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Courtesy of Fitbit
Google
cannot use the health data collected by
Fitbit
users in Europe for advertising and has to make sure rival wearable devices operate on its Android smartphone platform as part of the European Commission’s approval of its $2.1 billion Fitbit acquisition.
The approval comes after a monthslong investigation over concerns about the acquisition’s effect on Google’s (ticker: GOOGL) market position in the European Economic Area, which includes the 27 European Union member states and Norway, Iceland, and Liechtenstein.
Fitbit (FIT) competes in Europe against other wearable makers, including
Apple
(AAPL),
Garmin
(GRMN), and
Samsung
(005930-KR). The conditions are set to last 10 years.
The Commission investigated the competitive aspects of a Google-Fitbit tie up, focusing on data collection and the compatibility of wearable devices with Google’s Android operating system on smartphones.
“The commitments will ensure that the market for wearables and the nascent digital health space will remain open and competitive,” said the Commission’s Executive Vice President Margrethe Vestager.
In an email to Barron’s, a Google spokesperson said, “We believe this deal will spur innovation in wearable devices and enable us to build products that help people lead healthier lives. We understand that regulators wanted to look closely at this transaction, and we have worked constructively with them to resolve their concerns.”
The acquisition is still under review by U.S. regulators. Google is under antitrust scrutiny by the Justice Department and several states.
Big tech companies are facing a reckoning in Europe, where the Commission has proposed the Digital Services Act and the Digital Markets Act aimed at reining in their power.
Under those proposals, which still have to be approved by the European Parliament and Council of Ministers, companies are responsible for the content they host. They also want to prevent them from giving preference to their services over others.
“We are committed to protecting Fitbit users’ privacy and will continue to invest in and support manufacturers and developers. We continue to work with regulators around the world to answer their questions about the acquisition,” the statement from Google said.
Fitbit is a major wearables brand, having sold 100 million devices since it was founded in 2007. The company made its debut its stock in 2015.
Shares of Google’s parent Alphabet fell 0.4% on Thursday but are up 30% this year, compared with a 15% gain in the
S&P 500.
Shares of Fitbit rose 0.1%, and are up 9.7% this year.
The Commission’s investigation focused on Google’s advertising competitiveness. Adding Fitbit to its arsenal means Google can attempt to develop a similar database of users’ health and fitness and use that data to personalize ads. That would make it more difficult for competitors to match Google in online advertising.
There’s also the application programming interface Fitbit uses to provide health and fitness data to outside firms. The Commission said it was worried Google might restrict access to that API, to the detriment of digital health startups in the European market.
Finally, the Commission looked at whether Google could make it harder for makers of other wrist-worn devices operate on its Android system.
Write to Liz Moyer at [email protected]
