Google’s $2.7bn Fitbit purchase faces investigation, legal action over competition and privacy fears

The ACCC has warned of legal action against Google after the tech giant acquired Fitbit without the all-clear.

Australia’s competition watchdog has launched an “enforcement investigation” into Google today and is weighing up legal action after the tech giant completed its $2.7 billion purchase of Fitbit despite ongoing probes into the move in Australia and the United States.

The new Australian investigation will look into “serious concerns” that Google’s Fitbit takeover could eliminate competition in the wearable technology market and “frustrate” efforts by rivals such as Samsung, Garmin and Oppo to offer smartwatches for Android smartphones.

The investigation comes just one month after the Australian Competition and Consumer Commission rejected a proposed undertaking by Google to allow the move to go ahead.

ACCC chairman Rod Sims said Google’s failure to wait for the outcome of an investigation meant the watchdog would now consider court action.

Fitbit, a wearable technology brand, boasts more than 29 million users worldwide. Picture: Supplied

“Google’s decision to complete its acquisition of Fitbit before we completed our merger review means we are now conducting an enforcement investigation. As a result, and depending on the results of our investigation, we will consider whether to take legal action on this matter,” he said.

“The market for wearable devices like those made and sold by Fitbit is rapidly evolving. We are concerned that Google’s acquisition of Fitbit — an innovative company with its own wearables operating system and high standards for privacy protection — could prevent or hinder future competition.”

The ACCC has also previously expressed concerns about how Google would use the health information Fitbit had gained from its millions of users, and whether that would be combined to create larger profiles of Google users or used to sell advertising.

The tech giant offered to make a “court-enforceable undertaking” not to use health data for advertising and to allow rival companies some access to Android software in December but the ACCC rejected its proposal due to “significant difficulties” in monitoring whether Google was actually complying with it.

The watchdog had been seeking feedback from other tech firms and was intending to release a decision on Google’s acquisition on March 25.

The US Department of Justice’s antitrust division was also still investigating the proposed merger when Google announced its purchase, and Deputy Assistant Attorney-General Alex Okuliar said investigators would continue to look into whether it “may harm competition and consumers in the United States”.

Australian Competition and Consumer Commission chairman Rod Sims said Google went ahead with its purchase of Fitbit despite ongoing investigations in the US and Australia. Picture: AAP Image/Joel Carrett

A Google Australia spokesperson said the company would continue to work with authorities in the US and Australia over the deal.

“We have voluntarily engaged with the ACCC since the transaction was announced in November 2019 and we remain willing to continue engagement during their ongoing investigation,” the spokesperson said.

“We’re confident this deal is pro-competitive and will result in greater choices and benefits for consumers, both globally and in Australia.”

The representative also said Google would answer “additional questions” from US authorities and completed the deal after the Department of Justice’s waiting period expired.

Fitbit boasts 29 million active users worldwide.

Google’s Fitbit announcement comes just days after the company admitted it had been conducting an “experiments” by hiding news stories by some Australian outlets from its search results.

The move, which Nine called a “chilling illustration of their extraordinary market power,” comes just weeks before Google and Facebook face new conditions as part of news bargaining laws to force the companies to pay for the news they use on their platforms.