The competition watchdog has rejected Google’s promise that it would not distort competition should it be allowed to acquire wearables manufacturer Fitbit.

The tech giant had undertaken that it would not use the acquisition to harm competition, restrict competitors access to health data or use health data for advertising.

While the Australian Competition and Consumer Commission has not rejected Google’s proposed US$2.1 billion buy outright, today’s decision is a significant setback for the tech giant which is yet to receive regulatory approval from several other competition authorities, including the  U.S. Department of Justice. Google already has conditional approval in Europe.

The ACCC has set a new decision date for its judgement of the deal of 25th March 2021. 

In a statement today the ACCC said it will not accept a long-term behavioural undertaking offered by Google to assuage the regulator’s concerns. Google had offered a court enforceable undertaking that it would behave in certain ways to rival manufacturers, not use health data for advertising and, in some circumstances, allow competing businesses access to health and fitness data.

ACCC Chair Rod Sims. Source: ACCC.gov.au

“The ACCC continues to have concerns that Google’s acquisition of Fitbit may result in Fitbit’s rivals, other than Apple, being squeezed out of the wearables market, as they are reliant on Google’s Android system and other Google services to make their devices work effectively,” ACCC Chair Rod Sims said.  

Sims has previously warned of digital giants’ acquisitions distorting competition, referencing the proposed Google Fitbit deal in November last year and saying it was a “stretch” to believe Google would uphold commitments to regulators long term.

Today the competition tsar said Australia may not even be able to police such arrangements.

“While we are aware that the European Commission recently accepted a similar undertaking from Google, we are not satisfied that a long term behavioural undertaking of this type in such a complex and dynamic industry could be effectively monitored and enforced in Australia,” Sims said.

“We recognise we are a smaller jurisdiction and that a relatively small percentage of Fitbit and Google’s business takes place here, however the ACCC must reach its own view in relation to the proposed acquisition given the importance of both companies to commerce in Australia.”

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