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Risky Precedent Set By EU’s Approval Of Google-Fitbit Deal


12/20/2020


Risky Precedent Set By EU’s Approval Of Google-Fitbit Deal
The acquisition of Fitbit by Alphabet’s Google in a deal worth $2.1 billion was approved by the European Commission’s antitrust regulator this week just days after the chief of the antitrust body of the European Union send strong signals of being tough and stricter against large tech companies such as Facebook and Amazon.com by releasing the draft of a new legislation.
 
However, the approval of purchase of Fitbit by Google by the EU antitrust head of the EU Margrethe Vestager, seemingly is also sending mixed signals to the large United States based tech companies.
 
And even though the deal was however approved with conditions, it sets a risky precedent for future tech mergers and acquisitions, say analysts.
 
It might appear form the deal details that some meaty concessions from Google have been drawn out by Vestager. The wrist-worn fitness tracker company was agreed to be bought by Google in November 2019.
 
According to the conditions of the approval of the deal, Google has agreed to keep the user data of the California-headquartered Fitbit in a separate “silo”, so that such data cannot be used by the search engine giant for its existing digital advertising business. Google will also have to make sure that the Android smartphone operating system owned by it is still usable and workable on health tracking devices from rivals such as Samsung Electronics. Smartphones and fitness devices often work in tandem.
 
According to the European antitrust regulators, these concessions by Google will prevent it from assuming a dominant position in the still nascent digital health market by the use of the huge data and control of software for smartphones owned by Google. Google has also agreed to implementing the conditions on it for the next 10 years with the option of extending them from another 10 years and an independent trustee monitoring the compliance of the conditions by Google.
 
But analysts have pointed out to some gaps in the conditions of the approval of the deal.
 
The health information if the users of Fitbit cannot be directly accessed by Google’s ad business under the condition of keeping Fitbit data in a silo. But that does not make it clear whether that condition will also prevent Google from drawing anonymous, statistical lessons about the health data of the users and using that to improve the quality of its advertising.
 
And under the condition of Google continuing to ensure the same access to Android tools to Fitbit’s rivals as it does to other developers, Google in theory can still hold back future health-software innovations and not share it. Hence, analysts say that the fear of Google using its dominance in smartphone operating systems in favour of its own fitness tracker could still be a risk.
 
(Source:www.reuters.com)