EU approves Google’s Fitbit acquisition – but with conditions

18 Dec 2020602 Views

Image: © sharafmaksumov/Stock.adobe.com

The acquisition approval is conditional on full compliance with a number of commitments, including a Fitbit data silo separate from Google’s data.

Following an in-depth investigation, the European Commission has approved the acquisition of Fitbit by Google under the EU Merger Regulation.

The tech giant’s parent company agreed to purchase wearable fitness device firm Fitbit for $2.1bn in late 2019.

However, the European Commission raised concerns around the acquisition, primarily that the proposed deal would increase the “already vast” amount of data Google can use for ad targeting, further entrenching the company’s dominance in online advertising.

In a decision announced yesterday (17 December), European Commission executive vice-president, Margrethe Vestager, said the commission is able to approve the proposed acquisition because Google made a number of commitments that will ensure the wearables and digital health space market will remain open and competitive.

“The commitments will determine how Google can use the data collected for ad purposes, how interoperability between competing wearables and Android will be safeguarded and how users can continue to share health and fitness data, if they choose to,” she said.

What does Google have to do?

The European Commission’s investigation highlighted a number of concerns where competition could be harmed including in advertising, Fitbit’s web application programming interface (API) and competitors’ wearable devices.

Concerns around advertising

In terms of advertising, the commission was concerned about the possible acquisition of Fitbit’s database, giving Google access to data that could be used for personalised ads. When Google first submitted its commitments in July of this year, the company suggested the creation of a data silo that would keep data collected through wearable devices separate from any other Google dataset.

When the commission announced its investigation in August, it said the data silo proposal was “insufficient” as it didn’t cover all the data that Google would access as a result of the transaction.

The data silo is now required as one of Google’s commitments to maintain a technical separation of relevant Fitbit user data. But in addition, Google must commit to not use the health and wellness data collected from wrist-worn wearable devices and other Fitbit devices of users in the European Economic Area (EEA) for Google Ads. This includes search advertising, display advertising and advertising intermediation products, as well as manually inserted data and any data collected via sensors such as GPS.

Google must also ensure that EEA users will have an effective choice to grant or deny the use of health and wellness data stored in their Google account or Fitbit account by other Google services such as Google Maps, Google Assistant and YouTube.

Concerns around API access

The commission also highlighted its concerns around the possibility of restricting competitors’ access to the Fitbit Web API, through which a number of digital health players have access to health and fitness data supplied by Fitbit.

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Under the acquisition, Google could be in a position to restrict competitors’ access to the API. To address this, the tech giant has agreed to maintain access to the data, subject to user consent and without charging for access.

Concerns around competitors’ devices

Finally, the commission said it was concerned that, following the transaction, Google could put competing wearable device manufacturers at a disadvantage by degrading their interoperability with Android smartphones.

To address this, Google has committed to license the public APIs covering core functionalities that wrist-worn devices need to operate on Android to manufacturers for free. This includes any improvements related to the core functionalities and relevant updates, which will be kept in open-source code in the future.

Google has also agreed not circumvent the Android API commitment by degrading users’ experience with third-party wrist-worn devices through the display of warnings, error messages or permission requests in a discriminatory way.

Other conditions of the acquisition

While privacy was highlighted as a concern by other market participants, the commission’s investigation found that the provisions and principles of GDPR will provide sufficient privacy and data protection for users.

An appointed trustee will monitor the implementation of Google’s commitments. This trustee will have far-reaching access to Google’s records and technical information to ensure the commitments are met. The commitments also include a fast-track dispute resolution mechanism, which can be invoked by third parties.

The duration of the commitments is 10 years, and the commission may decide to extend the ads commitment by an additional 10 years due to Google’s entrenched position in the online advertising market.

Meanwhile, in the US

While the commission’s approval of the Fitbit acquisition could be seen as a win for Google, the search giant is still under fire in the US for anti-competitive practices.

Following a landmark lawsuit by the US Department of Justice in October, a bipartisan coalition of 38 states and territories filed an antitrust lawsuit against Google this week, alleging that the tech giant holds a monopoly in general search.

The complaint alleges that the company has “methodically undertaken actions to entrench and reinforce its general search services and search-related advertising monopolies by stifling competition”.

It continues: “Google has systematically degraded the ability of other companies to access consumers.”

In response, Google said competition is “just a click away” and claimed redesigning its search results would harm consumers.

Jenny Darmody is the deputy editor of Silicon Republic

editorial@siliconrepublic.com