Google is putting regulators “in an impossible position,” he added. in the cloud-computing market.ĭoubling down on acquisitions while being investigated for anti-competitive practices will provoke a political backlash, said Matt Stoller, a fellow at the Open Markets Institute, which studies and recommends competition policies. Google argues the tie-up isn’t anti-competitive because Google is well behind Inc. The antitrust division of the Justice Department is seeking more information on the deal to determine whether the tie-up harms competition. It agreed to buy cloud services company Looker in June for $2.6 billion. The Fitbit deal is Google’s second major acquisition this year. “Platforms like Google and Facebook, they collect data from consumers, not just the posts we like on Facebook or the searches we make on Google, but much more unexpected things,” she said. In August, she called tech giants “robot vacuum cleaners” sucking up valuable data in a way that can undermine competition. Margrethe Vestager, the European Union’s antitrust chief, recently called for more rules to rein in how companies collect and use information.
“This is a developing theory of harm in M&A antitrust review and enforcers will likely assess the risk.” “The merger arguably could reduce quality to consumers due to weakened data privacy protections,” Rie, the Bloomberg Intelligence analyst, wrote on Friday. And several other smartwatch makers use a Google operating system to run their devices, giving the internet giant an even bigger net to scoop up people’s digital health and fitness data.
In the second quarter, Fitbit got almost six times more market share in North America than in the Asia Pacific region, according Strategy Analytics. In the U.S., Apple and Google will be even more powerful because Fitbit has a larger share of the domestic market for smartwatches and fitness trackers. Apple had 46% of this growing sector at the end of the second quarter, while Fitbit had 10%, according to research firm Strategy Analytics. and Google control more than half of the global smartwatch market.
GETS ANTITRUST SCRUTINY ON DATA USAGE SOFTWARE
Google has never built its own smartwatches and its software for other companies’ wearable devices isn’t very popular, a point the company will likely make to justify why the deal won’t harm competition.Īlphabet Inc.’s Google is a leader in digital data though, and Fitbit would give it a new stream of valuable health and activity data from Fitbit’s more than 28 million users. Still, Google and Fitbit are pressing ahead.
“Any proposed transaction is likely to get attention from the antitrust enforcement agencies with a high likelihood of a second request even though the proposed transactions may have no antitrust implications,” Mitnick said. In the current political climate, regulators will take a very close look, said Joel Mitnick, a partner in the antitrust division of Cadwalader, Wickersham & Taft LLP and a former Federal Trade Commission lawyer. Two acquisitions that were reviewed by regulators - the DoubleClick deal in 2007 and the ITA Software purchase in 2010 - took eight and nine months, respectively, to clear, according to Bloomberg Intelligence data. That’s a broader time frame than other Google deals. Both companies have given themselves a year to gain antitrust clearances, although that can be extended through and Google would owe Fitbit $250 million if the deal fails due to antitrust issues, according to Jennifer Rie, a senior litigation analyst at Bloomberg Intelligence. The acquisition is expected to close sometime in 2020, Fitbit said. “Google’s proposed acquisition of Fitbit would also give the company deep insights into Americans’ most sensitive information - such as their health and location data - threatening to further entrench its market power online.” “Google is signaling that it will continue to flex and expand its power in spite of this immense scrutiny,” said Cicilline, a Democrat from Rhode Island. Representative David Cicilline, who heads the House antitrust investigation into the big tech companies, also criticized the deal. senator from Missouri, said on Twitter referring to the Justice Department. “Why should Google be permitted to acquire even more companies while they’re under DOJ antitrust investigation?” Josh Hawley, a Republican U.S. Google and Fitbit expect the deal to face protracted regulatory review in light of the current political focus on competition and privacy issues in the tech industry, a person familiar with the transaction said.Īnd two of the company’s major critics in Congress urged regulators to conduct just such a thorough review. market for fitness tracking devices and data, and the purchase is already coming under fire from U.S. means two of the largest technology companies now dominate the U.S. Google’s $2.1 billion acquisition of Fitbit Inc.
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