The proposed US $2.93bn Google Fitbit deal is facing new problems with both the US Federal Government and now the European Union set to delay any takeover of Fitbit by Google because of data concerns.
Overnight the EU came out and confirmed that they are now carrying out a full-scale probe into Google’s takeover of Fitbit.
The investigation could derail the purchase of the fitness-tracking firm who is facing a slump in revenues and investigations into their data collection practises.
It comes despite Google’s offer last month to not use Fitbit’s health data for ad targeting.
“The commission is concerned that the proposed transaction would further entrench Google’s market position in the online advertising markets by increasing the already vast amount of data that Google could use for personalisation of the ads it serves and displays,” the regulator said.
The watchdog said its investigation should be completed by 9 December.
In response, the tech giant said it would cooperate with the process.
“We appreciate the opportunity to work with the European Commission on an approach that addresses consumers’ expectations of their wearable devices,” blogged Google’s devices chief Rick Osterloh.
Recently Fitbit posted a US$132m loss in its last annual results, alongside a sales figure that had declined for the fourth year in a row, despite the launch of its Versa 2 smartwatch.
Competition Commissioner Margrethe Vestager said the amount of data wearable devices will generate is set to grow at an exponential rate
Analysts suggested part of the attraction for Google was the fact that Fitbit had formed partnerships with several insurers in addition to a government health programme in Singapore.
While the European Commission has said its main concern is the “data advantage” Google will gain to serve increasingly personalised ads via its search page, it also said its investigation would look into:
the effects of the merger on Europe’s nascent digital healthcare sector
whether Google would have the means and ability to make it more difficult for rival wearables to work with its Android operating system.
For its part, Google has explicitly denied its motivation is to control more data.
Bloomberg claims that regulators are increasingly suspicious of tech giants’ takeovers, aiming to prevent the already powerful firms from conquering innovative new markets where data is often the most prized asset. Antitrust authorities have been criticized for waving through deals such as Facebook Inc.’s takeover of Instagram and even Google’s 2007 bid for display advertising platform DoubleClick.
The EU’s wide focus on online ads clashes with Google’s view that the “deal is about devices, not data” and that it’s adding a service — wearable health devices — where it currently isn’t active and faces plenty of rivals from Apple Inc., Samsung Electronics Co. Ltd., Garmin Ltd. and others.
Google sought to avoid an extended EU review by promising to create a so-called data silo to keep some Fitbit data separate from other Google datasets that built profiles of internet users to serve them ads they might find attractive. EU regulators said they rejected the offer because it didn’t address their concerns and didn’t include all Fitbit data that could be used for advertising.