ACCC rejects Google behavioural undertakings for Fitbit acquisition

22 December 2020 The ACCC has announced that it will not accept a long-term behavioural undertaking offered by Google that sought to address competition concerns about its proposed acquisition of wearables supplier and manufacturer Fitbit. The ACCC will therefore continue its investigation into Google’s proposed acquisition of Fitbit and has set a new decision date of 25 March 2021. “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.  The proposed acquisition also further consolidates Google’s leading position in relation to the collection of user data, which supports its significant market power in online advertising and is likely to have applications in health markets. “We are also continuing to investigate the acquisition’s potential impact on wearable operating systems. The acquisition may result in Google becoming the default provider of wearable operating systems for non-Apple devices and give it the ability to be a gatekeeper for wearables data, similar to the position it holds for smartphones which licence the Android operating system,” Mr Sims said. “Wearable devices such as smart-watches are becoming more important in Australians’ online lives, and the user data these devices collect is likely to become increasingly valuable. The competition impacts of Google acquiring Fitbit to expand into these important markets needs to be very carefully considered.” Google sought to address the ACCC’s competition concerns by offering a court enforceable undertaking that it would behave in certain ways towards rival wearable manufacturers, not use health data for advertising and, in some circumstances, allow competing businesses access to health and fitness data. “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,” Mr 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.” The proposed acquisition has received conditional clearance in Europe, but several other competition authorities, including the U.S. Department of Justice, are yet to make a decision.  Both companies are based in the U.S. and Fitbit’s market share is higher in the U.S. than in most other countries. The ACCC will continue to work closely with overseas agencies on these important competition issues.  The ACCC has extended its decision date for reviewing the transaction through to 25 March 2021 in order to continue its investigation and consider its legal options.  More information is available at Google LLC proposed acquisition of Fitbit Inc Background Fitbit is a manufacturer and supplier of wrist-worn wearable devices and other related products. Google has an extensive range of interests including online search and advertising technology, mobile hardware and various commonly used software such as Google Chrome. The ACCC published a Statement of issues outlining concerns with the proposed merger in June 2020 and commenced consultation on Google’s proposed undertaking in November 2020. Release number: 280/20ACCC Infocentre:  Use this form to make a general enquiry. Media enquiries: Media team - 1300 138 917 Topics * Mergers
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