BIG TECH

By Vicky Tatsi

October 10, 2020

Ezra Whittaker

The concerns

On the one hand, Fitbit is an American company active in the development, manufacturing and distribution of wearable devices (both smartwatches and fitness trackers), that collect sensitive data including users’ heart rates, their fitness activity, and their sleep patterns, and connected scales in the health and wellness sector, as well as in the supply of related software and services.

On the other hand, Google is active in different business fields including online search and advertising technology, mobile hardware and software such as Google Chrome. It’s true that the above mentioned transaction has caused fears about Google’s increased access to data from Fitbit’s hardware, that may be used for personalization of the ads Google serves and displays, although Google-and Fitbit- claim(s) that this deal is about devices, not data and that it will not use sensitive data for Google ads.

What is European Commission’s role?

The European Commission, at its latest press release, makes it clear that 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 Fitbit's one. The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds, according to the Merger Regulation’s provisions, and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

Data sharing as a remedy?

The combination of data through an acquisition may provoke competition concerns, as Google will solidify its dominance and limit competition, and thereby limit data sharing when a remedy would require the parties to keep their databases separate. In case the level of data concentration enabled by a merger significantly impedes effective competition, there are two paths to be followed;

In order to face the competition concerns, either the relevant databases have to be kept separate, which limits data sharing among the parties, or the data has to be divested to a third independent party, which would enable data sharing beyond the parties. The latter approach can be explained by the following reasoning; by requiring the parties to divest or even duplicate the relevant data, competitors have to develop competing or even complementary services in order to keep the relevant product (and geographical) market competitive after the acquisition.

Precedent for such a remedy can be found in the acquisition of Reuters by Thomson in 2008 where the Commission approved the merger under the condition that the merging parties would divest copies of their databases containing financial information. Nevertheless, Google-Fitbit takeover is a bit different case as Google and Fitbit are not competitors as they are active in different product markets. So, in this case which is the right path to follow?

The commitment

According to Google, the combination of Google and Fitbit's hardware efforts will increase competition in the sector, making the next generation of devices better and more affordable. It is in this spirit Google’s initiative to offer not to use health data of fitness tracker company Fitbit. This proposal/commitment was an attempt to address EU antitrust concerns about its proposed $2.1 billion acquisition, which as it turned out was insufficient for the European Commission and its ex ante control.

Furthermore, Google Senior Vice President for Devices and Services Rick Osterloh said that “As we do with all our products, we will give Fitbit users the choice to review, move or delete their data”. However, let’s note at this point that users have these choices and rights at any moment, according to the GDPR’s provisions, which are legally binding.

Next steps

While the European Commission has underlined that its main concern is the "data advantage" Google will gain to serve increasingly personalized ads via its search page, it also said its investigation would look into:

1. the effects of the merger on Europe's nascent digital healthcare sector, and

2. 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.

Last but not least, it is crucial to be clear which is the interaction between consumer and personal data protection legislation and EU competition law in the digital economy. Different cases have proven that there is a regulatory dilemma faced by European antitrust authorities, which are currently struggling to find a solution to the market failures arising in digital markets due to legislative gaps.

This shows that there are many steps to be taken in order for a contemporary solid EU legal framework to be shaped that could be used by the authorities, member states and citizens in order to protect their rights and set limits on the action of companies that abuse their dominant position in the market, especially in case they make use of sensitive personal data.