisitions are subject to regulatory scrutiny. But it’s questionable whether anything will come of the review considering Google is not really a big player in the wearables space.
If the deal does go through, it might give the search giant the necessary firepower to compete with Apple in the wearables market. And who knows, we might even see the long-rumoured Pixel Watch.
DOJ, Google or Fitbit are yet to officially comment on any of this.
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