The European Commission today approved Google’s $2.1 billion deal to acquire Fitbit, with conditions. Google can buy Fitbit as long as the tech giant avoids using the wearable maker’s user health data for advertising purposes.
EU regulators have been scrutinizing the deal for months over concerns the merger would undermine competition in the tech sector. A major worry is that Google will tap Fitbit’s customer data to create more personalized ads, giving the tech giant an even greater edge in the online advertising industry. The commission also feared Google might cut access to Fitbit’s API for third-party apps and services.
“Such a strategy would come especially at the detriment of start-ups in the nascent European digital healthcare space,” the commission said.
By buying Fitbit, Google will for the first time have its own hardware products in the smartwatch market. However, EU regulators question whether the company will continue to play fair or try to undermine its rivals. “The Commission is concerned that following the transaction, Google could put competing manufacturers of wrist-worn wearable devices at a disadvantage by degrading their interoperability with Android smartphones,” it added.
In response, Google has committed to never combining data obtained by Fitbit’s wearable devices with the company’s advertising business. The API for Fitbit will also remain open to third-party developers at no cost.
"Google will maintain a technical separation of the relevant Fitbit's user data. The data will be stored in a 'data silo' which will be separate from any other Google data that is used for advertising," the commission added.
Google has also vowed to essentially keep the interoperability between Android smartphones and third-party wrist-worn devices intact. The commitments will only last for 10 years, but EU regulators can choose to extend Google’s “duration of the Ads Commitment” up to an additional 10 years if necessary.
On competition, the commission noted that Fitbit has a “limited market share” in Europe when other companies including Apple, Garmin, and Samsung hold a stronger presence in the smartwatch market.
“We can approve the proposed acquisition of Fitbit by Google because the commitments will ensure that the market for wearables and the nascent digital health space will remain open and competitive,” said Commission Executive Vice President Margrethe Vestager.
It’s unclear if Google plans on making the same commitments outside of the European Union. We’ve reached out to the company for comment. US regulators are still reviewing the deal.