ACCC rejects Google’s attempt to ease concerns around Fitbit acquisition

Mariam Cheik-Hussein
By Mariam Cheik-Hussein | 22 December 2020

Consumer watchdog the ACCC has rejected a pledge from Google which aimed to ease competition concerns around its proposed acquisition of Fitbit, with the watchdog to continue its investigation into the deal.

Google first announced a US$2.1 billion deal to purchase the wearable brand last year, kicking off investigations from competition watchdogs in the US and EU, as well as by the Australian Competition and Consumer Commission (ACCC).

A main concern was that Google would use the devices to harvest more user data for advertising, despite Google maintaining the acquisition was about the devices.

To ease the ACCC’s concerns, Google offered a court enforceable undertaking that it would “behave in certain ways towards rival wearable manufacturers, not use health data for advertising and, in some circumstances, allow competing businesses access to health and fitness data.”

However, the ACCC says this isn’t enough and has set a new decision date of March 25, 2021 for its investigation.

“The ACCC continues to have concerns that Google’s acquisition of Fitbit may result in Fitbit’s rivals, other than Apple, being squeezed out of the wearables market, as they are reliant on Google’s Android system and other Google services to make their devices work effectively,” says ACCC chair Rod Sims.

Fitbit has about 28 million global active users, and its share in the wearable tech market has dwindled from 45% in 2014 to just 3% this year. Competitor Apple holds 29% of the market according to market research firm IDC.

The ACCC argues that the proposed acquisition also further consolidates Google’s leading position in relation to the collection of user data, which supports its significant market power in online advertising and is likely to have applications in health markets.

“We are also continuing to investigate the acquisition’s potential impact on wearable operating systems,” Sims says.

“The acquisition may result in Google becoming the default provider of wearable operating systems for non-Apple devices and give it the ability to be a gatekeeper for wearables data, similar to the position it holds for smartphones which licence the Android operating system.

“Wearable devices such as smart-watches are becoming more important in Australians’ online lives, and the user data these devices collect is likely to become increasingly valuable. The competition impacts of Google acquiring Fitbit to expand into these important markets needs to be very carefully considered.”

While the EU recently accepted a similar undertaking from Google, Sims says it isn’t satisfied that such a pledge could be effectively monitored and enforced in Australia.

“We recognise we are a smaller jurisdiction and that a relatively small percentage of Fitbit and Google’s business takes place here, however the ACCC must reach its own view in relation to the proposed acquisition given the importance of both companies to commerce in Australia,” he says.

The proposed acquisition has received conditional clearance in Europe, but the US Department of Justice is yet to make a decision. The ACCC says it will continue to work closely with overseas agencies on these important competition issues.

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