Australian regulator rejects Google’s Fitbit undertaking, delays acquisition decision

Last week the European Commission signed off on the merger, on the condition that Google follows through with a handful of commitments.
By Mallory Hackett
02:35 pm
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Australian regulator rejects Google’s Fitbit undertaking, delays acquisition decision.

Carsten Koall/Getty Images

The Australian Competition and Consumer Commission on Tuesday rejected an undertaking proposed by Google to address competition concerns over its planned acquisition of Fitbit.

The ACCC in June released a list of issues it had with the merger that included concerns that Google would be given too much access to people’s data, as well as decreasing competition in the wearables market.

Google attempted to ease the ACCC’s concerns by offering a court-enforceable undertaking that it would behave in certain ways with competitors, not use health data for advertising and, in certain circumstances, allow competing businesses access to health and fitness data. 

However, the ACCC was not satisfied with the undertaking and said it “continues to have concerns” over the deal. The agency will continue to investigate the acquisition and has set a new decision date of March 25, 2021. 

WHY THIS MATTERS

Just last week the European Commission signed off on the merger, on the condition that Google follows through with a handful of commitments focused on its competitive practices across advertising, digital health APIs and smart device interoperability.

“While we are aware that the European Commission recently accepted a similar undertaking from Google, we are not satisfied that a long term behavioral undertaking of this type in such a complex and dynamic industry could be effectively monitored and enforced in Australia,” ACCC Chair Rod Sims said in a statement. 

“We recognize 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,” Sims said. 

The $2.1 billion deal has still yet to be approved by the U.S. Department of Justice. 

THE LARGER TREND

When Google and Fitbit first announced the acquisition, the two stressed that Fitbit devices would remain platform agnostic and that the companies would be transparent regarding their use of consumers' health and wellness data.

Among the list of groups who have raised concerns over the acquisition is Amnesty International. Ahead of the European Commission’s decision, the advocacy organization sent a letter urging it to halt the merger unless the companies can demonstrate consideration of human rights risks associated with data and surveillance and the implementation of data safeguards.

As Fitbit awaits the merger to fully commence, it was able to come out of the third quarter of 2020 beating its expected revenue by $64.9 million. It had $364 million in revenue last quarter, which represents a 5% year-over-year increase. 

 

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