Margrethe Vestager is sending mixed messages to America’s big tech groups. Days after promising to crack down on companies like Facebook and Amazon through a major new legislative effort, the European Commission’s antitrust czarina on Thursday approved Google’s $ 2.1 billion purchase of Fitbit with conditions ( Alphabet). This sets a risky precedent for future technology mergers and acquisitions.
At first glance, Vestager appears to have pulled some meaty concessions from Google, which agreed to buy the wrist fitness monitor maker in November 2019. It has pledged to keep California-based Fitbit’s user data on a separate “silo” so they are not used to increase the search giant’s digital advertising business.
Google will also ensure that its Android smartphone operating system remains compatible with health trackers sold by rival manufacturers such as Samsung Electronics. Smartphones and fitness devices often work in tandem. Vestager believes these commitments will prevent Google from dominating the nascent digital health market through its current trove of data and its control of smartphone software. The conditions will apply for 10 years, with the possibility of an equivalent extension, and will be overseen by an independent trustee. However, there may be some cracks. Fitbit’s data silo means that Google’s advertising business cannot directly access users’ health information. But it’s unclear if that also prevents you from drawing anonymous lessons and statistics and using them to improve the quality of your advertising.
And while the company has to offer Fitbit’s rivals the same access to Android tools as other developers, Google could, in theory, still keep some future health software innovations for itself. In other words, Vestager’s fear that Google could use its dominance of smartphones to favor its own fitness monitors may still be a risk.
The more general point is that such behavior-related solutions are much more difficult to implement than outright bans. Businesses are typically two steps ahead: the Commission fined Facebook € 110 million in 2017 for providing what it considered inaccurate information as part of a review of a 2014 merger. According to Brussels, the social media giant said that It couldn’t automatically link users’ WhatsApp and Facebook profiles, but then it did just that.
The risk is that by the time Vestager finds loopholes in its Google-Fitbit safeguards, the damage has already been done.