[Update: Approval Expected] EU to launch investigation into Google’s Fitbit acquisition

[Update: Approval Expected] EU to launch investigation into Google’s Fitbit acquisition

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Update 1 (09/29/2020 @ 12:35 PM ET): Google’s deal to acquire Fitbit is expected to gain approval from the EU. Scroll to the bottom for more information. The article as published on August 4, 2020, is preserved below.

Last year, Google announced its intent to acquire Fitbit, an American technology company that focuses on wearable technology, saying the move was about “devices, not data.” Even with Google making these assurances, however, the European Commission this week revealed plans to launch an investigation into the acquisition, citing concerns over the search giant’s access to health data and its position in online advertising.

The investigation is expected to last 90 days, which means the Google-Fitbit deal can’t close until the end of this year at the earliest. Google said it hopes to build “compelling devices” once the deal is done, so the investigation will certainly put a damper on the search giant’s future plans — at least for now.

In a press release, the European Commission said data that’s collected via wrist-worn devices could provide Google with a major advantage in online advertising markets. “By increasing the data advantage of Google in the personalization of the ads it serves via its search engine and displays on other internet pages, it would be more difficult for rivals to match Google’s online advertising services,” the commission said.

Google, meanwhile, claims the acquisition is about providing customers with more choice. In a blog post on Tuesday, Google’s Rick Osterloh said that Google’s AI and Fitbit’s hardware expertise will “increase competition in the sector” and result in better wearables that are more affordable. Osterloh went on to say that Fitbit users have the choice to review, move, or delete their data, which will be siloed away from its ad tracking business. “We’ve been clear from the beginning that we will not use Fitbit health and wellness data for Google ads,” Osterloh said. “We recently offered to make a legally binding commitment to the European Commission regarding our use of Fitbit data.”

Despite Google’s commitments, the European Commission still believes Google will use data as a result of the transaction, giving the search giant an unfair advantage for advertising purposes. Google doesn’t currently make its own wearable devices but instead develops the Android-based Wear OS platform which is used in smartwatches made by the Fossil Group, Xiaomi, OPPO, Mobvoi, and other companies.


Update 1: Approval of Google, Fitbit deal expected

According to sources speaking to Reuters, Google’s $2.1 billion purchase of Fitbit is on track to receive approval from the EU. In a statement, Google told the publication that it had offered to restrict the use of health data for ads and would strictly monitor the use of that data. “We’re also formalizing our longstanding commitment to supporting other wearable manufacturers on Android and to continue to allow Fitbit users to connect to third party services via APIs (application programming interfaces) if they want to,” a Google spokesperson told Reuters. These concessions, which were part of a proposal Google submitted to the EU in July, are apparently enough for the European Commission to consider approving the deal. According to Reuters, Google’s initial proposal was to just limit the use of fitness tracking data for advertising purposes, but that was rejected as being insufficient; Google’s new pledge to support interoperability by continuing to allow Fitbit users to connect their trackers to third-party services seems to have sweetened the deal.

The EU is scheduled to give its decision on the deal by December 23rd, 2020, though the Commission will now reach out to rivals and other customers in this space to seek additional feedback before deciding on whether or not to accept the deal. Reuters points out that healthcare providers and privacy advocates are concerned about what kind of data Google is seeking from this deal and where the company will acquire that data, so Google may still need to make more concessions before the deal is finalized.