It’s been over a year since Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) the Google subsidiary announced its plan to acquire Fitbit (NYSE: FIT), and the two companies have since worked to obtain the necessary regulatory approvals. A few months ago, European Union antitrust regulators extended the deadline for making a decision to January 8, but have now approved the deal well ahead of that date.
Here’s what investors need to know.
Approved with conditions attached
The European Commission has approved the purchase, but certain conditions are attached. Google will not be able to use Fitbit’s sensitive health data for ad targeting, which was a major concern of critics and privacy advocates over the deal. The companies had already committed, but the conditions of the Commission are more formally binding.
All Fitbit user data must also be separated into a separate data silo, and European users will have control over how that data is used. The tech giant must also commit to keeping Android application programming interfaces (APIs) available to other manufacturers in order to maintain a competitive market. All of these commitments last for 10 years and the Commission may be able to extend the restrictions on targeting advertising for another 10 years, if necessary.
“We can approve the proposed acquisition of Fitbit by Google, as the commitments will ensure that the wearable device market and the emerging digital health space remain open and competitive,” said Margrethe Vestager, head of antitrust law in Europe. . “The commitments will determine how Google can use the data collected for advertising purposes, how interoperability between competing handheld devices and Android will be protected, and how users can continue to share health and fitness data, if they wish. “
No more obstacles to overcome
In the United States, the Department of Justice (DOJ) is responsible for reviewing the proposed acquisition. The DOJ is expected to make its decision after its EU counterparts. The agency sued Google in October over allegations that the company violated antitrust laws to maintain its dominance in the search and advertising markets.
Just this week, a majority of state attorneys general have filed similar lawsuits against Google. Ten prosecutors filed a complaint on Wednesday, followed by more than 30 other attorneys general with a separate case on Thursday. This brings the number of antitrust lawsuits facing Google to three. These cases do not specifically concern the acquisition of Fitbit, but highlight the legal challenges that Google is currently facing.
The Japanese Fair Trade Commission (FTC) has suggested that it could also review the transaction, which would add another regulatory hurdle. EU approval is a major step towards closing the deal, but Google and Fitbit are still not entirely clear.