Deal would put Google into direct competition with Apple Watch, but faces close scrutiny from antitrust regulators over privacy implications
Google’s proposed acquisition of Fitbit appears set to receive a stiff response from some quarters, after a leading US lawmaker called for the deal to be investigated.
David Cicilline, chair of the US House of Representatives antitrust subcommittee, said the buyout would give Google access to users’ “most sensitive information”, including health and location data, which could in turn help further boost its market reach.
“This proposed transaction is a major test of antitrust enforcers’ will and ability to enforce the law and halt anti-competitive concentrations of economic power,” Cicilline said. ” It deserves an immediate and thorough investigation.”
Google parent Alphabet has acknowledged a potentially hostile regulatory environment, offering Fitbit a $250 million (£194m) termination fee if it fails to pass antitrust hurdles.
Google and Fitbit announced the agreement late on Friday, confirming rumours earlier in the week.
If it passes shareholder and regulatory approval, the buy is expected to conclude next year.
The $2.1bn deal is Google’s largest in the consumer electronics field since its acquisition of smart home device maker Nest for $3.2bn in 2014, and would see the company competing directly against Apple in the growing smart watch market.
It could also boost the fortunes of Fitbit, whose value has declined from a height of $4bn after it went public in June 2015 – only two months after the launch of the first Apple Watch.
Since then Fitbit, which made its reputation selling low-cost fitness trackers, has struggled to compete against Apple in the market for higher-end smart watches.
Fitbit co-founder and chief executive James Park said Google was the company’s “ideal partner”.
“With Google’s resources and global platform, Fitbit will be able to accelerate innovation in the wearables category, scale faster and make health even more accessible to everyone,” said Park.
Google senior vice president of devices and services Rick Osterloh said Fitbit was a “pioneer” in the industry and said Google planned to build on Fitbit’s advances with “the best hardware, software and AI”.
The deal would hand detailed Fitbit user data over to Google, but the company said it would not use that information in targeting ads and would allow customers to “review, move or delete their data”.
Fitbit tracks everything from users’ location to their weight, sleep and menstrual cycles and their heart rate and daily step count.
The deal comes at a time when regulators in the US and Europe are looking to strengthen their response to concentrations of market power and user data.
Some US presidential candidates have promised to break up the tech giants, while the EU recently handed additional powers to competition commissioner Margrethe Vestager, designating her as executive vice president of the European Commission.