The European Commission has opened an in-depth investigation under the EU Merger Regulation 139/2004. to assess Google’s proposed acquisition of Fitbit. The Commission is concerned that the proposed transaction would further entrench Google’s market position in the online advertising markets by increasing the amount of data that Google could use for personalisation of the ads it serves and displays.
Following its first phase investigation, the Commission has concerns about the effect of the transaction on the supply of online search and display advertising services as well as on the supply of adtech services. By acquiring Fitbit, Google would acquire (i) the database maintained by Fitbit about its users’ health and fitness; and (ii) the technology to develop a database similar to that maintained by Fitbit.
According to the Commission, the data collected via wrist-worn wearable devices appears, at this stage of its review of the transaction, to be an important advantage in the online advertising markets. By increasing the data advantage of Google in the personalisation 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. As a result, the transaction would raise barriers to entry and expansion for Google’s competitors for these services, to the ultimate detriment of advertisers and publishers that would face higher prices and have less choice.
At this stage of the investigation, the Commission considers that Google:
- is dominant in the supply of online search advertising services in the EEA countries (with the exception of Portugal for which market shares are not available);
- holds a strong market position in the supply of online display advertising services at least in the UK, Norway and eighteen EU countries, in particular in relation to off-social networks display ads;
- holds a strong market position in the supply of ad tech services in the EEA.
The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its concerns about the online advertising markets are confirmed.
In addition, the Commission will also further examine:
- the effects of the combination of Fitbit’s and Google’s databases and capabilities in the digital healthcare sector, which is still at a nascent stage in Europe; and
- whether Google would have the ability and incentive to degrade the interoperability of rivals’ wearables with Google’s Android operating system for smartphones once it owns Fitbit.
During the initial investigation, the Commission has been closely cooperating with competition authorities around the world, as well as with the European Data Protection Board. The Commission will continue this cooperation also during the in-depth investigation. Google submitted commitments to the Commission consisting of creating a data silo, which would have been restricted from usage for Google’s advertising purposes. However, the Commission considers that this is insufficient to clearly dismiss its serious doubts about the effects of the transaction. Among other reasons, this is because the data silo remedy did not cover all the data that Google would access as a result of the transaction and would be valuable for advertising purposes.
The Commission now has 90 working days, until 9 December 2020, to take a decision. The opening of an in-depth inquiry does not prejudge the final result of the investigation.
