European Commission Investigates The Google-Fitbit Acquisition

Global search-engine giant Google is poised to acquire Fitbit, a technology company popular for its wrist-worn activity tracker, in a market-changing $2.1 billion deal. The economic implications of this deal are significant from three angles: the lenses of privacy, competition, and consumer experience. 

The European Commission has taken a particular interest in the privacy and competition concerns raised by Google’s proposed acquisition of Fitbit. Since the introduction of the General Data Protection Regulation (GDPR), companies’ collection and use of private data has been a prominent point of scrutiny from the general public, various forms of media and public bodies. With Google potentially having access to Fitbit’s databases, it would follow that the company has access to details concerning consumer health from a specialist market leader such as Fitbit. This would enhance Google’s capability to create highly personalised advertisements through user data acquired from Fitbit. 

The European Commission is considering the possibility that Google’s access to Fitbit’s consumer data will have an adverse effect on the market. This adverse effect would arguably be resultant from advertisers having to pay more money to compete with Google’s enhanced advertisement campaigns after the acquisition of Fitbit. If a significant proportion of rival advertisers are unable to compete with Google’s Fitbit-enhanced advertisement campaigns, a possible effect on consumer choice within the digital healthcare sector should be considered. Namely, consumers would arguably have a fewer selection of products to choose from if competitors cannot afford to compete with Google’s advertisement campaigns after the Fitbit acquisition. This consequence could heighten barriers to entering the digital healthcare industry and possibly allow Google to push up prices due to reduced competition.  

To ascertain clearance from the European Commission, Google did propose the creation of a data silo. This would entail specific pieces of data collected from Fitbit consumers being placed into a digital silo that Google could not access in running their advertisement campaigns. The European Commission found this proposition unsatisfactory because it is, at present, ambiguous if the proposed data silo would significantly remedy competition concerns raised by the deal.

The European Commission has announced that they have until the 9th of December 2020 to make their decision on the transaction. 

By Brighton Dube