Google Could Escape EU Antitrust Probe With A Promise Not To Use Fitbit Data For Ads

Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) subsidiary Google LLC may be able to ward off an antitrust investigation by the European Union into its acquisition of Fitbit Inc (NYSE: FIT) by promising not to use the smartwatch maker’s health data to run targeted advertisements, Reuters reported Thursday. 

What Happened

Google had agreed to purchase Fitbit for $2.1 billion, or $7.35 per share in cash, last November. The deal has been under fire from activists over privacy and anti-competition concerns.

According to Reuters, Google may lessen fears of its competitors and privacy activists by issuing a binding pledge to the EU authorities, similar to the one it issued last year — that is, not to use Fitbit’s health data for its advertising service.

The EU is scheduled to decide on the deal by July 20, and Google must offer any concessions by July 13, Reuters noted.

Why It Matters

If Google fails to provide such a pledge, it will face a four-month investigation at the end of the EU’s preliminary review.
The deal will allow Google to better compete with Apple Inc AAPL, Samsung Electronics Co Ltd SSNLF, Huawei, and Xiaomi Corp XIACF, all makers of smartwatches and fitness trackers.
According to Reuters, Fitbit’s share of the market stands at 3%, while the leader in the segment is Apple, with a 29.3% market share. 

Price Action

On Thursday, Alphabet’s Class A and C shares closed 1% higher at $1,518.66 and $1,510.99, respectively.

Fitbit shares traded 1.34% higher at $6.80 in the after-hours session the same day, after closing the regular session 7.70% higher at $6.71.