BIG DATA & ANTITRUST

(Sensitive) Data Mergers and Consumer Welfare

The acquisition of Fitbit by Google is an emblematic case, as it represents an attempt by Google to expand its participation in the wearables and the health market. This text aims to provide a short overview of the main antitrust and privacy discussions surrounding the case, including the particularities involving sensitive data and the impacts of the merger when it comes to consumer welfare.

By Juliana Novaes

April 14, 2021

One of the most remarkable antitrust cases in 2020 was the acquisition of Fitbit by Google, which started in 2019 when the $2.1 billion deal was announced. Fitbit is a company focused on fitness and electronic products, such as smartwatches and wearable technology in general. This is an emblematic case, as it represents an attempt from Google to expand its participation in the wearables and the health market.

Antitrust concerns in the Google/Fitbit case

Fitbit is part of the fitness and health industry and has as part of its business model the development of electronic devices that are able to gather and analyze personal metrics from its consumer relating to their health and physical activity habits. 

As a consequence, a significant part of the data processed by the company is of sensitive nature, involving information such as heart rate, quality of sleep, steps climbed, and information that generally provides insights on health habits maintained by users.

The merger would hence mean that Google would have access to the databases belonging to Fitbit. Some concerns involving the case are based on the premise that Google could use this data for improving even more its profiling and personalization mechanisms, which would increase entry barriers and damage competition in general. This is based on the discussion around the potential of data as a competitive asset that can create barriers and exclude competitors who do not have access to the same amounts of information and therefore have reduced possibilities of developing personalized products and services with the same precision. This would hence open loopholes for large companies to abuse their power of dominance generated by vast amounts of data.

Data collected by Fitbit could strengthen Google's power in digital economy markets, such as online advertising and search engines, having the potential to leverage its position in additional markets, like those linked to health.

Consequently, following the announcement by Google, the European Commission began investigating the case, due to the high amounts of data that would be obtained from the acquired company and the potential effects this would have on competition.

Consumer welfare concerns

Following the announcement involving the deal, several civil society organizations wrote a joint declaration stating their concerns regarding the merger. The declaration is part of an international initiative that presses competition authorities from around the world to analyze carefully the impacts of the Google-Fitbit operation from a consumer welfare perspective.

This discussion inserts itself in a context in which consumer privacy has become a critical public policy topic. The merger raised concerns among civil society organizations on what are the possible impacts of such a merger when it comes to the privacy of customers.

The very nature of the personal data processed by Fitbit is of high concern, as it provides insights into consumers’ health conditions. This not only affects the right to privacy but could lead to other consequences in the long-term associated with discrimination of individuals and misuse. Health-related data is considered of sensitive nature by the General Data Protection Regulation and it is subject to particularly strict rules due to the long-term consequences for individuals if not correctly protected.

In this sense, one of the arguments presented by civil society organizations is that, as the merger could have potential impacts of lowering competition in the sector, there would be not enough incentives for Google to offer services with high quality in terms of privacy and data protection after acquiring Fitbit. This could therefore potentially decrease the level of informational autonomy and protection that would be designated to the customers who share their data with the devices offered by the company.

Civil society organizations also raise awareness of the possibility of Google imposing entry barriers to other competitors through interoperability mechanisms involving the Android operating system. This would also damage consumers, as they would have fewer options when choosing a similar service. 

Moreover, the organizations are concerned with the autonomy of customers when choosing which data to share with the company. They reinforce the need for Google to allow for the possibility of current Fitbit consumers not wanting to have their data integrated after the acquisition. 

The Outcomes

By the end of 2020, the European Commission decided to approve the acquisition. Nonetheless, there were commitments involved in the decision. Google had to commit to not using location, health, and well-being data from Fitbit users for 10 years to target ads. The company also assured that the deal will not affect Fitbit's competitors using Android and has indicated that it will not interfere with the operation of Fitbit devices on other operating systems. The European regulator also demanded that users have the option to disable data sharing with other Google services.

Juliana Novaes is a Law Student at the University of Sao Paulo also enrolled in a double-degree program at the University of Lyon. She is a researcher in the law and technology field and a digital rights activist. She is currently part of the Directive Council of the Internet Society’s Youth Observatory (Youth SIG) and is an Internet of Rights Fellow at ARTICLE 19. Her main topics of interest are infrastructure regulation, digital economy and freedom of expression.