Response to the ACCC's Statement of Issues on the Google/Fitbit merger

Introduction

In February 2020, the Australian Competition and Consumer Commission (ACCC) commenced an investigation into the proposed acquisition of Fitbit by Google, which was originally announced in November 2019.

In March 2020, we made a submission to the ACCC, arguing that the acquisition would very likely have onerous implications for both consumers and markets. We asked the Australian regulator to apply strict scrutiny and not let hisory once again repeat itself. We concluded that the proposed acquisition should not go ahead without strong and future-proofsafeguards. However, taking into account Google’s already dominant position and history and the highly sensitive nature of Fitbit’s data, we are unconvinced that this is possible.

On 18 June 2020, the ACCC published a Statement of Issues (SOI) outlining preliminary competition concerns. According to the ACCC:

Our concerns are that Google buying Fitbit will allow Google to build an even more comprehensive set of user data, further cementing its position and raising barriers to entry to potential rivals... Past acquisitions by Google, of both start-ups and mature companies like Fitbit, have further entrenched Google’s position. The access to user data available to Google has made it so valuable to advertisers that it faces only limited competition.

PI's response

In July 2020, PI submitted further comments, broadly welcoming the ACCC’s outline of its preliminary concerns in the SOI, several of which correspond with the points raised in our March 2020 submission to the ACCC in relation to the proposed acquisition. Our submission further elaborated on some of those points and sought to provide PI’s views on some of the other issues of concern identified in the SOI.

Specifically, we first wish to underline the importance of examining Google's wealth of consumer data pre- and post-transaction, as an integral part of the ACCC’s assessment of the competitive effects of the proposed acquisition. Second, we illustrate the wealth of Fitbit’s data which can further augment Google's dominance in the digital advertising market, as well as allow Google further market power in the market for data-dependent health services, including by eliminating competition between Google and Fitbit in this increasingly important market and raising barriers to entry, with negative consequences for consumers. Third, we argue that the proposed acquisition is likely to lead to the foreclosure of competitors to Google in the growing wearables market and therefore result in a lessening of competition in the aforementioned market. 

Finally, we respectfully ask the ACCC to apply very close and strict scrutiny in its review of the proposed acquisition. PI is concerned that the potentially harmful effects of the transaction cannot, in this case, be addressed by accepting remedies, especially remedies such as third-party data access or data sharing practices, which might seriously underline consumers’ privacy and data protection rights.

What's next?

The ACCC is expected to hand down its decision by August 13, 2020. Currently, the merger is also scrutinised by the European Commission, before which PI has also made submissions. Finally, IDEC, the Brazilian Institute of Consumers Protection, has officially requested the Brazilian Antitrust Authority (CADE) to formally scrutinize this merger also in Brazil.