Belgium Mergers Commission Tender

The European Commission has approved under the EU Merger Regulation the acquisition of Fitbit by Google. The approval is conditional on full compliance with a commitments package offered by Google.Executive Vice-President Margrethe Vestager in charge of competition policy said 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. The commitments will determine how Google can use the data collected for ad purposes how interoperability between competing wearables and Android will be safeguarded and how users can continue to share health and fitness data if they choose to.Todays decision follows an in-depth investigation of the proposed transaction which combines Googles and Fitbits complementary activities. Fitbit has a limited market share in Europe in the fast-growing smartwatch segment where many larger competitors are present such as Apple Garmin and Samsung. The proposed transaction leads to very limited horizontal overlaps between the activities of Google and Fitbit. The Commissions investigation focused on the data collected via Fitbits wearable devices and the interoperability of wearable devices with Googles Android operating system for smartphones.The Commissions investigationDuring its in-depth investigation the Commission gathered extensive information and feedback from competitors of the merging companies as well as from various other market participants and stakeholders. The Commission has also worked in close cooperation with competition authorities around the world as well as with the European Data Protection Board.Following its investigation the Commission had concerns that the transaction as initially notified would have harmed competition in several markets. In particularAdvertising 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 of Fitbit. By increasing the already vast amount of data that Google could use for the personalisation of ads it would be more difficult for rivals to match Googles services in the markets for online search advertising online display advertising and the entire ad tech ecosystem. The transaction would therefore raise barriers to entry and expansion for Googles competitors for these services to the detriment of advertisers who would ultimately face higher prices and have less choice.Access to Web Application Programming Interface API in the market for digital healthcare A number of players in this market currently access health and fitness data provided by Fitbit through a Web API in order to provide services to Fitbit users and obtain their data in return. The Commission found that following the transaction Google might restrict competitors access to the Fitbit Web API. Such a strategy would come especially at the detriment of start-ups in the nascent European digital healthcare space.Wrist-worn wearable devices 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.Some market participants who consider that Google has already a significant presence in the digital healthcare sector raised a concern that Google may obtain a competitive advantage in this sector by combining Googles and Fitbits databases to such a degree that competitors would no longer be able to compete. The Commissions in-depth investigation did not confirm such concerns because the digital healthcare sector is still nascent in Europe with many players active in this space. Moreover Fitbit has a limited user community in the fast-growing smartwatch segment.Other market participants raised a privacy concern indicating that it would be increasingly difficult for users to track what their health data would be used for. The Commissions investigation found that Google will have to ensure compliance with the provisions and principles of the GDPR which provides that the processing of personal data concerning health shall be prohibited unless the person has given explicit consent Such concerns are not within the remit of merger control and there are regulatory tools better placed to address them.The proposed remediesTo address the Commissions competition concerns Google offered the following commitments.Ads CommitmentGoogle will not use for Google Ads the health and wellness data collected from wrist-worn wearable devices and other Fitbit devices of users in the EEA including search advertising display advertising and advertising intermediation products. This refers also to data collected via sensors including GPS as well as manually inserted data.Google will maintain a technical separation of the relevant Fitbits 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.Google will ensure that European Economic Area EEA users will have an effective choice to grant or deny the use of health and wellness data stored in their Google Account or Fitbit Account by other Google services such as Google Search Google Maps Google Assistant and YouTube.Web API Access Commitment