Regulators are increasingly wary of Google’s Fitbit acquisition due to data privacy issues. The deal is expected go through in the months ahead.
Essential reading: Top fitness trackers and health gadgets
The acquisition was announced at the start of November 2019. Google agreed to pay $7.35 per share for Fitbit in an all-cash deal totaling around $2.1 billion. The search giant apparently fought off a number of bidders to secure the deal, including Facebook.
Shortly after the deal was announced, the US Department of Justice (DOJ) opened an investigation into whether the transaction 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 is looking into whether the acquisition will lead to anti-competitive behavior. Fitbit is one of the big players in the wearable market. If the deal gets the go-ahead that would mean one less independent player. There’s also the possibility its operating system will be merged into WearOS.
Today the New York Post reports that the DoJ is running a second request review, meaning both companies will need to provide the organisation with more information. The deal is obviously coming under greater scrutiny. If Google pulls out of the acquisition, it will have to pay Fitbit a cool $250 million.
The biggest concern is to do with data privacy – targeted advertising comes to mind. A number of consumer groups in the US, 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 last 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. It’s possible Google will have to make compromises on how it handles user data. But access to data is likely to be important for the search giant.
If you are a Fitbit user and share these privacy concerns there are things you can do to. Here we mean there are options on what to do with your data before the acquisition goes through, such as deleting it.
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. Last month Bloomberg reported there is heightened concern amongst regulatorsin the EU. The deal is likely to undergo a review by the European Commission as well as the Australian authorities.
“The concern people have is, well I might have given consent for Fitbit to have this information, but I didn’t give consent to Google,” and now Google could combine it with all its other data, said Justin Warren, a board member of Electronic Frontiers Australia.
Despite the increased scrutiny, the transaction is expected to close later this year. With Fitbit onboard, Google might have the necessary firepower to compete with Apple in the wearables market. And who knows, we might even see the long-rumored Pixel Watch.
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